The proposed USF contribution factor for the second quarter of 2014 will be 16.6 percent, the FCC Office of Managing Director said in a public notice Wednesday (http://bit.ly/On0Zsp). That’s slightly up from the first quarter factor of 16.4 percent. It’s also more than a full percentage point higher than the 2013 second quarter contribution factor of 15.5 percent. But it’s down from a 2012 second quarter factor of 17.4 percent. The proposed contribution factor will automatically take effect within 14 days unless the FCC takes action to intervene, the notice said. Carriers may not recover through a federal universal service line-item an amount that exceeds 16.6 percent of the interstate telecom charges on a customer’s bill, the notice said.
The FCC should consider “immediately” referring several issues to the appropriate federal-state Joint Board, NARUC told an aide to Chairman Tom Wheeler Friday, an ex parte filing said (http://bit.ly/1cuZqUi). USF contribution reform and a replacement model for implementation of Connect America Phase II should be sent to the joint board, NARUC said. The FCC’s “reluctance, through multiple administrations,” to classify VoIP service as either a telecom service or “something else,” has caused “significant costs to industry and rate payers,” NARUC said.
The Telecommunications Industry Association underscored the necessity of passing the FCC Process Reform Act (HR-3675) into law, and praised the House for its scheduled floor vote Tuesday.
Future FCC broadband progress reports are likely to continue to find it’s not being deployed on a reasonable or timely basis, regardless of actual levels of deployment of advanced telecom services, said industry observers in interviews this week. Most legal scholars we spoke to agree Verizon v. FCC (CD Jan 16 p1) gave the agency authority over broadband under Communications Act Section 706(a). That’s a big change from a common earlier read that a negative deployment finding under 706(b) was required to trigger the agency’s broadband authority. But the newfound independent 706(a) authority is unlikely to free the agency to find in 706(b) reports that broadband is being timely deployed, observers say.
Amid debates in states nationwide over deregulating the telecom industry, competing bills in Minnesota would take two very different tacks. One, proposed by the Minnesota Telecom Alliance (MTA), would limit the state’s regulatory authority for residential customers to those with a single traditional phone line, a move the state’s AARP said at a state legislative hearing Wednesday would “eliminate any meaningful oversight of the telecommunications industry in Minnesota.” Another bill, proposed by the Minnesota Department of Commerce, would add more regulations on rural call completion. NARUC and other organizations said they did not know of any states that have passed similar measures. Some observers said other legislation addressing rural call completion may follow.
The White House’s proposed budget for fiscal-year 2015 would include $375.38 million for the FCC and include provisions changing the USF program, create resources for “mission-critical systems to ensure that they are operational during a Continuity of Operations (COOP) event,” make a Do-Not-Call registry for phone numbers that public safety answering points use, get new equipment for the Enforcement Bureau and back information technology upgrades for the whole FCC, according to a document posted by the FCC (http://fcc.us/1hNuRs2). It would ask for spectrum license user fees, which NAB and CTIA object to. “The Administration proposes to direct that the FCC use either auction or fee authority to repurpose spectrum frequencies between 1675-1680 megahertz for wireless broadband use by 2017, subject to sharing arrangements with Federal weather satellites,” the budget document said. “Currently, the spectrum is being used for radiosondes (weather balloons). A new weather satellite that is scheduled for launch in 2015 will operate in adjacent frequencies. If this proposal is enacted, the National Oceanic and Atmospheric Administration would move the radiosondes to another frequency, allowing the spectrum to be repurposed for commercial use with limited protection zones for the remaining weather satellite downlinks.” The spectrum probably wouldn’t be repurposed for commercial use without this proposal, which would raise $230 million over 10 years, the budget said. The budget would include $1 million for upgrading FCC Form 477, to “drive an evolution of the national broadband map to further improve its utility as a key resource of broadband deployment for consumers, policymakers, researchers, economists, and others,” it said. The FCC would get $10.88 million to revamp USF. “More resources are required to continue the Commission’s work to modernize USF, implement reforms, increase its oversight of the newly-reformed programs and provide for critical enforcement of the rules,” the budget said. “This request will support funding for additional staff including, attorneys, economists, IT specialists, program managers, and technologists.” Congress must approve a budget.
The White House included provisions on school and rural broadband, spectrum license fees, the FCC’s USF and more in its proposed $3.9 trillion 2015 budget, partially revealed Tuesday in a 218-page document and requiring the approval of Congress (http://1.usa.gov/1c5yFWg). It would include a $56 billion Opportunity, Growth, and Security Initiative, which promises funding toward various goals in this sphere. The administration will roll out its budget in two phases, the first of which started Tuesday, and then post some other parts a week later. Congressional Republicans have already complained of the broader details.
The Independent Telephone and Telecommunications Alliance proposed an alternative regulatory framework for rate-of-return companies, in a filing Thursday (http://bit.ly/1gHLzHh). The voluntary plan would address “some of the concerns associated with eventually moving to model-based support by providing stability, certainty, and an adequate transition period,” ITTA said. In Phase I of the two-phase plan, USF support would be frozen at current levels while participants continue to implement intercarrier compensation (ICC) rate reductions pursuant to the framework in the 2011 USF/ICC Order. They would then move to a price cap-like structure with respect to regulation of rates for special access service. In Phase II, which would begin after the Connect America Cost Model has been modified “to reflect the unique circumstances of [rate-of-return] companies,” participants would accept model-based support and assume service and public interest obligations, in the same way as price cap carriers under CAF Phase II, ITTA said. “We think it’s a noteworthy proposal that should move the industry forward,” ITTA President Genny Morelli told us. “We're hopeful that others will feel the same way.” The primary benefit of the plan is “knowledge of your revenues,” said Trey Judy, director-regulatory at the Hargray Communications Group. “We get stability of revenues, we know the revenues that we will be able to count on to build out broadband,” he said. The plan will also make it a more feasible and easier process to acquire funding, Judy said. Western Telecommunications Alliance Vice President-Government Affairs Derrick Owens said he’s sending ITTA’s proposed plan to his policy committee and plans to discuss it with the committee early next week. “I know I have some companies who are interested in model-based support” or are thinking about what would happen,” Owens told us. But “right now the model that’s out there -- the CAF Phase II model -- doesn’t work for rate of return carriers, and so we're going to take a close look at what ITTA proposed.” CAF Phase II doesn’t work because “the inputs just don’t line up with the actual costs for rate-of-return carriers,” he said. “Any type of model that doesn’t focus on actual costs is difficult for us to accept.” From what Owens has seen from the ITTA proposal, “it at least puts something out there that we can talk to our members about,” he said.
The FCC is seeking proposals to bring advanced services to rural America, said Alexander Minard, Wireless Bureau Telecommunications Access Policy Division acting deputy chief. Non-binding expressions of interest are due March 7, and it’s “not really a high threshold,” to apply Minard said at an FCBA brown-bag lunch Thursday. “We want to see who raises their hand."
Broadband services should be required to begin contributing to the USF, a NARUC official told the FCC. Vermont Commissioner and past NARUC Telecom Committee Chairman John Burke told aides to FCC Chairman Tom Wheeler and Commissioner Jessica Rosenworcel that a NARUC resolution (http://bit.ly/1hTQPNr) passed at its winter meetings calls for expanding the USF contribution base (CD Feb 12 p9). The expansion would include “all communications services, including services such as broadband that are required to be offered in order to receive federal support,” wrote Burke in an ex parte filing posted Tuesday to docket 09-191 (http://bit.ly/1lm0U6j). NARUC didn’t take a position on whether the size of the fund should be increased.