A federal court rejected a 2014 California law requiring prepaid wireless fees and three California Public Utilities Commission resolutions implementing that law. In a Monday order (in Pacer) granting a MetroPCS motion for summary judgment, the U.S. District Court for Northern California ruled the law and resolutions “conflict with federal law and are therefore preempted and unconstitutional.” MetroPCS asked the court to declare unlawful and stop enforcement of three CPUC resolutions implementing the state's Prepaid Mobile Telephony Service Surcharge Collection Act, which required prepaid wireless customers to pay a surcharge supporting state USF and certain CPUC fees. The company argued the CPUC portion of the surcharge impermissibly assesses interstate voice and broadband data revenue, conflicting with federal law including the Communications Act, the 2000 Mobile Telecom Sourcing Act and the U.S. Constitution's dormant Commerce Clause. The agency said there's no conflict with federal law because the commission used an intrastate allocation factor to remove interstate and international charges from the surcharge base. “The Court agrees with MetroPCS that the usage of a mandatory intrastate allocation factor conflicts with federal law because it deprives carriers of the ability to treat as intrastate for universal service purposes the same revenues that they treat as intrastate for federal USF contributions,” wrote Judge Susan Illston. “By using the intrastate allocation factor as the sole method for assessing the CPUC fees, the CPUC has deprived carriers of the ability to rely on alternative allocation methodologies, such as their actual revenue data.” The court disagreed with CPUC argument that MetroPCS was "judicially estopped" from challenging because it proposed that CPUC adopt an intrastate allocation factor. MetroPCS may challenge because it supported a “reasonable” estimate of the intrastate portion and argued that the CPUC didn’t act reasonably, said Illston. The regulator and MetroPCS parent T-Mobile didn’t comment Tuesday.

A consolidated appeal of the FCC’s September wireless infrastructure order on state and local barriers to siting small cells will be heard by the 10th U.S. Circuit Court of Appeals, not the 9th Circuit, as sought by local governments, and that could be positive for the FCC, court observers said. The U.S. Judicial Panel on Multidistrict Litigation randomly picked the 10th Circuit Friday (see 1811020061). AT&T, Sprint and the Puerto Rico Telephone Company also appealed the order, forcing a lottery. AT&T’s appeal in the U.S. Court of Appeals for the D.C. Circuit was left out of the lottery.

The USF contribution factor could drop in Q1 to 19.7 percent, from Q4's 20.1 percent, of carrier U.S. interstate and international (long-distance) telecom end user revenue, said industry consultant Billy Jack Gregg's email update Friday, citing a Universal Service Administrative Co. demand projection in FCC docket 06-122. But the factor could be higher than 19.7 percent if the long-term decline in the industry's revenue base continues in Q1, he said, noting an expected 2018 base of $51 billion would be the lowest in USF history. USAC's Q1 revenue projection is due at the end of November. Overall, USF demand for Q1 was $2.02 billion, $34.4 million less than in Q4, with a high-cost fund decrease of $51.6 million the biggest factor, he said.

The FCC should fully fund model-based and cost-based rate-of-return USF mechanisms before considering a second Alternative Connect America Cost Model (ACAM) offer with new demands, said WTA in meetings with aides to Chairman Ajit Pai and Wireline Bureau staffers, posted Friday in docket 10-90 (here, here). The RLEC group also discussed "implementation and technical and economic feasibility of potential changes to associated broadband build-out obligations" and "potential impact of the growth of Customer Broadband Only Line ('CBOL') services upon cost-based RoR budgets and budget control." Hargray Communications urged adoption of consensus RoR budget hike proposals from NTCA, USTelecom, ITTA and WTA (see 1810010045). "Current funding uncertainty is deterring investment" that could help close the digital divide, it said on a discussion with bureau staffers. It opposed "arbitrary reductions" in support for seven years, "the term of many commercial loans."

