A rural telecom company proposed a plan it said would let the FCC control Universal Service Fund growth without “drastic and untested reverse auctions.” In a letter to the agency, Panhandle Telecommunications Systems urged the FCC to continue letting multiple wireless competitors operate in rural areas but give them an “economic incentive” to use other wireless carriers’ networks where it isn’t economically feasible to build more facilities, PTS said. Wireless rivals’ universal service support should be based on their own costs, not the “identical support” process, which bases competitors’ support on incumbent local exchange carrier costs, PTS said. Under the plan wireless competitors would have to share their networks with other wireless carriers licensed in the same area and charge less than the standard roaming rate. This would discourage building more networks and lessen the drain on the USF, which finances those networks, the plan said. The proposal is by the competitive subsidiary of Panhandle Telephone Cooperative, making it more neutral than some, PTS said. Panhandle Telephone Cooperative is an incumbent local exchange carrier in Oklahoma, Texas and New Mexico. Its PTS subsidiary provides competitive wireless service in Oklahoma and Kansas and competitive local exchange carrier service in Texas. The reduced roaming rate would be based on “the national average cost to produce a wireless minute,” also called “local wholesale rate,” PTS said. This rate would be used to set USF support for wireless competitors, PTS said. A formula would be devised to let wireless competitors “calculate their own costs based on a national average cost without resorting to the highly- regulated and burdensome cost accounting methods currently required of some ILECs,” PTS said. The proposal includes a procedure for paying competitive wireline companies. They would have to do cost studies like those incumbent rate-of- return LECs do. “Since many rural CLECs are accustomed to preparing cost studies in their affiliated ILEC areas, they should be willing to prepare a similar study for their CLEC areas as well,” the letter said. The plan would cap USF support for a wireline CLEC at 1.5 times the support per line in the state where the company operates.
The FCC asked for comments on TracFone’s request for eligible telecommunications carrier status to provide Lifeline service in Pennsylvania. ETC status allows a carrier to get universal service funding. TracFone told the FCC it plans to seek USF money just for Lifeline and not to provide service in high-cost areas. Comments are due Feb. 8, replies Feb. 25.
The Kansas Corporation Commission became the third state commission to rule that interconnected VoIP providers must pay into the state universal service fund. The commission said making VoIP providers contributors is consistent with federal law and FCC policy since they already pay into the federal universal service fund. The KCC (Case 07-GIMT-432- GIT) said interconnected VoIP providers’ ability to separate traffic jurisdictionally doesn’t matter if the federal fund’s safe-harbor mechanism applies to their state contributions. The commission dismissed arguments that it’s preempted by federal law. Federal law and policy are silent on VoIP payments to state funds, and when New Mexico and Nebraska ordered interconnected VoIP providers to contribute to their state funds, they didn’t face preemption claims, it said. The KCC will hold workshops within 60 days to help set a formula for figuring VoIP universal service fund contributions and to settle other matters of follow-through.
LAS VEGAS -- Testing of devices designed to surf the Internet using the white spaces without causing harmful interference to TV broadcasts could take months to complete and analyze, FCC Chairman Kevin Martin Kevin Martin told CES here. Martin fielded audience queries on the topic during the session and afterwards from the press. Some industry and FCC officials have said in recent weeks they worry that consideration of the item may be on hold.
About $4.1 billion of the Universal Service Fund’s $6.6 billion disbursements in 2006 went to “high-cost” rural subsidies, according to a report issued Monday by the Federal-State Universal Service Joint Board. The staff report said schools and libraries support was $1.7 billion, low-income was $808 million and rural health care was $41 million. High-cost support increased by $300 million from the year before, which the report attributed to more subsidies going to competitive carriers. The USF report tracks a variety of telecom trends and is the only document that includes statistics from all incumbent local telephone companies in the U.S., the FCC said in a news release accompanying the joint board report. For example, the report shows Bell access lines declined to about 118 million in 2006, compared with 127 million in 2005, while fiber installations grew.
FCC action on early termination fees (ETFs) is expected early in 2008, with the commission expected to refocus at least in part on telecommunications issues following a major fight over media consolidation. The Universal Service Fund, 700 MHz auction, future use of the broadcast white spaces, and 800 MHz rebanding also are expected to get agency attention.
The Benton Foundation blasted the Bush administration for failing to achieve universal broadband access by 2007. Mostly completed in September, the report was held until now so it could include material on a November Joint Board on Universal Service decision to include broadband as a supported service, said Charles Benton, foundation CEO and founder. The board ordered the FCC to create a specific broadband fund under the program, a “critical first step,” but not enough unless the “FCC acts immediately,” the report said. And the $300 million proposed annual broadband fund is “woefully inadequate for tackling the challenge at hand,” the report said. With broadband deployment costing $1,000 a line, a $300 million yearly fund at most would add 300,000 broadband connections, boosting penetration “only about 1 percent,” the report said. The National Exchange Carrier Association pegs annual costs at closer to $3 billion. The Bush administration should have drafted a strategy for universal broadband deployment, the report said. Nearly 60 percent of households with incomes above $150,000 have broadband, compared with less than 10 percent of households with incomes below $25,000. Broadband deployment should be covered under the Universal Service Fund, especially for rural areas, the report said. “Making the transition to broadband can, over the long run, save consumers tremendously,” the report said. Broadband service costs could be lowered through a “modernized” USF program and policies allowing municipalities to offer the service, it said.
FCC Commissioner Robert McDowell on Thursday questioned the need to vote for a proposal to put an interim cap on Universal Service Fund subsidies for competitive telecom companies. The commission already may have acted by default on the interim measure in setting caps as a condition to its approvals this year of several acquisitions, McDowell told reporters at a press event. “The same goal may already have been accomplished,” he said. It might make more sense to move directly to long- term USF reform, he told reporters. Asked if his comments indicate he would vote no on the interim cap, McDowell said, “the question is have we already voted?”
The FCC should move quickly to approve an interim cap on universal service support to competitive rural carriers, so it can address longer-term reform, TracFone Wireless said in an ex parte letter filed Tuesday at the FCC. The company wants an interim cap on both incumbent and competitive carriers, but “time is of the essence” and a cap on competitive carriers might be approved faster, it said. It’s been seven months since the Federal-State Joint Board on Universal Service recommended capping competitive carriers to halt Universal Service Fund growth, TracFone said. By acting now on that proposal, the FCC could stabilize the fund and advance wider reform, it said. TracFone isn’t a facilities- based provider, so it doesn’t get USF support. But it seeks status as an “eligible telecom provider” so it can get universal service money for providing Lifeline service.
The proportion of long distance revenue carriers must contribute to the Universal Service Fund in first quarter 2008 fell 10.2 percent from 11 percent this quarter, the FCC said Friday. To get the “contribution factor,” the agency divides projected carrier revenue by expected USF subsidies for the quarter. Of an estimated $1.9 billion in first 2008 quarter subsidies, $1.14 billion is for the rural high-cost program, with $535.6 million for the E-rate program, $209 million for low-income support and $25 million for the rural health-care program.