The FCC should cap federal interstate access charges for rate-of-return carriers at today’s rates while considering Universal Service Fund and intercarrier compensation overhauls, said the National Telecommunications Cooperative Association. The group was responding to a May 2 FCC request to refresh the record on USF and intercarrier compensation. Access costs unrecovered under the capped rates “should be recovered from interim USF funding as another component of Interstate Common Line Support,” NTCA said. The action likely won’t swell the fund because the FCC has capped USF support for competitive eligible telecommunications carriers and is looking to kill the identical support rule, which bases CETC subsidies on incumbent costs, NTCA said. “This decisive FCC action now will preserve and advance universal service in high-cost and rural areas, will provide a specific and predictable universal service mechanism and will provide a reasonable cost recovery mechanism for rate of return carriers for the foreseeable future,” the NTCA said. It also urged the FCC to create a timeline to shift the universal service system from Public Switched Telephone Network technology to IP broadband.

The Independent Telephone & Telecommunications Alliance lauded GAO (CD July 11 p1) for condemning FCC management of the Universal Service Fund. “ITTA has long advocated that carriers serving rural and high-cost areas should receive universal service support regardless of the size of the carriers where USF is necessary to ensure the viability of the underlying telecommunications network and affordable consumer rates,” ITTA President Curt Stamp said. “We are encouraged that the GAO report recognizes this goal and are hopeful that Congress and the [FCC] will heed this message as we develop meaningful USF reform.”

The Senate Appropriations Committee Thursday approved a bill recommending $341 million for the FY 2009 FCC budget. It also admonished the agency for inadequate oversight of the universal program. The FCC needs to do a better job with the program, the committee said. Members also ordered the FCC to report on the feasibility of a broadcast “code of conduct” for foul language, sexual content and violence. They also sought a study of commercially supported broadcasting on public school buses.

NCTA said it generally supports a proposed universal service bill introduced by the ranking members of the House Commerce Committee and Telecom Subcommittee. “We believe it provides a solid foundation” on which to begin discussions, said NCTA President Kyle McSlarrow. The group supports an overall cap on the size of the fund, approves the bill’s proposal asking the FCC to consider alternatives to current rules on contributions, and prohibit assessments on broadband transmission or Internet access services. NCTA has “long supported basing provider contributions to the universal service fund on assignment of telephone numbers rather than the current revenue-based contribution method,” McSlarrow said. The reverse auction provision, however, includes “myriad significant details that would need to be resolved in order to ensure” the auctions promote broadband development in “truly” high-cost areas. “We believe that the focus of USF support should continue to be on the provision of voice services, with any additional supported services limited to schools, libraries and health care providers,” McSlarrow said. While government can play a role in helping to widen broadband deployment, those goals are best achieved with “tax credits or tax incentives to providers that build out in unserved areas, rather than by increasing the universal service burden on voice service providers… or by interfering with the market by providing subsidies in ‘unserved’ areas,” he said.

Carriers won’t need “dollar-for-dollar replacement of lost intercarrier revenues” after an FCC overhaul of intercarrier compensation or the Universal Service Fund, said the National Association of State Utility Consumer Advocates. In comments to “refresh the record” on USF and intercarrier compensation proceedings at the FCC, the group asked the FCC to reject the premise that reducing intercarrier compensation revenue will increase USF demand. Technology and market changes help carriers “mitigate” reform’s impact, it said. For example, “carriers are now generating billions of dollars in [DSL] revenues that they did not generate five or ten years ago,” it said. The group urged the FCC to “reject resoundingly” proposals by Sprint Nextel and others to raise the subscriber line charge to offset revenue lost to reform. “Industry members may find it appealing to ‘pass the buck’ to consumers as a simple way to resolve thorny regulatory problems, but such a tactic would thwart the goal of universal service and unfairly burden consumers,” the group said.

The FCC seeks comments on a waiver petition by Sage Telecom related to Universal Service Fund contributions. Sage doesn’t want the Universal Service Administrative Co. to base the USF annual contribution true-up for under- projections on the average of the two highest contribution factors, nor to figure the true-up for over-projections based on the average of the two lowest contribution factors, the FCC said. Comments are due Aug. 7, replies Aug. 21.

The Universal Service Fund for schools and libraries is under the lens of a congressional inquiry into programs prone to payment errors, according to GAO reports and congressional correspondence. The inquiry comes as the FCC must choose a contractor to run the “E-rate” program. The Universal Service Administrative Company, which recently solicited bids for a five-year contract to run the program, sent its recommendation to the FCC last week, a company spokesman told us.

Audio bridging service providers must contribute to the Universal Service Fund, the FCC said Monday, partially denying an InterCall appeal of a Universal Service Administrative Co. ruling. The commission rejected InterCall’s claim that audio bridging providers need not support the fund since they aren’t telecommunications service providers. “The audio bridging services InterCall provides are equivalent to teleconferencing services and are ’telecommunications'” under the 1996 Telecom Act, the FCC said. The FCC told USAC to enforce contribution by audio bridging companies starting with the Form 499-Q due Nov. 1. The requirement won’t apply retroactively, the FCC said, reversing USAC. “It was unclear to InterCall and the industry that stand-alone audio bridging providers have a direct USF contribution obligation,” the commission said. InterCall didn’t respond right away to a request for comment.

Changes to the universal service fund program need to be “fair and equitable for all consumers, no matter where they live,” the Independent Telephone and Telecommunication Alliance said in a letter to House Commerce Committee Chairman John Dingell, D-Mich. The group, which represents mid-size local exchange carriers working mainly in rural areas, praised Dingell’s comments calling the fund a “fundamental American value” at a House hearing (CD June 25 p1). Changes are needed in light of the advance of broadband, ITTA President Curt Stamp said in his letter. Congress is likely to get serious about USF reform soon, now that consumers are paying an 11.4 percent surcharge on their phone bills, said Free State Foundation President Randolph May, who testified at the hearing. Several members cited the 11.4 percent surcharge as an “impetus for getting on with the business of reform,” May said in a blog Friday. “Consumers have finally begun to pay attention,” he said.

Sen. John McCain, R-Ariz., has accomplished little on communications, ex-FCC chairman William Kennard said Wednesday in a debate hosted by the Media Access Project. Kennard spoke for Sen. Barack Obama, D-Ill., while former NTIA official John Kneuer backed McCain. Obama has a significantly more detailed technology policy, despite a shorter resume, Kennard said. McCain is opposed to Washington “micromanagement” of the industry, and has been dealing with communications issues for years, Kneuer said. The industry has a “stark, stark choice,” Kennard said.