A draft FCC jurisdictional separations freeze item is an order, a spokesperson told us Friday, describing an item on the circulation list. An NPRM proposed to extend by 15 years the freeze on federal-state separations rules apportioning rate-of-return telco regulated costs and revenue between interstate and intrastate jurisdictions (see 1807180059), drawing objections from state regulators and support from telco interests (see 1808280021). The spokesperson noted the circulation list included a draft order on a Sandwich Isles petition for reconsideration of a December 2016 order requiring the company repay $27 million in "improper" USF support, which was released with a proposed $49 million fine. It also included a draft item on Spectrum Networks Group "Applications and Waiver Request to Allow it to Provide Private, Internal Machine-To-Machine Communications to Businesses on 900 MHz Business/Industrial/Land Transportation Channels."

The Oregon Public Utility Commission plans to further weigh requiring interconnected VoIP companies to contribute to the state USF. The agenda for Monday at 9:30 a.m. includes a schedule for docket AR-615 and discussion of proposed rules, forms and instructions to be released Tuesday. The PUC plans a Dec. 4 public meeting on staff’s recommendation that the commission issue a notice of proposed rulemaking. At an October workshop, AT&T and cable providers raised doubts about PUC authority over VoIP (see 1810100042).

The National Tribal Telecommunications Association recommended changes to USF support mechanisms for carriers serving predominantly rural tribal areas, in a report filed Thursday at the FCC in docket 10-90. NTTA "proposes a Tribal Area Solution to revise current federal universal service programs for [rate-of-return] carriers. These revisions, proposed for the High Cost Loop Support, Connect America Fund Broadband Loop Support, and Alternative Connect America Cost Model support programs, recognize the unique challenges faced by carriers serving rural Tribal areas of the lower 48 states in the country.” Efforts to help tribal areas appear on paper to be “fairly substantial,” the group said: “However, the facts are clear -- Tribal areas, especially rural Tribal areas in the lower 48 states, lag significantly behind the rest of the country in regards to broadband availability.”

The FCC needs to revise the USF in way that's “sufficient and predictable,” said NTCA and Golden West Telecommunications CEO Denny Law in meetings with aides to all four FCC commissioners and staff from the Wireline Bureau, said an ex parte filing posted Thursday in docket 10-90. Stakeholders have shown “overwhelming support” for “longer-term funding to promote universal service in rural areas,” the filing said. The agency also needs to “ensure the sustainability of any budgets adopted” to provide incentives to invest in broadband “for the benefit of rural consumers,” the filing said.

The FCC Wireline Bureau sought comment Friday on the implications of a provision in the FY 2019 National Defense Authorization Act that would bar use of money in any USF program to buy equipment or services from companies that “pose a national security threat” to U.S. communications networks or the communications supply chain. The FCC had been expected to deepen its inquiry in light of the NDAA (see 1810190025). The bureau asks specifically about Section 889(b)(1), which bars federal agencies from using “loan or grant funds to procure or obtain, extend or renew a contract to procure or obtain, or enter into a contract (or extend or renew a contract) to procure or obtain equipment, services, or systems” with Huawei, ZTE and other Chinese companies. “Does the prohibition in section 889(b)(1) apply to support provided by the … USF?” the bureau asks. “To the extent the provision is intended to apply to USF, what obligation might it impose upon the Commission? Would the Commission’s proposed rule in the Protecting Against National Security Threats to the Communications Supply Chain NPRM satisfy the intent of section 889(b)(1)?” Comments are due Nov. 16 in docket 18-89, replies Dec. 7.

The Regulatory Commission of Alaska issued a 4-1 final decision adopting USF changes proposed by the Alaska Telephone Association. Wednesday’s order in docket R-18-001 follows commissioners’ August 5-0 oral vote to sunset the Alaska USF in five years and adopt the ATA plan (see 1808090025). “Our decision to make significant revisions to the AUSF is intended to correct the escalating crisis resulting from a large decrease in assessable intrastate revenues and the resultant increase in the AUSF surcharge paid by intrastate telecommunications consumers,” RCA said. The ATA plan “continues to promote parity of intrastate and interstate long distance rates and also maintains a support mechanism designed to compensate LECs for reductions in access charge revenues and for fulfilling [carrier of last resort] duties,” RCA said. It’s “an acceptable transitional measure that will prevent further escalation of the AUSF and related surcharge,” the agency said. The decision may be appealed within 30 days, it said. Commissioner Stephen McAlpine dissented from the written order.