Hours before the Senate took up legislation seeking to ban Internet access taxes, President Bush promoted the ban as a way to stimulate broadband deployment (see separate story, this issue). The Senate late Mon. was prepared to take a procedural vote as the first step toward consideration of S- 150 by Sen. Allen (R-Va.). S-150’s main opponent, Sen. Alexander (R-Tenn.), said Senate Majority Leader Frist (R- Tenn.) has been urging compromise for months, but said talks appeared to have failed: “We simply have a difference of opinion.”
Although Rep. Barton (R-Tex.) is mainly an energy expert, he could help lead the next overhaul of telecom regulations if he takes over the House Commerce Committee Feb. 16. Committee Chmn. Tauzin (R-La.) resigned Tues., effective that day, and said he wouldn’t seek reelection. Barton is widely regarded as front-runner for chairman, and he acknowledged Wed. he was seeking the job. He has a limited track record on communications, but sources -- and his own comments -- indicate he would be likely to push for comprehensive telecom reform in 2005.
The 9 Democratic candidates for President seldom, if ever, mentioned the term “UNE-P” on the campaign trail, nor are local phone competition issues addressed. While telecom policy isn’t a central issue in the candidates’ stump speech, universal broadband frequently is championed. Former Vt. Gov. Howard Dean (D) also sparked a great deal of attention with recent comments suggesting a need for telecom “re- regulation.” Retired U.S. Army Gen. Wesley Clark has vowed to eliminate NTIA and fold its essential operations into the Commerce Dept.’s Technology Administration.
The most important part of the FCC decision issued Mon. on what services are eligible for universal service support (CD July 15 p1) is what the Commission chose not to do, observers said, as did the Commissioners themselves in separate statements issued as part of the order. The FCC voted to defer action on whether “equal access” should be on the list of eligible services. Placing it on the list would have required competitors, such as those that provide wireless service in rural areas, to offer equal access service before they could be eligible for universal service, a move they opposed but rural ILECs supported.
Low-volume, low-income consumers who depend on “lifeline” phone services will have to pay a “disproportionate” amount into the Universal Service Fund (USF) if the FCC adopts a connection-based contribution methodology, a new report by the New Millennium Research Council (NMRC) said. “A per-line charge would be harmful to the very population the fund seeks to help,” as low-volume long distance service callers, who represent 40% of consumers, would be “required to pay the bulk” of the universal service funding, said Jeffrey Kramer, senior legislative representative for AARP.
Proposed changes in the universal service fund (USF) contribution process (CD April 22 p1) would “unfairly impact low-use, low income consumers,” the Telecom Research & Action Center (TRAC) told the FCC. It strongly criticized the proposed connection-based methodology, saying it was “just plain wrong, and the FCC should abandon any further consideration of this unfair methodology.” TRAC urged the Commission to “carefully measure the adverse impact” on residential consumers of the proposal to alter how it assessed contributions to the USF. TRAC said the proposed change to a connection-based methodology from the current revenue-based one would shift much of the responsibility for USF funding to residential users from business ones and would increase USF rates for many average-use and low-use residential customers. It said the connection-based methodology, which would shift the assessment from the carriers to end users, would violate the Telecom Act by excluding some parties from contributing to the USF. TRAC Pres. Samuel Simon said under the connection-based system, high-volume residential or volume consumers and low-volume residential consumers would be charged the same flat fee: “This is hardly equitable or nondiscriminatory, given that business consumers, who typically make many interstate calls, would be assessed the same as residential consumers.” TRAC said low-income and low-volume users of prepaid wireless services also would be disadvantaged by the connection-based methodology because they were ineligible to receive the FCC’s “Lifeline” exemption from USF contributions and would be charged a flat connection fee regardless of the number of calls they made. In a separate comment, the National Grange, a rural advocacy organization, said a modified revenue-based methodology was the “most reasonable alternative for funding the USF because it [would] result in the fewest disruptions in the longstanding relationships among various companies and their consumers.” The Grange agreed with TRAC that connection-based methodologies would negatively affect low- volume long distance callers, residential customers and customers on fixed incomes that were “disproportionately represented in rural communities.” It said since one of the major purposes of the USF was to provide or enhance telephone services in high-cost rural residential areas, there was no “logic in any methodology that would effectively increase USF contributions from consumers who already reside in high cost rural areas.”
House Commerce Committee ranking Democrat John Dingell (Mich.) called on FCC to investigate AT&T’s recent increase in Universal Service Fund (USF) line-item fee for residential customers, but Chmn. Tauzin (R-La.) is considering congressional action rather than waiting for Commission response. Dingell urged FCC Chmn. Powell in letter dated Jan. 7 specifically to “open the books and records” of AT&T while raising questions whether long distance companies in general were using fee to “gouge” customers. Committee spokesman Ken Johnson said Tauzin “is giving serious consideration to holding congressional hearings” on AT&T decision to raise fees: “He will make a final decision after consulting with [Telecom Subcommittee] Chairman Upton [R- Mich.], but clearly we are very concerned about the impact the fee hike would have on consumers nationwide.”
As it warned in ex parte filing Dec. 13, AT&T raised monthly universal service line-item fee for residential customers to 11.5% starting first of year, from 9.9%. AT&T had asked Commission for permission to change formula used to determine contributions to Universal Service Fund (USF) because falling revenue had skewed it. It said problem was that FCC determined how much a company should contribute to USF using revenue from 6 months ago. When company’s revenue is falling, as AT&T’s is, using that contribution factor on lower current revenue results in larger per-customer fee, company said. It had asked for permission to base its contribution factor on projected revenue rather than 6-month- old revenue and had offered to true up contributions if there were shortfall once actual revenue total was available.