FCC Commissioner Mignon Clyburn said she opposed any amendments to the Senate’s budget resolution (S.Con. Res. 8) aimed at limiting USF funding for mobile services. Her comments came in a news release Friday. The amendments, which had not been voted on at our deadline, “fail to take into account how vital a program Lifeline is for low income families to stay connected, help secure and maintain jobs, and reach law enforcement in case of emergencies,” Clyburn said. She acknowledged that the program lacked proper controls when it was first implemented but “last year we took appropriate and significant steps to correct that,” she said. “The Commission is open to making additional adjustments where necessary, but in no uncertain terms should qualifying low-income consumers who have followed the rules, be refused service.” Competitive Carriers Association President Steve Berry also objected to any proposed amendments which would limit USF funding for mobile services in a separate news release. “This is not the time nor the place for consideration of policies that would fundamentally impact Universal Service Fund programs,” Berry said. “Eliminating USF support does not reduce the Federal Budget; it only harms rural and low income consumers.”

South Carolina has run into state USF funding issues with its ILECs. “The incumbent local exchange carriers ('ILECs') that receive disbursements from the State USF pursuant to prior Commission orders file an annual ILEC Data report with [the South Carolina Office of Regulatory Staff],” Chief Counsel and Director of Legal Services Nanette Edwards told the South Carolina Public Service Commission in a letter posted Friday (http://1.usa.gov/Yu7FGA). “ORS has observed that the forms completed by certain ILECs show that the monthly USF support amount exceeds their reported cost.” Edwards’ office “seeks guidance from the Commission as to what actions, if any, should be taken,” she said.

FCC Chairman Julius Genachowski said Friday he will leave the FCC in a matter of weeks. Industry officials told us they expect an announcement from the White House as early as this week on a replacement, with former CTIA and NCTA President Tom Wheeler still considered the likely front runner. In the interim, industry and government officials expect the White House to designate Commissioner Mignon Clyburn as the first woman to chair the commission, until a new permanent chairman is confirmed and in place.

Susan Crawford remained positive when discussing the exit of the FCC chairman on the morning he announced his departure. (See separate report in this issue.) “Julius Genachowski is an unfailingly gracious, kind man,” she said on stage after her Friday keynote at the SouthEast Association of Telecommunications Officers and Advisors meeting in Charlotte, N.C. “He catered to a situation in which he felt his freedom of action was quite strained.”

The FCC responded to attacks on several fronts, arguing in four briefs filed with the 10th U.S. Circuit Court of Appeals that it had authority to adopt the reforms in its landmark 2011 USF/intercarrier compensation (ICC) order. The commission defended Monday its new Access Recovery Charge for ILECs to recoup lost access fees, a rule governing ICC for CLEC-VoIP partnerships and a rule banning call blocking by VoIP providers. The reforms it adopted will let the commission meet its congressionally directed mandate to make broadband service available throughout the U.S., it said.

The state of Washington may change how it taxes telecom. Legislators introduced House Bill 1971 Feb. 27 and held a House Finance Committee hearing last week. Sponsored by one Democrat and one Republican, the bill would remove some tax exemptions from the law and draw millions of dollars more in taxes, as well as create a five-year state USF. The bill’s central purpose is tax parity, said House Finance Committee Chairman Reuven Carlyle (D), a bill sponsor, at the hearing. The state’s tax policies “are behind the age and the era,” he said. “We're also trying to recognize that issues like bundling ... really call us to try to get a much simpler, more consistent approach to taxation that is a better reflection of what’s happening in the marketplace."

Industry forces battered the tentative principles put forth by the NARUC Telecom Task Force, saying they're out of touch and potentially harmful, while consumer and rural advocates praised the way they elevate the state role. The association of state regulators assembled the task force at its fall meeting (CD Nov 14 p5) and offered up an initial statement of principles for comment, which were due March 8. The comments were posted Friday. The principles outline states’ roles in overseeing consumer protection, public safety and reliability concerns, competition, broadband access, affordability and adoption, interconnection, universal service and regulatory diversity, all in a way that preserves evidence-based decision-making (http://bit.ly/VFfk6k). NARUC President Philip Jones has said the task force’s end goal will be a new version of the association’s 2005 white paper on federalism, to be issued later this year.

The uncertain amount of paperwork the FCC requires is scaring Iowa telcos. The FCC has yet to firmly say whether it’s reducing the amount of paperwork required for companies that receive high-cost USF support, the Iowa Telecom Association told the Iowa Utilities Board in a Wednesday filing (http://bit.ly/WgAg2z). The federal deadline for filing paperwork is July 1, but “the comment period governing some of the section 54.313 rules and reporting forms [on paperwork reduction] extends until April 26, 2013, thus final approval of the section 53.313 rules and reporting forms may not be known until a date close to when the July 1, 2013, filings are due,” the association said. But there are rules in Iowa that call for the state’s telcos to file “duplicative” filings on May 1 as part of an annual report to that state commission, it added. The telcos ask that the Iowa regulators bump back the state deadline to July 1 to accommodate the uncertainty of the paperwork involved in the federal filing.

Several CEOs and general managers of small telcos wrote to President Barack Obama this week to highlight the effects of the FCC’s “flash-cut elimination” of Safety Net Additive (SNA) support in the 2011 USF/intercarrier compensation order. SNA has historically provided small rural telcos with USF support over a five-year period starting two years after qualifying investments are made. In its order, the FCC “unfairly eliminated the mechanism looking backward for carriers who made qualifying investments in 2010 and 2011 -- prior to the release of the FCC’s order,” the letter said. That provision “threatens to undermine steps taken in the past few years to deploy broadband-capable communications networks,” it said. “Although the amount of SNA support at issue is relatively small in the grand scheme of things,” the $5 million to $10 million in support that “has been yanked away” will make it harder to pay down Rural Utilities Service loans and harder to keep prices low for consumers, the letter said. “We ask that you please encourage the FCC to reconsider the retroactive, flash-cut elimination of SNA support and to address the risk it poses to our shared public policy objectives."

Gig.U Executive Director Blair Levin is “very supportive of the notion” of the FCC’s Gigabit City Challenge, announced earlier this year, he told the Institute for Local Self-Reliance during a Tuesday podcast (http://bit.ly/10H08Dy). In January, FCC Chairman Julius Genachowski urged that every state include at least one gigabit-speed city (CD Jan 22 p1). Levin managed the creation of the National Broadband Plan and has focused on helping to create such fast networks. “The question to me is what does the FCC do about it?” Levin said. “The FCC is an agency with immense powers in a variety of different ways, and I'd love to see them actively engaged in the pursuit of this goal and not just simply saying others should do it.” He said it “remains to be seen” how effective the initiative will be, citing the FCC’s announced workshops and a hope they'll invite “the right people” in evaluating policies across all government levels. “I don’t want to use universal service as a way of keeping everybody low,” Levin reflected later, noting it shouldn’t be used as an excuse not to innovate. “It troubles me when you look at the fastest cities in the world that none of them are in the United States because I think that’s where innovation is going to come from.” One key going forward will be to figure out how to ensure networks meet certain societal needs, which the free market may not do on its own -- needs such as 911 service, network resiliency during disasters and wiring schools, he said. The FCC’s November 2011 USF order contained good things but isn’t “a once-in-a-generation transformation of universal service,” Levin said, describing a coming transformation from the four major telcos bringing wireless 4G broadband into rural areas. He noted that “undoubtedly” the government will “need to look at the system again” when that happens.