The FCC, as expected, approved a cap on payments to competitive eligible telecommunications carriers under the high-cost Universal Service Fund program. Also as expected, wireless carriers voiced deep concern about the cap exerting a chilling effect on their efforts to participate in the USF program. Wireless attorneys said some carriers may challenge the order in federal court. An accompanying FCC statement issued Friday said the cap clears a path for further reform.

FCC Commissioner Robert McDowell announced Monday that he had cast an electronic vote supporting a cap on the high- cost Universal Service Fund. He became convinced that a cap is needed because the contribution factor - the proportion of long-distance revenue that carriers must contribute to the fund -- is again on the rise after declining last year. McDowell’s support gives Chairman Kevin Martin the deciding third vote in favor of a cap (CD April 28 p1). Commissioner Michael Copps previously voted against the cap. All the commissioners but Jonathan Adelstein have voted, sources said.

Subsidy caps and reverse auctions proposed to rein in a rapidly growing Universal Service Fund split wireline carriers by geography, in comments to the FCC. While Verizon urged a high-cost cap and auctions, rural groups said the reforms would undermine broadband deployment efforts. Meanwhile, wireline groups didn’t contest a proposal to kill the identical support rule. Wireline groups also expressed mixed feelings on a Universal Service Joint Board proposal to expand high-cost support to broadband and wireless.

The Internet voice industry is divided on a popular proposal to base universal service fund contributions by carriers on phone number count rather than interstate revenue. Vonage and other interconnected VoIP carriers support a numbers approach as making the fund technology- neutral. Others say a numbers world would force overhaul of business models at Google’s GrandCentral and other enhanced service providers. That shouldn’t be, Feature Group IP CEO Lowell Feldman said in an interview. Ten-digit phone numbers represent “1970 technology, not 2008 technology,” he said. “The numbers scheme is really a sleight of hand to try to force the industry to always use numbers.”

The Internet voice industry is divided on a popular proposal to base universal service fund contributions by carriers on phone number count rather than interstate revenue. Vonage and other interconnected VoIP carriers support a numbers approach as making the fund technology- neutral. Others say a numbers world would force overhaul of business models at Google’s GrandCentral and other enhanced service providers. That shouldn’t be, Feature Group IP CEO Lowell Feldman said in an interview. Ten- digit phone numbers represent “1970 technology, not 2008 technology,” he said. “The numbers scheme is really a sleight of hand to try to force the industry to always use numbers.”

FCC Chairman Kevin Martin said he didn’t delay FCC action on a Universal Service Fund cap or broader USF reform. Martin said a proposed cap is before commissioners but “I haven’t gotten signals from the commissioners that they're willing to end up moving forward.” For a second month, Martin detailed in a meeting with reporters all items on which he seeks votes (CD March 4 p1) at the next monthly meeting, more advance notice than has been agency practice.

The FCC late Friday approved purchase and privatization of Alltel by TPG Capital and Goldman Sachs Capital with a condition that concerned some commissioners. The order contains language capping Universal Service Fund payments to Alltel at 2007 levels, unless Alltel files cost data showing its per-line costs are less than the capped funding level or immediate compliance with the E-911 public safety answering point (PSAP) location accuracy standard.

The FCC should raise the income ceiling for LifeLine and Link-Up program eligibility so the programs are in line with a similar one subsidizing heating costs, the Iowa Utilities Board said in comments filed late Friday. The FCC voted in 2004 to raise the Lifeline and Link-Up eligibility ceiling to 135 percent of federal poverty guidelines, seeking comments on whether to raise it to 150 percent. The agency recently asked for comments to “refresh” that issue, which had lain dormant.

Hearings and letters to the FCC and NTIA on DTV consumer education will multiply in September, when Congress returns, Hill aides said in interviews this week. Senate Commerce Committee Chairman Daniel Inouye, D- Hawaii, told reporters he will convene a fall hearing on the DTV transition, saying a July 26 session convinced him “more needs to be done.” House Telecom Subcommittee Chairman Ed Markey, D-Mass., also will scrutinize consumer education efforts, an aide told us.

The National Association of Regulatory Utility Commissioners (NARUC) faced a heaping plateful of telecom resolution proposals at its summer meeting in New York City, set to open Sunday, July 22. Proposed resolutions address Universal Service Fund (USF) reform, VoIP number use, broadband over power lines, wireless termination fees, the digital television transition and IP relay fraud.