Congress voted Tuesday to delay for two months the 10-year, $1.2 trillion sequester as a part of the legislation to avoid the so-called fiscal cliff (HR-8). The legislation directs the president to on March 1 order the automatic, across-the-board spending cuts which were originally scheduled to kick in on Wednesday. The FY2013 spending reductions will then be “evaluated and implemented” on March 27, the legislation said. The new deadline provides Congress with less than three months to permanently end or further delay the sharp cuts which threaten federal budgets.

As 2012 draws to a close, federal agencies were preparing to dramatically reduce their expenses, a spokesman for the National Treasury Employees Union (NTEU) said last week while lawmakers and the White House struggled to avoid a Wednesday funding sequester deadline. The Office of Management and Budget and Office of Personnel Management told federal union groups Friday that “while they are still hopeful that a deal can be reached ... they are taking prudent action so agencies can be prepared for this contingency,” said NTEU President Colleen Kelley in a statement. NTEU represents FCC and Commerce Department employees, among others. Spokespeople for OMB, FCC, FTC, NTIA, departments of Justice and Homeland Security, U.S. Patent and Trademark Office and RUS did not comment.

The track record of wireline carriers in Phase I of the Connect America Fund (CAF) program versus that of wireless carriers in Phase I of the Mobility Fund demonstrates that wireless deserves more funding in the revised high-cost USF program, the Competitive Carriers Association said in comments filed at the commission. On Nov. 27, the FCC sought comment on Phase II of the mobility program, which will provide up to $500 million each year in continuing support. CTIA also offered suggestions, while acknowledging that comments were tough to write since the program is still taking shape.

The FCC provided extra USF money for Windy City Cellular and Adak Eagle Enterprises, two eligible telecom carriers serving remote parts of Alaska. “We provide this limited, interim relief because we find that it is necessary to ensure continued service in the carriers’ respective service areas during the pendency of our review,” said an order by the Wireline and Wireless bureaus (http://xrl.us/bn7hbg). “While their petitions have been pending, WCC and AEE have taken steps to reduce their expenses, and our decision to provide interim relief reflects this fact.” Under the FCC’s USF transformation order, ETCs serving remote Alaska got special treatment, with their support capped at $3,000 per line per year, which is equivalent to $250 per line per month, starting Jan. 1 and extending for two years. Both ETCs filed petitions for waiver, seeking higher reimbursement rates because of their unusually high costs. Under the order, WCC will get a fixed $40,104 per month and AEE $33,276 per month for an additional six months or until their waivers are ruled on by the FCC.

Colorado has adopted “a pretty arbitrary method” of determining high-cost support for telcos, said Pete Kirchhof, executive vice president of the Colorado Telecommunications Association (CTA), which represents 25 small companies. The Colorado Public Utilities Commission adopted a new set of telecom rules last Monday after months of deliberation (CD Dec 18 p9). They've already provoked concern from CenturyLink, smaller telcos and a 911 authority. The order, effective this Monday, will kill retail regulation in regions deemed effectively competitive, cap the state’s high-cost USF and assert that Internet Protocol-enabled service falls outside the PUC’s jurisdiction except in emergency communications. The order is “what we feared, to be honest,” Kirchhof told us, citing telcos’ worries about lower levels of support and burdensome processes of appealing effective competition rulings.

The FCC will provide broadband for nearly 75,000 low-income people who lack service, in 14 projects across 21 states and Puerto Rico as part of its Lifeline broadband adoption pilot program. It'll run 18 months, start Feb. 1 and subsidize service for a year, the Wireline Bureau said Wednesday (http://xrl.us/bn68f8). The bureau will collect and analyze data in the final three months, it said. The variety of projects will include five wireless broadband projects, seven wireline broadband projects and two that'll offer wireline or wireless, the FCC said. Seven will test discounted service in rural areas, including two on tribal lands, and seven in urban and suburban areas. Tested variables will include use of digital literacy training, equipment types, subsidy levels, speed ranges and usage limits, the bureau said. Lifeline has saved more than $210 million in 2012, the bureau said, saying that’s higher than its target. The FCC reiterated its Lifeline reforms, such as eliminating Link-Up subsidies and putting in place measures to limit one Lifeline subsidy per household. The broadband adoption pilot will cost $14 million, to come from the overall Lifeline savings, the commission said. Rep. Doris Matsui, D-Calif., said in a separate news release she was pleased with the FCC’s expansion of the Lifeline program for universal broadband adoption. “We must close the digital divide in this country and the FCC moving forward today to establishing a broadband adoption pilot program through the USF will move us closer to that goal,” she said.

