Prospects for a comprehensive telecom bill are dim, considering the unresolved net neutrality arguments going into the next Congress, congressional aides said Thurs. on a Practising Law Institute panel. The neutrality debate doomed telecom legislation in the 109th Congress, Republicans and Democrats agreed, and though the issue is less politicized now that elections are over, it’s still misunderstood. Congress’s role in franchising is uncertain, with FCC action coming soon, and so is the path to dealing with net neutrality, they said.

The FCC should consider Cingular’s application to be designated as an ETC in Va. only on its merits and not use the proceeding to focus on broader USF issues, Cingular said in reply comments. “The primary arguments in the comments opposing Cingular’s petition actually have nothing to do with Cingular’s petition itself,” Cingular said: “Instead, these commenters seek to use Cingular’s petition as a vehicle to advance their positions in larger ongoing universal service rulemaking proceedings. Those issues should be addressed in the broader rulemaking proceedings, however, and not in the context of Cingular’s petition. Grant of Cingular’s petition in Virginia will in no way prejudice the Commission’s consideration of universal service reform.” Any claims it’s not deserving of ETC status are groundless, Cingular said: “Many areas are simply uneconomic to serve without support, either because of low population density, difficult topography, or both. This is true in the wireless as well as the wireline context.”

The FCC should “act swiftly” to keep the Universal Service Fund (USF) program running after Dec. 31 by redirecting unused funds, 31 House lawmakers wrote in a letter to Chmn. Martin last week. The program will be imperiled by the Dec. 31 expiration of its exemption from Antideficiency Act (ADA) accounting rules. ADA rules bar agency spending unless cash is in hand, a hobble for the USF program. A Commerce-State-Justice appropriations bill that includes a permanent exemption from ADA rules for the USF E- rate program has been deferred to the next Congress. House lawmakers told the FCC they will keep working toward a “more lasting solution to protect consumers from disruptions to USF programs and increased USF phone bill charges.” In the short run, the FCC should direct USAC to apply unused money to 2007 commitments while remaining ADA-compliant, they said.

FCC Comr. Tate is “energized” at the thought of reverse auctions to set rural universal service subsidies, she said Wed. at a Phoenix Center conference. Tate wants to hear “positives and negatives” about use of auctions,” she said. “Something needs to be done” about Universal Service Fund growth, Tate, who is Universal Service Joint Board chmn., said: “I think we are at the tipping point.” One thing to keep in mind, Tate said: USF programs must continue to assure adequate infrastructure for homeland security and interoperability needs. Tate moderated a panel on rural broadband that included Dennis Weller, Verizon’s chief economist, who said an outdated USF must change. “Competitive bidding may be the solution” because it “imposes market discipline,” he said. If the USF model is “restructured,” said Brian Adkins, Embarq’s federal legislative dir., rural wireline carriers must shed their carrier-of-last-resort requirements, or all USF recipients must face those mandates. Net neutrality probably will be the top communications issue, above universal service reform, in the Democratic-led Congress, said Daniel Sepulveda, aide to Sen. Obama (D-Ill.). But universal service offers “opportunities for bipartisan cooperation,” he said.

Major carriers are in full-on growth mode and mostly unperturbed by potential regulatory and legislative roadblocks, according to CFOs speaking at a UBS conference in N.Y. Wed. The usual deregulatory overtures were mostly missing -- even when cued by questions from reporters and attendees -- as the executives laid out their financial forecasts for the coming year in what one attendee called “a bullish story.” The AT&T-BellSouth merger and attendant delay was the only issue given any significant discussion, though AT&T remains confident approval will come soon.

Qwest supports Universal Service Fund (USF) legislation sponsored by Reps. Terry (R-Neb.) and Boucher (D-Va.), the company told the lawmakers Wed. Financing for USF is “unsustainable” and the program needs revamping, the letter said: “Your legislation takes common sense steps toward that end.” Qwest also said greater focus should be placed on rural broadband investment, which the bill takes up. USF distribution needs to be rethought, the letter said, since some rural communities that Qwest serves are denied funds while a few states get most of the money. The company also praised the bill’s attempt to control spending.

The FCC should deny a Cingular request for Universal Service Fund (USF) subsidies in Va., wireline companies said, arguing the big wireless company doesn’t need USF subsidies. Letting Cingular draw on the USF could sap the subsidy program, Verizon said in an opposition filed late Mon. USF subsidies should be used where telecom service otherwise isn’t financially feasible, Embarq said. “It should not be wasted on uneconomic arbitrage,” said the company, a spinoff of Sprint’s wireline operations.

The Tex. PUC recommended that the state legislature next year reform state universal service fund high-cost subsidy programs. The PUC adopted a staff draft report required by a 2005 law ordering the PUC to study the state’s 11 universal service programs and suggest changes to the 2007 legislature. The report (Case 318630) concluded the large-company high- cost support fund, involved in 75% of state USF disbursements, paid a disproportionate share (96%) of its $425 million in payments to the state’s 5 largest incumbent telcos. The PUC said the large-company program is “overdue for updating” to resize or retarget support. The PUC said the small-company high-cost program should get light legislative review, particularly on reasonableness of basic exchange rates and access lines’ eligibility for state subsidies. The report noted rural incumbents’ rates haven’t changed since the state USF fund’s 1999 inception. The report said the other 9 state universal service programs achieve state policy goals and “fulfill their state purposes effectively.”

Reps. Boucher (D-Va.) and Terry (R-Neb.) got a nod for their Universal Service Fund (USF) measure from the Independent Telephone & Telecom Alliance (ITTA) Mon. Although Congress is about to adjourn, the bill is likely to reemerge next year, and the group wanted to make clear its support, a spokesman said. The group sent letters to both congressmen expressing support for provisions that would allow carriers to use USF for funding broadband networks.

Prepaid phone cards fill a growing need, giving newcomers to the U.S. a low-cost way to place calls to their homelands, economist Robert Shapiro said in a report to be released today (Wed.). Shapiro, a former Clinton Administration official, said accelerating immigration since 1990 fuels need for low-cost international long distance service. Immigrants made up 41% of U.S. population growth 1990-2000 and 45% 2000-2003, and many have low incomes, he said in an interview. His study “is an analysis of how markets respond to gaps in basic services for lower income people,” Shapiro said. International calling isn’t covered by the Universal Service Fund Lifeline and Link-Up programs for low income consumers because until recently few in that demographic made international calls, he said. In his survey for IDT, whose telecom services include sale of prepaid calling cards, he looked mainly at price, and didn’t address USF reform, he said. But results indicate there may be no need to apply USF subsidies to international calling, thanks to a “market solution” - phone cards, Shapiro said. Prices for a 30-min. international call average $6.21 for prepaid cards, $7.59 for dial-around, $9.82 for landline and $17.13 for mobile service. Shapiro looked at 11 nations to which emigres frequently make calls, such as China, Mexico, El Salvador and the Philippines. Prepaid cards tend to cost less because they remove the “risk of nonpayment,” he said.