Universal Service Fund subsidies should be automatically available to rural carriers using satellite broadband, Hughes, Inmarsat and the National Rural Telecommunications Cooperative said. In comments on the FCC’s three plans to revamp USF (see separate report in this issue), the groups condemned a proposed rule that would require a commission waiver for USF recipients before they could use satellite broadband to fulfill new deployment requirements. “The economic challenges of deploying terrestrial-based communications infrastructure will mean that it could take many years for customers in hard-to-serve areas to have access to terrestrially provided broadband services, and in some cases terrestrially provided services will never be available,” Hughes and Inmarsat said in joint comments. “These customers deserve the option of being able to choose satellite-delivered broadband, even if it is available at slower speeds than the speeds that may be available using terrestrial-based services.” The satellite companies supported the FCC’s proposed USF contribution proposal, which would base payments to USF on the carrier’s quantity of residential phone numbers. However, the companies “are very concerned that the proposed contribution rate of $35 per assessable business connection over 64 kbps would have a punitive effect on satellite broadband providers who have lower user to connection ratios than terrestrial broadband providers,” they said.

Largely reiterating past arguments, telecom interests fought over when and how to revamp the Universal Service Fund and intercarrier compensation. In comments last week, carriers, states and others dissected three FCC overhaul plans, known as Appendices A, B and C. Appendix A is FCC Chairman Kevin Martin’s Oct. 14 revamp plan, B is a proposal addressing USF only, and C a revised Martin plan incorporating changes sought by the Organization for the Promotion and Advancement of Small Telecommunications Companies and other groups. Earlier this month, Martin said a revamp this year is unlikely (CD Nov 19 p2). But other commissioners have said they want to vote on an order at the December meeting. (See separate story on the FCC agenda in this issue.)

With the proper revisions, major cable and wireless associations said, they would back FCC Chairman Kevin Martin’s plan to overhaul the Universal Service Fund and intercarrier compensation. Meanwhile, Qwest, congressmen and consumer advocates took sides. The FCC plans to vote Nov. 4 on the Martin plan. Sunshine was to have gone into effect Tuesday (CD Oct 28 p2).

The FCC seems to be setting up intercarrier compensation and Universal Service Fund overhaul proposals for its Nov. 4 meeting. Whether Chairman Kevin Martin will propose a complete overhaul there was still fluid, sources said. A court order gave the commission until Nov. 5 to explain the statutory basis for its ISP-bound traffic compensation regime. Industry officials said the Wireline Bureau is soliciting comments on several comprehensive proposals.

The FCC should use phone numbers for Universal Service Fund contribution, said the USF by the Numbers Coalition. Members from AT&T, Verizon, CTIA, USTelecom and IDT met last week with Amy Bender, aide to Chairman Kevin Martin. Group members not represented at the meeting are NCTA, GCI, Megapath and the VON Coalition. The FCC assesses USF contributions based on a carrier’s interstate revenue. The coalition wants contributions based on how many phone numbers a carrier owns. That would be easier, provide certainty to consumers and stabilize USF funding, said the coalition.

The FCC will reform intercarrier compensation and the Universal Service Fund together, perhaps this year, Tom Tauke, Verizon executive vice president, told reporters Thursday. “If [reform is] going to happen, it’s going to happen in a package,” Tauke said. Two months ago, he doubted intercarrier reform could happen this year, he said. Taking compensation together with USF distribution and contribution is “a lot to swallow,” but court pressure and growing industry consensus makes him optimistic, Tauke said. Now is the “last best chance” for the telecom and technology sector to ally and reform an “unsustainable” system, he said.

NCTA said it generally supports a proposed universal service bill introduced by the ranking members of the House Commerce Committee and Telecom Subcommittee. “We believe it provides a solid foundation” on which to begin discussions, said NCTA President Kyle McSlarrow. The group supports an overall cap on the size of the fund, approves the bill’s proposal asking the FCC to consider alternatives to current rules on contributions, and prohibit assessments on broadband transmission or Internet access services. NCTA has “long supported basing provider contributions to the universal service fund on assignment of telephone numbers rather than the current revenue-based contribution method,” McSlarrow said. The reverse auction provision, however, includes “myriad significant details that would need to be resolved in order to ensure” the auctions promote broadband development in “truly” high-cost areas. “We believe that the focus of USF support should continue to be on the provision of voice services, with any additional supported services limited to schools, libraries and health care providers,” McSlarrow said. While government can play a role in helping to widen broadband deployment, those goals are best achieved with “tax credits or tax incentives to providers that build out in unserved areas, rather than by increasing the universal service burden on voice service providers… or by interfering with the market by providing subsidies in ‘unserved’ areas,” he said.

Rural wireless carriers made clear in reply comments on three Universal Service Fund rulemaking notices that the FCC could face legal challenge if it kills the identical-support rule. VoIP carriers and American Indian tribes, meanwhile, entered the debate over a USF overhaul, urging a broadband- specific fund. They had sat out an earlier comment round.

The FCC sought comments on an Ascent Media Group request to reverse a Universal Service Administrative Co. decision. USAC refused to accept an amended August 2007 Form 499-Q used to determine Ascent’s universal service contribution. Ascent said it inadvertently gave its entire projected revenue instead of projected billed USF revenue, but didn’t realize the mistake until after the 45-day revision window. Comments are due May 13. Replies are due May 20.

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.”