The FCC should revise the one-year limit on a USF contributor’s ability to re-file its FCC Form 499 and obtain a refund from the fund, CTIA officials said in a meeting with Nicholas Degani, aide to FCC Commissioner Ajit Pai. “CTIA urged the Commission to replace the current rule with a reasonable, symmetrical deadline for revised Form 499 filings,” said an ex parte filing on the meeting (http://xrl.us/bn6wir). “As CTIA has previously explained, the one-year deadline set in the Bureau Order1 is unfair, procedurally defective, and arbitrary and capricious.” CTIA complained in particular that the rule places no time limits on revisions that increase a filer’s contribution.

Colorado capped its high-cost USF fund, plans to deregulate competitive parts of the state and wants to keep its hands off Internet Protocol services. The Colorado Public Utilities Commission adopted a rulemaking order (http://bit.ly/UMLLdB) Monday, and it’s effective Dec. 24. The deadline for any appeals for rehearing, reargument or reconsideration is Jan. 14. The order follows a series of hearings and comments throughout the fall (CD Sept 10 p5). The proceeding began in August.

The FCC approved an order reforming the smallest of the four USF programs, the Rural Health Care Program, creating the new Health Care Connect Fund. The program is the last of the four to be tackled by the commission. The changes are aimed at expanding provider access to broadband especially in rural areas and encouraging the creation of state and regional broadband healthcare networks, officials said Wednesday. The order builds on lessons learned from a pilot program approved by the commission in 2008. The order also creates a pilot program slated to start in 2014, to study how the program could be expanded to optimize care for patients in skilled nursing facilities. A commission news release said the order removed “artificial limitations on technology and provider type that hampered legacy universal service health care support,” requires participants to contribute 35 percent of the costs “increasing fiscal responsibility” and supports broadband services “purchased from diverse communications providers, while also allowing health care providers to construct new broadband networks when that is the most cost-effective option.” Parts of the reform efforts proved controversial. Commissioner Robert McDowell would only concur with parts of the order. McDowell complained that the program rules only require that a “majority” of consortia members be rural. “While some rural health care participants may benefit by using the experts and specialists that non-rural participants can offer as members of a consortia, simply requiring a ‘majority’ of the members to be rural is insufficient,” he said. “The intended focus of this USF program should be for rural America, that is, parts of the country that typically are far from hospitals.” McDowell also said he was pleased that the program remains capped at $400 million per year. “I am not convinced that the annual demand will stay below the cap in the foreseeable future, as projected in this order,” he said. “As such it would have been more prudent for the commission to include in this order a contingency plan to allocate priorities if the program does approach the spending cap.” McDowell also opposed the new pilot for skilled nursing facilities. “We certainly shouldn’t be laying the foundation for inflating the program before assessing the effect of the other reforms we adopt today,” he said. Commissioner Ajit Pai dissented to parts of the order. Pai was also concerned about the new pilot program. “The order recognizes that, ‘on this record,’ this program may not comply with Section 254 of the Communications Act,” he said. “That provision directs us to support ‘health care providers,’ and yet the order reaches ‘no conclusion about whether or under what circumstances a [skilled nursing facility] might qualify as a healthcare provider under the statute.’ It’s also fair to say that we have not had the chance to assess how the reforms we implement today will work on the ground and how much the new Health Care Connect Fund will cost.” Pai also questioned budget caps in the order. “The order defers hard decisions about enforcing these caps,” he said. “This leaves in place the current first-come-first-served system. As a result, everyone who submits an application will get fully funded, until one day, they won’t.” But Commissioner Mignon Clyburn was more enthusiastic. “This marks the fourth tine under the leadership of Chairman [Julius] Genachowski that the FCC has voted to reform a Universal Service Fund program as recommended by the National Broadband Plan.”

The FCC Wireline Bureau seeks comment on a request for stay of the 2012 Wholesaler-Reseller Clarification Order. U.S. TelePacific Corp. filed the request pending partial reconsideration of the order, to the extent it requires USF contributions on the transmission component of broadband Internet access. Comments in WC docket 06-122 are due Jan. 9, replies Jan. 24.