Less than a decade after Congress passed a landmark law expanding the types of companies supporting the federal Universal Service Fund (USF), the fund faces a new financial crisis. The main problem, though, isn’t that the fund will run out of money any time soon. Due to fees the FCC assesses on local, long distance, wireless, paging, pay phone and international carriers alike, the USF now takes in about $6.5 billion a year. That money subsidizes rural and low-income residential phone service and communications links to rural schools, libraries, hospitals and other vital services. If the fund needs more cash, the fees automatically are adjusted upward.
CHICAGO - Federal and state regulators said Wed. they sympathize with concerns about local franchising requirements impeding video competition but doubt the FCC has authority to preempt them. On a panel at the Supercomm show here, FCC Comrs. Abernathy and Adelstein and Cal. PUC regulator Susan Kennedy, considered a maverick who favors federal preemption on some issues, said Congress or state legislatures are better positioned to take such action.
Despite pressures at multiple levels, the universal service fund (USF) may finish 2005 without a legislative overhaul. Senate Commerce Chmn. Stevens (R-Alaska) and ranking member Inouye (D-Hawaii) and House Commerce Committee Chmn. Barton (R-Tex.) want USF reform, as do others. Industry wants USF reform. And the FCC is pursuing reform (see accompanying article).
With universal service fund (USF) charges soaring for wireline and wireless carriers alike, the Bells, long- distance providers, rural phone companies, mobile carriers and cable TV operators are pressing for changes in the funding formula. But that’s where agreement ends.
When the USF was new, Franklin Roosevelt wasn’t halfway through his first term. Even so, the venerable program still has a startling capacity to make news.
The FCC Office of Inspector Gen. (OIG) made “significant progress” in designing and carrying out its Universal Service Fund (USF) oversight program, but “more work remains to be done,” OIG said in a semiannual report to Congress. “The primary obstacle to implementation of effective, independent oversight has been a lack of adequate resources to conduct audits and provide audit support to investigations,” OIG said: “This lack of resources has prevented us from completing the body of work necessary to assess fraud, waste and abuse at the program level.” But progress has been made. OIG added 2 people, bringing to 5 the number of employees dedicated to USF oversight, and expects to get 2 more. OIG said it sought $3.17 million for USF oversight in the FY2006 budget and began to explore alternatives for getting contract audit support. “Through our participation in the fourth large-scale round of E-rate beneficiary audits with USAC and through audits that we anticipate conducting under our 3-way agreement with USAC we are moving forward to evaluate the state of the program and identify opportunities for programmatic improvements,” OIG said.
Rep. Cubin (R-Wyo.) introduced a bill (HR-2533) late Mon. that permanently would exempt the Universal Service Fund (USF) from Antideficiency Act (ADA) accounting standards. The bill is a companion to S-241, introduced by Sens. Snowe (R-Me.) and Rockefeller (D-W.Va.). The ADA bars federal agencies from incurring obligations in advance of appropriations. The FCC last year ruled the ADA applies to the USF, meaning the fund administrator would have to have cash on hand before sending commitment letters to fund recipients. The immediate impact was on the E-rate program, but rural ILECs fear their payments also could be affected. Congress in Dec. passed a bill exempting the USF from the ADA through 2005.
Congress will weigh key technology issues this year. Some bills will stir fierce fights, while industry will get quick wins on others, Rep. Boucher (D-Va.) told the Computer & Communications Industry Assn. (CCIA) Wed. The Congressional Internet Caucus co-founder predicted easy decisions on sweeping patent reform, a hard deadline and subsidy model for DTV transition and Internet-specific Telecom Act updating. But the broadcast flag and digital content reproduction and fair use issues will be more contentious.
An order to require VoIP providers to give customers access to E-911 service is on the agenda for the FCC’s open meeting Thurs., as expected, but it’s not clear if that order will be as strongly worded as proponents want. The order is expected to require VoIP providers to offer adequate access in 120 days, which probably would put the deadline in mid or late Sept. The order probably won’t set any requirements for ILECs to open network facilities VoIP providers say they need to offer full 911 service.
Putting spectrum out, ensuring there’s no interference and getting out of the way is govt.’s appropriate role in the wireless industry, analysts said Fri. at a CTIA Wall Street Analyst Roundtable in Washington. As Congress prepares to rewrite the Telecom Act, legislators should remember the U.S. wireless market is highly competitive and will remain so even after pending mergers, they said. “The government should set the rules and let the market play it out,” said Ovum Wireless Telecom Vp Roger Entner. Until only one wireless carrier remains in the U.S., “I don’t think regulation has a significant role to play in the wireless and I hope the rewrite of the Telecom Act will reflect that view,” he said.