Rural telcos want a wider contribution base for the universal service fund, plus support for broadband deployment, according to Wed testimony before the House Subcommittee on Rural Enterprises. Groups lauded the approach in a bill (HR-5072) by Reps. Terry (R-Neb.) and Boucher (D-Va.) that would require all 2-way voice services to contribute, create a fund for broadband deployment in unserved areas and put a limit on the fund’s growth.

Prospects are good for passage of a telecom bill the President can sign this Congress, House Telecom Subcommittee Chmn. Upton (R-Mich.) told a Tues. National Journal breakfast. “Their bill is not all that far away from ours,” Upton said, referring to a Senate telecom bill introduced Mon. (WID May 2 p3). That bill, especially its franchise provision, offers a “hook” to get something into conference where the 2 can be reconciled, Upton said.

Prospects are good for passage of a telecom bill the President can sign this Congress, House Telecom Subcommittee Chmn. Upton (R-Mich.) told a Tues. National Journal breakfast. “Their bill is not all that far away from ours,” Upton said, referring to a Senate telecom bill introduced Mon. (CD May 2 p1). That bill, especially its franchise provision, offers a “hook” to get something into conference where the 2 can be reconciled, Upton said.

Asked what they would do to increase broadband deployment, a panel of attorneys Tues. offered a panoply of ideas, ranging from tax incentives to better consumer education to more reliance on powerline communications. Some panelists at a symposium sponsored by Catholic U.’s law school Tues. also recommended more dependence on the marketplace and less on regulation, although others said regulators better be sure that marketplace remains open to competition.

FCC Chmn. Martin and others are using a “phony crisis” to justify a proposal to change how Universal Service Fund (USF) contributions are collected, the Keep USF Fair Coalition told reporters Mon. The group, which opposes Martin’s proposal of a flat collection method based on telephone numbers, said the current revenue-based method isn’t broken. Coalition Exec. Dir. Maureen Thompson released a report she said “debunks the hoax” that USF collection reform is needed. The report shows the long distance revenue base for USF contributions isn’t dwindling, as opponents argue, Thompson said. According to the report, long distance revenue base, $76.6 billion in 2003, is projected to be $78.9 billion in 2006. Projected revenues drop slightly in 2007 to $76.8 billion -- still slightly over the 2003 level, Thompson said in an audio news conference. If needed, the current revenue base easily could be expanded by making it more “technology neutral,” meaning revenue could be added from VoIP and other advanced technologies not directly contributing to the fund now. If that were done, the expanded revenue base for USF would be $104.5 billion in 2006 and $105.9 billion in 2007, Thompson said, calling that a more “common-sense” approach to enlarging the fund. The coalition opposes a numbers-based system because it might lead to higher fees for low-volume users of long distance service. Although contributions to the fund come from companies that offer long distance service through a percentage of revenue, the firms pass the fees onto users. The coalition’s announcement came on the eve of a Senate Commerce Committee hearing on USF contributions today (Tues.). The Pacific Research Institute (PRI) took advantage of today’s scheduled hearing to issue a call for more sweeping USF change. The think tank said the USF has “spiraled out of control,” giving “wasteful subsidies [to] entrenched local carriers.” Rather than expand USF to include contributions from high-tech services such as VoIP, Congress should target needy consumers with vouchers and add rules that “ensure public accountability and safeguard cutting-edge innovations,” PRI said.

The Universal Service Fund (USF) should be tied to all forms of communication, Senate Commerce Committee Chmn. Stevens (R-Alaska) said Tues. at a hearing on the fund’s contribution rules. “This technology is changing so fast” a law is needed that can work for some time, Stevens said. It doesn’t make sense for Congress to rewrite complex rules and then have to change them again because of technology changes. He said the Committee is determined to get a fair set of principles on “who pays in and who pays out” and to eradicate abuses in the program.

The FCC is using a “hoax” argument that the Universal Service Fund (USF) contribution process is broken to justify fee hikes, a citizen group charged Fri. The USF contribution formula “requires at most minor adjustments that can be accomplished without hefty increases in federal phone fees,” the Keep USF Fair Coalition said. The group opposes FCC Chmn. Martin’s proposal to move from a long distance revenue- based system to one based on how many telephone numbers a carrier serves, claiming it would penalize low-volume long distance callers. At a news event set for today (Mon.), the group will discuss “the phony USF funding crisis.” A Tues. Senate hearing will address USF contribution methodology. Progress & Freedom Foundation Pres. Ray Gifford said the coalition’s view “is contrary to established fact.” The long distance industry, which is the basis for the current contributions system, “is in decline and it makes no sense as a funding vehicle for universal service in the age of VoIP technology.” A PFF working group has endorsed per-line fees.

CTIA officials are promoting a new proposal for USF reform that combines the “numbers-based” approach to collections promoted by Chmn. Martin with a capacity-based assessment for large users. CTIA began circulating its version of USF reform the past few weeks, a spokesman said. CTIA Pres. Steve Largent highlighted the USF proposal Mon. during a lunch with reporters, calling it one of the Assn.’s top priorities.

Using a flat-fee system to support the Universal Service Fund (USF) would hit Latino customers with higher costs, several citizens organizations warned Thurs. A proposal supported by FCC Chmn. Martin would base carrier contributions to the USF on a flat, per phone number basis. Since carriers pass those costs onto customers, low-volume customers would pay the same as those who make a lot of phone calls, said the groups, part of the Keep USF Fair Coalition. The USF is now funded on a revenue basis, so low-volume customers pay less than high-volume users. Those who make few long-distance calls or use prepaid wireless phones will either have to pay more or start paying for the first time, said the League of United Latin American Citizens, the Latino Issues Forum and Consumer Action. “Other than older Americans, Latinos and Hispanics account for the largest number of Americans who would end up paying more under the Martin plan for USF” because they are very low income according to Census Bureau data, the groups said in a news release.

FCC Comr. Adelstein has “long supported a revenue approach” for raising money for the Universal Service Fund “because it’s easier to administer,” he told OPASTCO members Wed. at their winter meeting in Maui. That doesn’t mean he would reject proposals to move away from revenue, he told them. “I'm open to exploring all alternatives; I don’t reject any of these” proposals for reforming the USF contributions system, but none of them is “a panacea,” he said. The FCC is considering changing the way carriers contribute to the USF because of concern the current revenue-based approach no longer works due to changes in industry technology. Adelstein told the group universal service reform is one of the top 3 issues before the FCC this year. Others are intercarrier compensation and IP-based services -- and all 3 are interrelated. “I don’t know if we ever had such a big nut to crack” at the FCC, he said: “Each one of those 3 proceedings is a huge challenge and complicated on its own” and all have to be done in concert. During a Q-&-A session after Adelstein’s speech, rural telecom executives emphasized their concern about phantom traffic. Phantom traffic needs to be dealt with before the FCC takes on USF reform because “the basics need to be handled first,” said a telecom official from Minn. Adelstein said he agreed there was “a good argument for doing it first.” He told the group that “some people, I think, prefer to have this [issue] out there as a driver” to force consensus among supporters of various proposals. However, phantom traffic “may be harder” to fix if regulators wait, he said. In answer to another question, Adelstein said FCC rules require video content providers to offer nondiscriminatory access to their content at reasonable rates but the rules are limited. It’s “contrary to the intent” of the rules for companies to use their “vast hold on the market” to impede access to content, he said. One audience member asked if it made sense for rural carriers to keep “pouring” money into networks while intercarrier compensation and USF reform remained pending. Adelstein told him the FCC, and the Senate Commerce Committee, strongly support USF. “We can’t afford to let these networks go. They are critical to future economic competitiveness.”