Federal Universal Service Fund

BOSTON -- Prepare for more VoIP regulation as the FCC more often treats VoIP as it does traditional phone service, panelists said Tuesday at the VON conference. The VoIP industry must pay more heed to rules emerging at the federal, state and international levels, they said. “You need good legal counsel to navigate these kinds of things,” said VON Executive Director Jim Kohlenberger.

Seeking Universal Service Fund reform they can live with, telecom companies have been meeting in small groups for months trying to agree on proposals for the Federal-State Joint Board on Universal Service. As the joint board’s self- imposed Nov. 1 deadline nears, meeting participants have become more closed-mouthed about progress.

The telecom industry argued vehemently against modifying special access rules in a House Telecom Subcommittee hearing Tuesday, as Democratic leaders pushed for new pricing policies. Democratic leaders also condemned the FCC’s forbearance petition policies as lacking transparency, preventing Congress from exercising “appropriate” oversight. “Unacceptable,” House Commerce Chairman John Dingell, D- Mich., said in a back-and-forth discussion with Verizon Executive Vice President Tom Tauke.

An FCC vote on whether to cap universal service subsidies to competitive rural telecom companies “hopefully” will occur in the “very, very near future,” FCC Commissioner Deborah Tate said Monday at a conference on Universal Service Fund reform. Asked to specify the timing, Tate said only FCC Chairman Kevin Martin can answer more definitively. She co- chairs the Federal-State Joint Board on Universal Service, which earlier this year recommended the interim cap to the FCC. Tate said she’s still pushing for a Nov. 1 deadline for the Joint Board to make another recommendation to the FCC on longer-term changes in the USF.

Both broadband and wireless should be in the mix for high-cost Universal Service Fund reform, the Federal-State Joint Board on Universal Service said Thursday in a brief statement. The board adopted the statement in July, but it took the FCC two months to release it, sources said Friday.

The FCC should raise the income ceiling for LifeLine and Link-Up program eligibility so the programs are in line with a similar one subsidizing heating costs, the Iowa Utilities Board said in comments filed late Friday. The FCC voted in 2004 to raise the Lifeline and Link-Up eligibility ceiling to 135 percent of federal poverty guidelines, seeking comments on whether to raise it to 150 percent. The agency recently asked for comments to “refresh” that issue, which had lain dormant.

Hearings and letters to the FCC and NTIA on DTV consumer education will multiply in September, when Congress returns, Hill aides said in interviews this week. Senate Commerce Committee Chairman Daniel Inouye, D- Hawaii, told reporters he will convene a fall hearing on the DTV transition, saying a July 26 session convinced him “more needs to be done.” House Telecom Subcommittee Chairman Ed Markey, D-Mass., also will scrutinize consumer education efforts, an aide told us.

Competitive telecommunications providers increasingly are serving rural towns but they are not going to surrounding areas where providing service costs more, said a study of universal service funding sponsored by four telecommunications companies that operate in rural areas. Competition in small towns boosts the need for Universal Service Fund (USF) support in surrounding areas because it cuts incumbent phone companies’ ability to ease financial burdens by averaging, consultants Balhoff & Rowe said in the report. CenturyTel, Consolidated Communications, Embarq and Windstream filed the study with the Federal-State Joint Board on Universal Service, now studying ways to improve the universal service program. The four companies serve small and midsized communities nationwide. The study, based on Texas Universal Service Fund operations, concluded that competitors “appear unlikely to offer services” in outlying areas soon, with significant potential effects on the universal service program. “Competitors are making the financially rational choice to avoid serving high-cost areas altogether, but carriers of last resort, like the four sponsors of the study, are compelled to serve the areas outside rural towns -- often at a significant loss,” the companies said in a release. With increased competition in towns taking lines from rural incumbents, “internal cross- subsidy systems” used to average costs “will prove inadequate,” the study said. “Historically, policymakers have relied at least in part on monopoly-based support systems founded on internal company cross-subsidies to maintain affordable rates in uneconomic service areas,” the study said. “Those internal cross-subsidy systems almost certainly will prove inadequate to cope with emerging competitive patterns.” A wireless industry representative, speaking on condition of anonymity, said the study did not provide data on wireless costs or coverage patterns, relying mainly on data about cable and competitive wireline overbuilders.

The National Association of Regulatory Utility Commissioners (NARUC) faced a heaping plateful of telecom resolution proposals at its summer meeting in New York City, set to open Sunday, July 22. Proposed resolutions address Universal Service Fund (USF) reform, VoIP number use, broadband over power lines, wireless termination fees, the digital television transition and IP relay fraud.

The FCC should impose the proposed temporary cap on subsidies to competitive carriers from the high-cost Universal Service Fund (USF), several members of Congress said in letters to the FCC the past few weeks. The letters came as wireless carriers worked the Hill seeking political support for encouraging the FCC to tweak a May 1 Federal- State Joint Board proposal to place an interim cap on funding for competitive eligible telecommunications carriers (CETC), who mostly are wireless providers. Most lawmakers writing the FCC said consumers will see higher costs without the cap.