Wireline and wireless carriers lined up on opposite sides as comments accumulated Wed. at the FCC on capping USF subsidies to competitive rural carriers. The cap was recommended by the Federal-State Joint Board on Universal Service as an interim measure to slow the rampant growth of the Universal Service Fund. But the recommendation to apply it only to competitive eligible telecom carriers (CETCs), generally wireless carriers, has created a sharp division among rural carriers.

N.Y. residents would pay $150 million more into the Universal Service Fund (USF) if the contributions system is changed as proposed, consumer groups said Tues. Contributions are made by telecom providers, which charge consumers for them. Plans to shift from a revenue-based payment to a per-connection charge, such as one based on phone numbers, would boost N.Y.’s share from $407 million to $555 million, said the League of United Latin American Citizens, N.Y. State Alliance for Retired Americans and the Keep Universal Service Fund Fair Coalition. The connections- based proposal would “take a bad situation and make it even worse” because New Yorkers already pay more into the fund than they get back, the groups said in a press teleconference. Accusing “big phone companies” of pushing the connections system, the groups said the FCC shouldn’t move from “a consumer-friendly, pay-for-what-you-use tax on long-distance to a regressive per-connection charge that would be imposed on every phone line whether or not consumers made any long distance calls at all.”

Rep. Boucher (D-Va.) asked OPASTCO to promote his Universal Service Fund (USF) bill (HR-2054) on the Hill Wed. at the group’s legislative conference. The measure would revamp the USF program by widening the contribution base to include all those providing network connections, and expand services to pay for broadband. “We are in a hypercompetitive global market,” Boucher told OPASTCO members, stressing the importance of getting faster broadband deployment throughout the country, especially in rural areas. USF is under stress “today as never before,” Boucher said, adding that he and the bill’s chief co-sponsor, Rep. Terry (R-Neb.), have worked 3 years on “comprehensive” legislation to deal with problems in the system. Boucher’s bill has 11 co-sponsors, all but one Republicans. It has attracted support from AT&T, Qwest, Embarq and Alltel and NTCA, Boucher said, and the challenge is to encourage trade groups that like the bill to urge other lawmakers to sign up. “This bill will not be passed into law without your personal assistance,” Boucher told OPASTCO members. OPASTCO Pres. John Rose said the group applauds the bill but thinks it wise to pursue regulatory as well as legislative fixes.

FCC Chmn. Kevin Martin plans to proceed as soon as the fall on a proposal to change how telecom providers contribute to the Universal Service Fund, he said Mon. after a speech. Martin told reporters he is waiting for a U.S. Appeals Court, D.C., decision on a related universal service issue before teeing up a proposal to replace the revenue-based contribution system with one relying on phone numbers.

Along with a cap on universal service subsidies (CD May 2 p1), the recommendations from the Federal-State Joint Board on Universal Service late Tues. could hit wireless carriers with a 2nd reduction in their payments. The Joint Board urged the FCC to “consider abandoning or modifying the so- called identical support… rule.” The rule bases competitive carrier funding on the same per-line support given to the rural ILEC operating in the same area.

A hefty increase in the amount of money telecom carriers, and ultimately consumers, must contribute to the Universal Service Fund beginning in April has triggered renewed calls by industry groups for USF reform. The FCC late Thurs. raised the so-called “contribution factor” -- the proportion of interstate and international revenue that telecom carriers must donate to the fund -- to 11.7% from 9.7% for the 2nd quarter, starting in April. The industry money goes to USF subsidies.

Mass. consumers will benefit if the FCC shifts universal service contributions from a revenue base to phone numbers, a pro-numbers group said Fri., challenging predictions of harm to consumers by the Mass. Consumer Coalition and the Keep USF Fair Coalition (CD March 9 p10). Opponents used “incorrect data and ‘funny math,'” said the USF by the Numbers Coalition. The opposing group “exaggerates how high numbers- based assessments would be” and overstates what Mass. customers now contribute to USF, said USF by the Numbers, composed of AT&T, CTIA, NCTA, USTelecom, Verizon, VON Coalition, DSL.Net, GCI and IDT Corp.

Mass. consumers stand to lose $158 million a year if proposals to shift federal universal service contributions from a revenue base to a numbers or connections base are adopted, according to the Mass. Consumer Coalition and the Keep USF Fair Coalition. The groups, at a news conference in Boston, said the shift would hurt most the rural, minority, low-income and elderly phone customers who make few long distance calls. They said universal service contributions from Mass. would jump to $266 million a year on a connection- based assessment, from $108 million under the current system based on long distance revenues, assuming a fee of $1.50 a connection. The groups said those who use little long distance would suffer mammoth increases in their USF contributions, with the result that those who don’t make long distance calls will be subsidizing those who use lots of long distance.

More than a third of the country’s state regulators want the FCC to alter or kill the Missoula Plan for intercarrier compensation reform, according to comments filed late Wed. Most concerned voices speak for one of 2 types of states: (1) “Early adopters” that already implemented access charge reforms, resulting in higher consumer costs -- and don’t want to do so again. (2) “Payer” states where carriers put more into the universal service fund than they get back. They tend to be urban states with fewer rural LECs and see more payouts as unfair.

Some industry groups are using an FCC notice of proposed rulemaking on USF contribution methodology to argue for moving to a number-based method of calculating payments -- a question the FCC never raised, NASUCA claimed. The VON Coalition, CTIA and other groups said tweaks to current methodology will fall far short of needed reform.