Any USF reform should encourage participation by new technologies, including satellite broadband, the Satellite Industry Assn. told the FCC. The Commission fielded comments Wed. on using reverse auctions to improve USF distribution (CD Oct 12 p6). Reverse auctions could “reveal various providers’ relative cost” of serving rural areas, SIA said, adding that satellite providers can serve rural communities efficiently and cheaply. “Satellite technology is in many respects ideally suited to delivering service to rural and high-cost areas,” SIA said: “A customer in rural Montana can get the same satellite service as a customer in downtown Chicago.” Basing universal service support on technological efficiency would cut the fund’s burden, as variations on the reverse auction have in Chile, Colombia, India, Peru and S. Africa, SIA said. The key to reverse auctions’ success is ensuring that entrants with new technologies -- including satellite providers -- can participate in the program, the satellite group said. To ensure satellite providers can participate effectively in reverse auctions, SIA said, the Commission should: (1) Not award set-asides, credits or other favorable treatments to incumbents. (2) Let satellite providers that provide broadband services on a non-common carrier basis keep that status. (3) Avoid restrictions such as service areas that give certain providers an edge over others. SIA also pushed for targeted USF pilot projects to prove satellite providers’ ability to bring telecom service to remote areas. “Reverse auctions could be used to award contracts to provide service to areas or individuals that currently lack access to any communications services,” SIA said. Pilot projects could focus on specific areas -- some tribal lands, for instance -- historically unserved by traditional telephony, SIA said.

Rural carriers are raising red flags about what could happen to some of the smallest carriers if the FCC institutes reverse auctions to make USF distribution more efficient. Comments varied widely on this and other proposals to restructure the distribution side of USF.

The FCC hastened reimbursement to an Alaskan telecom company for service to rural health clinics to spare the carrier money difficulties. The Wireline Bureau ordered immediate reimbursement under the Rural Health Care (RHC) universal service program, waiving rules requiring Unicom to wait until at least Nov. Unicom delivers broadband to the Yukon-Kuskokwim Health Corp. (YKHC), which runs clinics in small Alaskan villages. RHC reimbursement comes as a credit against a carrier’s Universal Service Fund contributions, so the reimbursement isn’t applied until late in the year, after the carrier’s USF contributions are calculated. But Unicom already has “a substantial credit” against its USF contributions because it paid out so much to support the RHC program, the bureau said. “Unicom would be owed millions of dollars by the time it would be reimbursed in full,” the FCC said: “Unicom is a small carrier but an active participant in the rural health care program and thus has one of the largest differentials between what it pays into and receives from the USF.” Adhering to payment rules would mean hardship for the company and put rural health care in Alaska “at risk by jeopardizing deployment of Unicom’s terrestrial broadband system,” it said. Lack of reimbursement also could put Unicom in breach of contract with the YKHC and subcontractors, the agency said.

The FCC should adopt rules for the coming 700 MHz auction that offer licenses in small geographic areas to accommodate bids by small carriers, said rural wireless groups. The FCC is considered likeliest to offer some spectrum in cellular market area (CMA) chunks - the smallest geographic licenses sold in the recently concluded AWS auction.

The S.C. Office of Regulatory Staff asked the PSC to let it keep running the state universal service fund. The staff agency -- part of the PSC until made autonomous by a 2004 S.C. law - during the summer solicited bids from outside vendors to run the fund and audit telcos’ compliance with the program, in the belief that 3rd parties could save the state money. But bids were far higher than expected. The agency told the PSC its people can manage the fund and audit telco compliance for less than any outside vendor. If the PSC agrees, the only USF aspect involving outside vendors would be audits of the staff’s fund administration.

E-rate and disability constituencies are solid in support of HR-5252, representatives of teachers, librarians and special needs consumers said Fri. on an Alliance for Public Technology (APT) panel. Speakers held out little hope the bill will pass before a lame duck session, but declared it would improve on current policy.

Senate Commerce Committee Chmn. Stevens (R-Alaska) swore he won’t section off the video franchising portion of his bill to ease its passage -- perhaps as an amendment to another bill. “We're going to deal with our bill as it is. We've got to get it to conference,” Stevens told media after a Progress & Freedom Foundation lunch. “Absolutely not,” Stevens said firmly, when a reporter asked if he'd consider attaching his bill to an appropriations bill: “This bill is going to be considered on its own merits.”

Communications Services Integrated (CSI) agreed to pay $250,000 to the U.S. Treasury to settle an FCC enforcement proceeding against the company for failing to make contributions to the Universal Service Fund. The payment is less than the $462,638 that the FCC originally planned to fine the telecom provider. The FCC said CSI justified a request for a “downward adjustment.” In addition, the company has submitted all “worksheets” required of USF contributors and has paid past due debts, the FCC said.

The FCC is working with OMB on a written interpretation of rules that would exempt the Universal Service Fund (USF) from Anti-Deficiency Act accounting rules, Senate sources said. ADA rules require funding to be in place before expenditures are made, which is difficult in a program like USF. Sen. Rockefeller (D-W.Va.) asked FCC Chmn. Martin about the status of negotiations with OMB at Martin’s renomination hearing last week. Martin told Rockefeller that he could provide details on the talks “soon.” Sources said the FCC had OMB’s oral assurance it would exempt USF from the accounting rules when the nomination of FCC Comr. McDowell up for Senate consideration. That was to be followed up with a written agreement later, making unnecessary legislation backed by Rockefeller and other senators to make the exemption permanent, Senate sources said.

The FCC levied a $237,992 fine against Telecom Management Inc. (TMI) for not contributing to the Universal Service Fund or paying regulatory fees. The Me.-based company offers long distance plans, toll-free numbers and phone cards by reselling Global Crossing services. The FCC said TMI didn’t contribute to the USF “despite having collected several hundred thousand dollars in USF fees from its customers.”