UNIVERSAL SERVICE NEXT BIG ISSUE FACING FCC, ADELSTEIN SAYS

Adelstein said voice-over-IP (VoIP) would have an effect on the current universal service support structure. VoIP, he said, “raises a host of public interest issues” in addition to universal service. He said it could affect law enforcement, 911 and access charges, along with other telecom service aspects with a direct effect on consumers. He said resolution of VoIP required that regulators “get the structure right” without too much delay. The answers to the quandaries raised by VoIP are unknown, Adelstein said, “but we've got to find them.” He said a major public interest issue in universal service was whether to include equal access in the subsidized universal service entitlement, which could mean significant changes in how each local carrier’s subsidy was figured.

Adelstein said most of the major issues facing federal and state regulators had a major public interest component. In broadband, he said it’s in the public interest “to have access to the best technology.” Meeting the public interest involves finding a fair way for the deploying entities to recover their costs. He acknowledged the dichotomy between unregulated cable broadband and regulated telecom broadband, but said that “from a consumer point of view, their interests are best served by regulating DSL” as a Title II telecom service. If both cable modem and telco DSL were unregulated information services, he said a likely result would be higher prices, poor service and provider constraints on the broadband content users could access.

The public interest “was clearly established in the case of no-call by the 50 million sign-ups to the national no-call list. The public showed it wants to take back control of its own phones,” Powell said. He said the public interest was “obviously well served” by implementation of wireless local number portability, but acknowledged that some carriers might need waivers of the Nov. 24 deadline..

Also at NARUC, NeuStar CEO Jeff Ganek told state regulators that the lessons the industry learned in implementing wireline local number portability (LNP) could be applied to batch hot-cut processes and VoIP interoperability issues. He also said he expected the implementation of wireless LNP Mon. to go relatively well. “I don’t expect problems with the core LNP systems,” he said, “but with new systems being turned up in every wire center, you can expect some glitches. We'll fix those as fast as we can.” Ganek said the challenges with hot cuts would be ensuring that the operation support systems could efficiently process thousands of daily transactions among scores of independent service providers each day. He said NeuStar was working with carriers that sought to automate the hot-cut process. He said the development of VoIP would pose the challenge of ensuring that the thousands of independent IP networks could interoperate. VoIP providers must solve questions involving numbering/addressing, links, authentication and interprovider compensation, Ganek said. They also must address data sharing with one another and with wireless and landline networks.

Investment analysts told state regulators that the uncertainties in the telecom industry meant investors still were reluctant to put significant money into telecom companies because the whole industry seemed mired in a deflationary spiral, showing little or no net revenue growth. They said regulators could help to improve telecom’s attraction as an investment not so much by what they did but rather in how they did it. Paul Glenchur of the Schwab Washington Research Group said regulators “have an enormous burden at a very bad time, but you need to keep things on a reasonably fast track and reach decisions as quickly as you can.” James Henry of the Babcock Group said: “Don’t be afraid to make decisions. Investors value a firm decision.” Simon Flannery of Morgan Stanley cautioned regulators against “trying to reinvent the wheel. Coordinate your efforts and learn from each others’ experiences.”