Several important communications-related items could pass Congress this week as it returns for a brief lame- duck session, industry and congressional sources said. The loudest buzz is on the universal service fund (USF) and the controversy over the FCC’s change in accounting mechanisms that could slow some E-rate payments and possibly lead to a rise in contributions, and several sources expected some efforts to push a legislative solution.

More groups are urging Congress to pass legislation that would exempt the universal service fund (USF) and E- rate programs from Anti-Deficiency Act (ADA) account requirements. Several groups joined NTCA -- which sent letters Mon. -- in sending letters to the Hill urging a legislative fix in the lame-duck session scheduled to start Nov. 16. By applying the ADA rules to USF, the FCC forced the Universal Service Administrative Company (USAC) to withhold millions in E-rate funds until cash flow issues can be corrected. These groups also said the accounting change could affect USF programs and force USAC to raise USF contribution levels. NARUC told Senate Commerce Committee Chmn. McCain (R-Ariz.) that USAC already has been forced to hold $460 million in E-rate funding. “It is our strong view that applying the accounting standards contained in these acts does nothing to stabilize the fund or promote the goals of universal service, and in fact jeopardizes the stability of the fund,” NARUC said. These groups urged action before the congressional session’s end. NARUC also said USF should also be exempted from the Miscellaneous Receipts Act, even though the Office of Management & Budget ruled that the Act’s not applicable to USF. NARUC noted that the Federal Highway Fund and Fish & Wildlife Service were also exempt from ADA. Joining NTCA and NARUC were OPASTCO, the Independent Telephone & Telecom Alliance, the Rural Telecom Group and the Western Telecom Alliance.

USTA is urging Senate Appropriations Chmn. Stevens (R-Alaska) and Sen. Inouye (D-Hawaii) to include language in omnibus appropriations legislation that would exempt the Universal Service Administrative Corp. (USAC) from the Anti-Deficiency Act. Stevens and Inouye will likely be next session’s Senate Commerce Committee chmn. and ranking Democrat. Congress will return for a lame-duck session next week, where completion of the remaining appropriations bill will be a top priority. The anti- deficiency act (ADA) provision will cause USAC to “radically change the timing” for distributing USF funds, USTA said. In a letter sent Mon., USTA Pres. Walter McCormick said the ADA requires USAC to have funds on hand before committing them to particular programs. The FCC’s ruling has already caused USAC to delay new E-rate funding commitments, McCormick said. To make future commitments, USAC may need to raise USF contributions to 12.5% of interstate revenue from 8.9%, he said. “Of deep concern to USTA is the fact it is possible that a similar interpretation of the applicable rules could be applied to the high cost, low income and Link Up programs. If that occurs, USAC would likely have to suspend the High Cost program for three to six months to collect adequate funds going forward. In addition, the first quarter Contribution Factor could climb to 25% of interstate revenues, significantly impacting our members and customer bills,” McCormick said: “Unless Congress acts quickly, this situation could further undermine the stability of the nation’s universal service fund. Meanwhile, OPASTCO sent an alert to its members urging them to ask congressmen and senators that serve their communities to support legislation to exempt the universal service program from the ADA. OPASTCO is part of a coalition of groups trying to resolve the issue. Another coalition member, the Alliance for Public Technology (APT), circulated a letter to other public interest groups, asking them to sign it. The letter asks for swift action by the House and Senate Commerce Committees to solve the problem. “This problem will have widespread consequences if it is not addressed immediately,” APT told other groups in urging them to sign: “We must not allow unintended administrative flaws to get in the way of a program as vital to our country as E-rate.”

The Universal Service Administrative Co.’s (USAC’s) outside board members are trying to get a legislative fix to solve an accounting problem (CD Oct 6 p1) that caused the $6.5 billion universal service program to lose money and jeopardized not only to the E-rate program but also high-cost rural telephony support. Although USAC can’t lobby Congress, its board has been meeting with state regulators, telecom industry associations, education groups and others to seek help in gaining legislation during the lame-duck session of Congress beginning Nov. 15. “The USAC board is reaching out to constituents, talking to people about a solution, trying to do as much as we can,” said USAC Chmn. Frank Gumper, a Verizon consultant: “We've got to do something to get the situation under control, to get the program back to normal.”

