McDowell Still Hoping to Move Ball Forward on Contribution Reform
FCC Commissioner Robert McDowell will continue to push for USF contribution reform, though he still has an “open mind” about steps to take next, he said in an interview. McDowell has long championed taking on the contribution side of USF (CD Jan 9 p1). The FCC approved an order in October addressing the distribution side of USF and an order on the USF’s Lifeline program in January. In May, the FCC released a 182-page further notice of proposed rulemaking on contribution reform.
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"It seems the most logical to try to broaden the base of support. In other words it’s better to take a little bit from a lot of people than a lot from a few, but it all has to be legally sustainable as well,” McDowell said. McDowell also said he would support efforts to develop a broader consensus, as proposed by a number of major industry players in their comments to the FCC (CD Aug 8 p1). “It always makes sense when making policy to have as broad a base of consensus as possible before implementing reforms and that would be my hope with contribution reform as well,” he said.
McDowell said he read through comments which were filed at the agency last month and in early August. “It seems that one common concern of commenters thus far is a fear that their ox will be gored through any comprehensive reform,” he said. “Currently, it’s interstate revenue that feeds the universal service system. That pool is shrinking and that model is unsustainable as the contribution factor rises. So, should the commission broaden the base of contributors, that means someone who is not paying today will be paying into the fund tomorrow. Naturally that’s going to create resistance from everyone not paying in today."
Genny Morelli, president of the Independent Telephone and Telecommunications Alliance, said her group made a proposal for comprehensive reform. “We would like to see the commission institute a new system for how contributions are allocated, who contributes and on what basis they contribute, but that said, I think, realistically it appears fairly unlikely that the commission will be able to tackle comprehensive reform this year,” Morelli told us. “There’s not a lot of time left before the end of the year. There didn’t appear in the comments and reply comments a strong consensus built around any comprehensive approach. There were a lot of comments filed on what the general principles should be to guide the commission in establishing a new system but not a lot on what that system should look like."
"While the comments, not unexpectedly, reveal a lot of differences regarding reforming the contribution system, I think it is incumbent on the Commission to keep moving forward,” said Free State Foundation President Randolph May. “Also, as importantly, I think it is incumbent on the commission not to fall backwards on the modest distribution reforms it adopted. The agency is under pressure to backslide, and it shouldn’t."
A former top FCC official said the easiest step for the FCC to take might be just covering retail broadband access, which would expand the base and allow some reductions in the contribution factor. “That sort of begs the question, Do you need to do anything else?” the lawyer said. “There’s a lot of discussion of problems and only a little discussion of solutions and even some of the solutions the FCC put out were kind of, frankly, half-baked,” the lawyer said. “It seems like there’s not a great sort of obvious path forward."
"I think there’s no chance they will do anything before the election,” said an industry lawyer who has pressed for reform. “After the election, there could be some flurry of work that nibbles around the edges of this. The big kahunas would be broadening the base to include residential broadband Internet access or changing the system from a revenues-based system. I think either would be unlikely unless Obama wins. And even then, [FCC Chairman Julius Genachowski] would have to decide that he wants to do something big on this front before leaving. Otherwise, it will wait for a new chairman to take over and get his/her agenda figured out, which typically takes a long time."
The Rural Cellular Association said the FCC can make “incremental but meaningful progress” by going after “'low hanging fruit’ -- i.e., relatively uncontroversial proposals that enjoy diverse support -- while also taking additional time to conduct a more comprehensive analysis of the more complex issues raised.” The FCC should “take immediate steps to broaden the contribution base by ensuring that all enterprise services that include a telecommunications component and all one-way Voice over Internet Protocol services are subject to assessment,” RCA said in a filing at the commission (http://xrl.us/bnms7q). “These proposals enjoy broad support in the record, are plainly within the Commission’s authority under Section 254(d) of the Communications Act, and will significantly broaden the contribution base.”