FCC Chairman nominee Tom Wheeler outlined his perspectives and priorities Tuesday on the incentive auction and a host of other policy issues facing the commission at his nomination hearing before the Senate Commerce Committee. Wheeler said he would adhere to three governing policies to if confirmed: Consumer protection, competition and predictability. Wheeler said the “ability to know what the rules are, whether the rule is right or wrong ... is far more of an economic incentive.” Wheeler also faced pointed questions from committee members about his views on transaction reviews, USF reform, E-rate modernization, federal spectrum sharing, retransmission consent and net neutrality.

The U.S. wireless industry is once again becoming a duopoly, dominated by Verizon Wireless and AT&T, the Competitive Carriers Association said in response to a May 17 notice from the FCC Wireless Bureau asking for comments as staff write their annual wireless competition report. Verizon Wireless and AT&T disagreed. At issue is whether the upcoming report will be the fourth in a row in which the FCC declines to find that the wireless market is effectively competitive.

South Park Telephone Co. is “exactly the type of rural carrier that Universal Service funding was designed to support,” the Colorado Public Utilities Commission told the FCC in a letter Friday supporting the carrier’s request for waiver of various USF rules (http://bit.ly/ZYjZA9). The Colorado carrier serves a low-density, mountainous area of about 600 square miles (CD Dec 5 p14). “It is our understanding that the Commission has granted USF waivers to both Accipiter and Allband in the past where similar deployment challenges and high costs existed,” the PUC wrote. “We are mindful of the Commission’s desire to reduce the USF fund size and to transition funding in support of broadband, but hope that the Commission reaches the same conclusion after a full review of its petition and supporting materials filed by SPT.”

Another cash infusion is going to Adak Eagle Enterprises and its subsidiary Windy City Cellular to help them keep afloat while the FCC continues its long-pending review of their request for waiver of some new USF rules. In an order adopted Friday, two FCC bureaus gave the Alaskan carriers $40,000 and $33,000, respectively, for the next month. That’s the same amount they got per month when the commission first approved their “limited, interim relief” for six months starting December (CD Dec 26 p14). The commission needs the time to “fully consider” Adak and WCC’s May proposals (CD May 17 p16) for how to further reduce expenses, the chiefs of the Wireless and Wireline bureaus said in their order (http://bit.ly/13V5Naj). The order came the day after late night emails from the carriers’ attorney pleading for relief. “The AEE/WCC interim relief runs out on June 20 -- just four business days from now,” Patton Boggs partner Monica Desai wrote around midnight in letters to each commissioner’s wireline aide, and various agency staff (http://bit.ly/1bOlov8). Desai summarized the companies’ arguments in favor of a waiver, including the “steep cuts the companies have undertaken” and their investment of USF support into plant and personnel to provide “comprehensive” service. “We are hopeful that you will be persuaded to grant a waiver,” she said. An FCC spokesman declined to comment on whether the additional one month relief means an agency decision is expected within the month.

NTCA members are interested in a potential voluntary model-based option for USF support distribution, but have concerns, the association and representatives from several of its member companies told FCC officials Tuesday, an ex parte filing said (http://bit.ly/1447qml). Concerns include the utility and applicability of a five-year distribution term, given that the financing options available for investments in rural networks often involve a timeline of decade or two, and the ability to realize a payback on such investments can take even longer, they said. NTCA members also expressed concern with their inability to plan for 2014 investments or beyond given the uncertainty arising out of quantile regression analysis-based USF support caps, and continuing reconciliation of model data including study area boundaries.