The Internet Innovation Alliance (IIA) officially kicked off Mon., as its leaders said “promoting VoIP services” and “educating people” were top goals of the new group. Unlike other VoIP organizations, such as the VON Coalition, the IIA will focus primarily on regulatory and economic rather than social policy VoIP issues, its leaders said.

VoIP providers are forming the Global IP Alliance to demonstrate to state, national and international regulators that the industry is capable of self-governance. The alliance, expected to be formally announced in the next several weeks, will be led by Pulver.com and consist of ILECs, CLECs, IXCs and pure VoIP providers from around the world. “We want to make sure we represent all points of view globally,” said Pulver.com Gen. Counsel Jonathan Askin, who will be exec. dir. of the alliance. He said the group has attracted “a lot of” U.S. VoIP providers and “a couple of” European ones, but he said “we need to get more Asian” companies. The initial members will include SBC, Global Crossing, Skype, KMC, Volo and Pulver.com.

Rural carriers urged the FCC to deny AT&T’s prepaid calling card petition,(CD Aug. 4 p4) saying their customers would be affected because the petition would decrease access charge revenue and the Universal Service Fund (USF). The letter to FCC Chmn. Powell was sent Mon. by the Independent Telephone & Telecom Alliance, NTCA, OPASTCO and Western Telecom Alliance. AT&T is seeking a ruling that its card is an information service, so its revenue shouldn’t be subject to access charges or USF. Noting AT&T hasn’t been paying the fees for several years, the letter said: “AT&T’s unauthorized self-deregulation disproportionately harms rural carriers and their consumers. Rural carriers rely on access revenues and universal service support to provide consumers in their regions with high quality, affordable telecommunications services… Additionally, AT&T’s claim that adding a recorded message transforms a traditional voice call into an enhanced service is illogical.” The group asked the FCC to act quickly and require AT&T to make retroactive payments: “Based on AT&T’s May 2004 10-Q filing, we calculate every month that goes by, AT&T is avoiding as much as $10 million in access charges and $2.3 million in universal service contributions. The FCC should not allow AT&T to chart its own course while it continues to deliberate these important issues.” The FCC reportedly has put the item on hold until after the election.

One of the few surprises at Wed.’s FCC mostly well scripted meeting was a strong statement from Comr. Copps warning that the FCC is still falling short on homeland security. Shortly after the session’s start, Copps -- responding to an FCC report on post-Sept. 11 communications changes that led off a meeting largely focused on homeland security -- addressed at length Commission shortcomings. Sources involved with emergency communications said Thurs. that issues remain, echoing in part Copps’ statements. Copps, sources said, delivered what he viewed as a moderate speech.

Wireline and wireless carriers alike opposed reseller TracFone Wireless’s request for universal service funding in N.Y., saying it would add pressure on the Universal Service Fund (USF) without benefits. But public interest groups said the entry of TracFone, which offers prepaid service, would help low-income consumers. TracFone had asked the FCC to give it eligible telecommunications carrier (ETC) status, needed to receive USF support, and to forbear from rules that require a carrier to have facilities of its own to receive that USF support.

Congress faces a choice between acting quickly to preempt states from regulating VoIP or taking more time to tackle the Internet service in a broader rewrite of the Telecom Act, House Telecom Subcommittee members said Wed. At a hearing on VoIP, industry witnesses disagreed. The preference seemed to be what some committee members considered impossible: A more comprehensive Telecom Act rewrite done quickly. House Commerce Subcommittee on Commerce Chmn. Stearns (R-Fla.) told us after the hearing, however, that the debate is more complicated than that. “Some of them [Commerce Committee members] don’t want to do anything at all,” he said. Full Committee Chmn. Barton (R- Tex.) didn’t take a position on the best approach, but he did predict “VoIP is going to be huge. I think it’s going to make cell phone expansion look like wagon trains.” Barton told the witnesses Congress will preempt states on VoIP regulation: “There should be only one, federal set of rules that apply to VoIP.”