House Communications Subcommittee Chairman Greg Walden, R-Ore., said there is “plenty of blame to go around” but the current data on the program “doesn’t paint a picture of success,” in his opening remarks. He said the Lifeline fund grew 226 percent since 2008 and, in 2012, the FCC spent $2.2 billion on the program. “Specifically, it spent $2.2 billion of your money, my money -- virtually every American’s money -- since the Lifeline program and the entire Universal Service Fund is paid for through a charge on phone bills,” he said. “We are spending large sums of money and probably squandering much of it.”

The FCC did not act within its discretion when it determined InterCall’s services were “telecommunications” service and required the company to pay into the USF, Arent Fox attorney Ross Buntrock argued for The Conference Group. The agency also did not act properly in issuing the order through adjudication, rather than through the notice-and-comment rulemaking procedures it must follow under the Administrative Procedure Act, Buntrock said.

Universal support for telecom around the world needs to be reviewed and cut down, said the mobile operators of the GSM Association Wednesday (http://bit.ly/ZhtgiK). It released a new report (http://bit.ly/10SIKvk) concluding “most funds are not succeeding in delivering their stated goal of widening access to telecommunication services and that alternative market-based solutions are more effective,” noting the amounts of unused funds in these USFs. There’s $11 billion “languishing” in these various funds unused, with India having a particularly high amount, it said. The report surveyed 64 funds, with over a third estimated to not yet give out contributions in any effective way. GSMA Chief Regulatory and Government Affairs Officer Tom Phillips called the USFs “a convenient form of taxation on the telecommunications industry,” which often “should be closed down and the balance of monies held used to extend access to mobile services to those unable to afford them, or those groups that live in particularly remote areas,” according to an association statement. The report discusses the November 2011 reform of the U.S. USF, particularly emphasizing the change to the FCC’s high-cost support and Lifeline program. It called the U.S telecommunications market “highly competitive.” Nearly half of the surveyed USFs were shown to be of limited activity or inactive, but the U.S. USF was judged active.

Commenters generally supported a process proposed by the FCC Wireline Bureau to let parties challenge census blocks misidentified by the National Broadband Map (NBM). The process would let parties challenge census blocks identified as eligible to receive Connect America Fund Phase II support, when the parties argue they're actually unserved by an unsubsidized competitor. Cable and wireless ISPs offered some tweaks to the process. USTelecom and several rural associations offered alternative proposals that would involve recommendations by state authorities.

Sprint Nextel and AT&T oppose a joint proposal put forward in the New York Public Service Commission’s proceeding on its state USF and intrastate access charges. The two major telcos have argued for months that intrastate access issues should be resolved in litigation, not as part of a multiparty negotiation. “There should be no further delays in reforming New York intrastate originating access rates,” Sprint said Friday in its comments to the PSC (http://xrl.us/bn9sqr), calling Verizon’s current proposal, introduced in November and attracting wide support, “an effort to delay reform further.” Parties who signed on to the November joint proposal include PSC staff, the New York State Department of State Utilities Intervention Unit, the Cable Telecom Association of New York, Verizon, Verizon Wireless, Frontier, Level 3, a group of smaller ILECs, Time Warner Cable, tw telecom and Windstream.

The November 2011 FCC USF order cost a rural Texas telco more than $500,000 in support, the company said. Hill Country Telephone Cooperative asked the Texas Public Utilities Commission for money from the state’s USF this fall to make up for the loss. “I've been in telecom for 34 years, and I find these days the most challenging of my career,” Hill Country General Manager Delbert Wilson told us. “This whole [FCC] transformation order has filled our industry with chaos and uncertainty."

The FCC mass-media agenda may be light in 2013, compared with work on USF and spectrum issues that will take up much of the eighth floor’s and many bureaus’ and offices’ attention, commission and industry officials predicted in interviews last week. They said Media Bureau staff may find the new year sharpens their focus on spectrum, with Chairman Julius Genachowski hoping to finish an order for the voluntary incentive auction by the end of next year. He would need rules for how to change the channels of stations that don’t agree to sell all or some of their frequencies.

Smart meters and smart grids should be excluded from assessable services that are subject to USF contributions, the National Rural Electric Cooperative Association, Edison Electric Institute, and Utilities Telecom Council told FCC Wireline Bureau officials Tuesday, an ex parte filing said (http://xrl.us/bnqofz). “Smart meters and smart grids are not interstate telecommunications or interstate telecommunications services, nor would the public interest be served by subjecting smart meters and smart grids to USF contributions,” the groups said. “Moreover, it would conflict with the regulatory authority of other agencies and would be administratively infeasible to collect USF from utility customers.” Excluding smart meters and smart grids would promote marketplace innovation, energy efficiency, reliability and security, they said.

Higher education is ready to work with the commission on a connections-based contribution system, or an adjusted revenues-based system, the nonprofit association Educause told FCC officials (http://xrl.us/bnodj9). Under a numbers-based regime, higher education would pay up to 20 times more in USF fees than under the current revenues-based system, Educause said. Without end-users from whom to recover these additional fees, the added funds would ultimately have to come from staff salaries, and reduced student services, the group said.

Recent news reports suggesting that the FCC may levy a new “tax” on Internet service are sparking a wave of negative reaction from both free market-oriented and public interest groups. Free Press has had longstanding concerns. On Tuesday, the free-market Heartland Institute joined in. But it remains unclear at this point how much support there is at the FCC for contribution reform or a move to broaden the program to place a fee on retail Internet access service.