The FCC’s waiver process for USF and intercarrier compensation rules is riddled with “onerous, burdensome, and costly shortcomings,” said Alexicon Telecommunications Consulting in a filing Wednesday (http://bit.ly/12pTmXg). The company submitted a report on behalf of its client, the Small Company Coalition, an alliance of rural telecom and broadband providers. Since the 2011 USF/ICC order, many impacted parties have filed petitions for waiver with limited or no relief, Alexicon said. The waiver process doesn’t give affected carriers an effective avenue to address shortfalls in the new rules, it said. “As a matter of good public policy, the FCC should have aimed for a net zero change in regulatory burden between the pre- and post-ICC/USF Transformation worlds,” Alexicon said: A decrease in funding would be OK if accompanied by a decrease in regulatory obligations, for instance. “This plainly has not happened,” the consultant said. A review of the waiver requests reveals that “the process is expensive, untimely, and in general not working properly,” Alexicon said. For example, it said, the Texas companies that sought waivers “met the substantial burden” required to file, but had their requests dismissed in a single order because of the existence of alternative remedies through a state process (CD May 1 p8). The Wireline Bureau “moved the goal posts,” Alexicon said, because nothing in the USF/ICC order mentioned seeking state relief as a prerequisite for obtaining a waiver of FCC rules. Alexicon urged the commission to “reconsider the rules causing the most harm” instead of relying on “an untested waiver process” that has an “ever-changing set of requirements."

The FCC’s 2011 USF/intercarrier compensation order faced attacks on all fronts Wednesday, as ILECs, CLECs, VoIP providers and state regulators filed hundreds of pages of reply comments responding to the commission’s defense of its rules. With heated rhetoric, the challengers accused the FCC of statutory overreach, failing to follow the Administrative Procedures Act, and making straw man arguments in its briefs to the court.

Rural regions will face bigger telecom and broadband funding challenges and states must act accordingly, said the professional services firm Balhoff & Williams in a 45-page white paper (http://bit.ly/1a51Qor) released Tuesday. “State legislators and public service commissions have a short period to affirm their long-standing commitment to terrestrial rural voice and broadband networks, and it will be difficult to recover if the networks fail or falter,” the firm said in a news release (http://bit.ly/ZK3ZBv). “The ultimate concern is the potential damage to local economies, emergency preparedness, and social environments in rural regions.” The paper highlights the importance of state USF funds, pointing to communities’ need for broadband access as well as declining federal support. The paper details the history of support companies receive and lays out the stakes associated with the funding challenges: “States must adjust their approach to funding service in high-cost areas (which historically have accounted for up to 75 percent of the total funding need) or risk leaving thousands of communities and millions of households without adequate broadband and voice services,” the document said, saying states must understand the urgency and many aspects of providing universal service. This challenge makes it more important for states to supplement funding with their own USFs and begin analyses immediately, Balhoff & Williams said. State commissioners Larry Landis of Indiana and Jim Cawley of Pennsylvania praised the paper’s findings, in statements. The paper “underlines the importance of State USF mechanisms for supporting the redefined concept of universal service for all Americans that now includes retail broadband access services, and for meaningfully sustaining the carrier of last resort (COLR) obligations of wireline ILECs in general and rural ILECs in particular,” Cawley said.

The FCC is expected to vote on a report and order on licensing, service, and technical rules for the H block, said a tentative agenda for the meeting announced by Acting Chairwoman Mignon Clyburn Thursday. The H block is potentially controversial because of the proximity of the bands (1915-1920 MHz and 1995-2000 MHz) to some PCS band spectrum. Also on the tentative agenda is a report and order on improving and streamlining the collection of broadband data (see related story above in this issue) and a declaratory ruling protecting customer proprietary network information on mobile devices. The CPNI item had been expected (CD June 6 p1). The commission is also slated to get updates on the incentive auction of broadcast TV spectrum and on the status of USF reform.

A Texas bill that’s one step away from law may disrupt a proceeding on rate rebalancing, officials said. The Texas Legislature passed Senate Bill 583 on May 25, which will change the course of a key telecom proceeding, many companies have argued. The law would reduce the PUC’s role in setting rates for certain companies. Both the PUC proceeding and the bill have implications for the Texas USF and its small and rural ILEC universal service plan, and stakeholders are attempting to reconcile changes that may be on the way. Earlier this spring, a multitude of parties sought to halt the rate proceeding, begun in January and carrying out a 2011 law, due to a variety of different bills proposed that would affect the state USF (CD March 13 p13).