Federal Universal Service Fund

Universal service fund (USF) support would be used for broadband deployment, under a discussion draft released Thurs. of a bill by Reps. Terry (R-Neb.) and Boucher (D-Va.). The bill would expand the USF base by requiring payments into the fund by service providers that use telephone numbers or IP addresses or sell network connections. “To change USF, I believe that all who play must pay,” said Terry. He called the draft a vehicle for reform that would remedy “inequities that exist today.” Boucher said he’s seeking comments on the draft by Dec. 23 and plans to introduce a bill next year.

House and Senate conferees agreed Fri. to exempt the universal service fund (USF) from Anti-Deficiency Act accounting rules for a year, and to bar the FCC from limiting USF support to primary lines. Senate Commerce Chmn. Stevens (R-Alaska) brokered the USF deal Thurs. night with House Commerce Chmn. Barton (R-Tex.), who wants to overhaul USF. Stevens thought he had sewn up the arrangement, but learned after the Thurs. conferees’ meeting that the primary-line provision wasn’t in the bill. “I didn’t sleep last night because of this amendment,” he told conferees during Fri.’s meeting, arguing passionately that the primary-line provision is essential in rural areas.

Clearer rules and procedures would go far to improve management of the universal service fund (USF), the FCC was told by a variety of organizations. USF management can be confusing and inefficient for contributors and recipients, according to some comments, but many said the problems don’t stem from the Universal Service Administrative Co. (USAC) the non-profit that administers USF. The agency had sought comments on the entire USF program, including the high-cost fund, E-rate and smaller programs (CD June 15 p8).

Four rural telecom bodies have allied to strengthen their lobbying power as Congress eyes policy changes on issues such as universal service. At a news conference Thurs., members of the Coalition to Keep America Connected said the impending Telecom Act revision spurred creation of the group, made up of the Independent Telephone & Telecom Alliance, NTCA, OPASTCO and the Western Telecom Alliance.

The 4 proposals to modify the rules governing high- cost universal service support by the FCC’s Joint Board on Universal Service didn’t received much support in comments filed with the FCC Fri.

The available support is a “great benefit,” according to more than 90% of Universal Service Fund (USF) Schools & Libraries Program participants, USAC said. Only 6% said their school or library gets “some benefit;” 1% said there is “no benefit,” USAC said. The data were amassed by a USAC program launched in Jan. to learn now to improve USF by visiting and talking with recipients. Participants rely on USF for public safety, better communications between faculty and parents, distance learning, readying students for state-mandated tests and acquiring new technologies, USAC said. “Some school officials also have expressed that without USF support, their schools would not be able to meet the federal requirements of the No Child Left Behind Act,” USAC said.

The Bush Administration chided Congress for “restrictive language” that would prohibit reforms to the Universal Service Fund program in the Commerce-Justice- State appropriations bill, according to a Sept. 8 memo from the Office of Management & Budget. OMB objects to Section 520 of the bill, which the Senate passed 2 weeks ago, that prohibits the FCC from using any funds from the bill to make changes to USF payments implementing last year’s Federal-State Joint Board on Universal Service recommendations on USF payments. OMB said this provision would prevent reforms to improve the “fairness and efficiency of the program and potentially reduce burdens on telephone ratepayers.”

Prepaid wireless carriers likely will get limited access to the Universal Service Fund (USF)in the Gulf Coast region under initiatives FCC Chmn. Martin outlined last meeting (CD Sept 16 p5), said Medley Global Advisors in a research note. Martin proposed to amend eligibility rules for carrier support under the Lifeline and Linkup programs that subsidize phone service to customers with incomes at or below 135% of federal poverty guidelines, Medley said. The proposed changes would mean Lifeline and Linkup eligibility for TracFone, AT&T, U.S. Cellular, Virgin Mobile, Liberty Wireless, Sprint Nextel, Cingular, Alltel, T-Mobile and other prepaid wireless carriers serving low income customers in storm affected areas, the researchers said. “This proposal is modeled off of a recent Commission decision allowing Miami-based TracFone to become eligible for federal Lifeline subsidies once they receive ETC designation in a particular state and offer E-911 service [CD Sept 7 p2],” Medley said.

Expanding the scope of the universal service fund (USF) to broadband networks may be “timely,” the Congressional Research Service (CRS) said Wed. In a 76- page report, CRS analyzed options for telecom reform in Congress and at the FCC, assessing levels of support and dissent among industry players and political constituencies. The report cited 2 main public policy issues: (1) Devising the best regulatory framework for encouraging investment and innovation in the broadband network and applications riding over the network. (2) Deciding whether the govt. should intervene in rural markets by expanding universal service to include access to broadband networks at affordable rates. Despite widespread consensus that today’s statutory and regulatory framework for telecom is ill-suited for the market, there’s disagreement about how to fix it, the report said. A key barrier -- an “administrative and legal morass,” in the authors’ words -- is deciding if an information service is purely an information service or has a telecom component invoking more rigorous regulation. The recent Supreme Court Brand X decision and an Aug. 5 FCC order helped clarify classification of information services, but the Commission has yet to address how to classify and regulate specific service offerings based on the underlying network architecture, the report said. For example, the FCC’s re-classification of DSL service as an information service rather than a telecom service had 2 effects on universal service: It reduced the funding base and limited funding to telecom services. Two other challenges to Congress in tackling a telecom law update: (1) Creating a regulatory framework that market changes won’t render obsolete. (2) Identifying regulatory elements suitable for handling at the state and local level versus those that should be centralized, the report said. It’s also timely for Congress to consider reviewing Title VI regulations to see if it would be in the public interest to streamline franchising by consolidating it at the state or federal level and lessen or eliminate some regulations, the report said. To enhance broadband competition, the report said, intramodal competition will continue to be important, especially for large business markets. It suggests maintaining some current statutory provisions for CLECs to foster that competition, “given the inability of facilities-based CLECs to attain the economics of scale needed to support ubiquitous networks. On the issue of intercarrier compensation (ICC) reform, where there again is widespread agreement on problems but dispute over solutions, the report advises Congress to “use its deliberations” to give the FCC statutory guidance. As for USF reform, congressional action clearly is needed for change, particularly in regard to assessments on providers and recipients of funds. With VoIP service emerging, Congress should consider reviewing Title II requirements on voice services. The FCC is “constrained by current statute” in its ability to provide regulatory parity to competing voice services, the report said, because some services meet the definition of telecom, some are information and some are “ambiguous.” Finally, on DTV transition, the report said Congress should leave multicasting to the FCC to “study and construct recommendations for rules (and, if necessary, statutory changes) to address the potentially related issues of mandatory carriage of multiple broadcast signals and better serving the needs and interest of viewers in different governmental jurisdictions.” This is likely to give momentum to political forces seeking to address the multicasting issue as a “study item” in DTV legislation. - - AV

The wireless industry urged the FCC to ignore ILECs’ request and modify a requirement that wireless ETC applicants submit formal 5-year network improvement plans to the agency to show they can provide the supported services. Wireline incumbents, who want that requirement maintained, said the plans provide target completion dates for each project that receives universal service support and ultimately will lead to a network that provides coverage throughout an ETC-designated area. Calling the requirement “unrealistic” and “overly burdensome,” wireless carriers asked the Commission to shorten the required build-out plan to 18 months or less.