Wireline carriers are arguing over a proposal that would expand eligibility for incremental support funding under the Connect America Fund Phase I program. The American Cable Association and the NCTA came out Thursday against the proposal introduced in March by the Independent Telephone & Telecommunications Alliance, CenturyLink, Frontier and Windstream (CD Mar 8 p10).

The U.S. Department of Agriculture has asked the FCC to be flexible in its system for waivers of the USF/intercarrier compensation order, so the Rural Utilities Service has the flexibility it needs to adjust RUS loans held by rural carriers, Secretary Tom Vilsack told the Agriculture Subcommittee of the Senate Appropriations Committee on Thursday. “If we have it then I think we can make adjustments,” he said. His comments came in response to questioning by Sen. Jerry Moran, R-Kan., who in a February letter to Vilsack expressed his concern over how the order would affect the viability of the rural telecom companies, many of whom take out loans from the RUS.

The FCC should reconsider its requirement that privately held rate-of-return regulated carriers submit for public review annual reports of financial condition that have been audited and certified by an independent certified public accountant, the National Telecommunications Cooperative Association said in a letter to the commission Tuesday (http://xrl.us/bmzp2y). The requirement is “overly burdensome,” treats rural LECs inequitably compared to other USF recipients, and is “unnecessary,” the group wrote, arguing it is neither reasonably tailored nor appropriately balanced to “achieve the objective of accountability.” NTCA made three counterproposals: permit RLECs to submit a financial reporting form similar to that required by the Rural Utilities Service; allow RLECs to prepare the form through a compilation process rather than the “costly and burdensome” process of having a financial report audited and certified by a CPA; and allow RLECs to submit financial data “under seal pursuant to the established protective order process."

Small healthcare providers feel burdened by the number of FCC forms they must fill out each year to get support from USF rural health care (RHC) programs, National State Offices of Rural Health and the Michigan Center for Rural Health officials told Wireline Bureau staffers, said an ex parte filing (http://xrl.us/bmzpqb). Many recipients hire contractors to complete the required paperwork, the groups said, suggesting the commission consider a three-year period of eligibility so entities won’t have to refile Form 466 every year. They said that the RHC primary program has led to the creation of the greater Minnesota telehealth broadband initiative pilot, but implementation is being delayed because of “lack of administrative funding for the project, the difficulty in finding a 15 percent match, confusion at the outset of the program as to whether it was [a] grant program, and the unusual nature of the RHC competitive bidding process.” The driving factor for broadband adoption by rural health clinics is image size and the ability to do teleradiology, the groups said in a filing in docket 02-60 made Wednesday by a bureau staffer who participated in the March 7 meeting. It said the groups want the agency to “consider incentives for local telecommunications companies to build out last mile connections,” which could help with a lack of connectivity throughout Minnesota.

C-Spire, U.S. Cellular, Allied Wireless and other small carriers opposed a T-Mobile petition seeking reconsideration or clarification of the FCC’s USF/intercarrier compensation reform order. “Grant of the Petition would directly contravene the Commission’s overarching policy objective of reducing legacy USF support payments,” the carriers said in an ex parte filing reporting on their meeting at the agency (http://xrl.us/bmzo7q). “In un-capped states (e.g., Arizona, Hawaii, Louisiana and Oregon) any additional support to T-Mobile would necessitate increased funding from the USF pool.” The carriers said the support T-Mobile is seeking “is for prior investment, made perhaps many years ago by T-Mobile, without a penny of high-cost support.”

The structure of USF-supported capital and operating expense caps imposed in the FCC USF-intercarrier compensation order “defeats the predictability required of USF support as required by the Communications Act,” NTCA told an adviser to Commissioner Mignon Clyburn on Monday (http://xrl.us/bmzkvv). Dynamic, year-by-year alteration of the caps presents “substantial challenges” for all rural LECs, and instills a “consistent fear that any given RLEC might be next in line to trigger the caps if that RLEC undertakes further broadband deployment,” NTCA said in an ex parte filing. The dynamic nature of the caps also confuses lenders and investors, NTCA said. “Allowing such uncertainty to perpetuate and to potentially stymie the deployment of broadband would be contrary to the very purpose of the National Broadband Plan, the President’s own stimulus initiatives, and stated objectives of the Commission’s reform.” NTCA also expressed concern on continuing call completion issues, truth in Caller ID issues and access avoidance and phantom traffic problems.

Republicans in the House and FCC took aim at Chairman Julius Genachowski for his proposal to require broadcasters to post political files online. At a budget hearing Monday of the House Appropriations Subcommittee on Financial Services, the plan was criticized by Chairman Jo Ann Emerson, R-Mo., and FCC Commissioner Robert McDowell. Genachowski defended the FCC’s authority to make the change and highlighted the commission’s progress freeing up spectrum and deploying broadband.

The Pennsylvania Public Utilities Commission unanimously approved the motion of Commissioner James Cawley Thursday to reopen the record of its rural ILEC access charge investigation order (docket No. C-2009-2098380) to examine the “cross-effects” from the FCC’s Universal Service Fund/intercarrier compensation order, the PUC said. The PUC will initiate a new proceeding no later than April 20 to examine the implementation of the FCC order, it said. The implementation of the FCC’s USF order triggers a series of compliance obligations, Cawley said. The FCC’s order also has material effects on major adjudication decisions by the PUC, and the PUC’s access charge order needs to be updated accordingly, he said. The PUC’s rural ILEC access charge investigation order had ruled that the intrastate switched access rates for rural incumbent LECs had to gradually move to their interstate equivalents. The rural ILECs would have been afforded “revenue neutral” recovery of “lost” intrastate carrier access charge revenues from retail local service rates through the use of a $23 monthly basic local residential service “benchmark.” That’s the residential local rate per month, and would not include various taxes.

Commissioner Robert McDowell said the FCC appears to be moving too slowly to wrap up all aspects of Universal Service Fund reform, including the Rural Health Care Program. His remarks came in a speech Thursday at the Mid-Atlantic Telehealth Resource Center Summit in Charlottesville, Va. The FCC approved last year the start of USF distribution reform and an order on the Lifeline program in January. But other work remains to be done, McDowell said. “I understand that some of you have been anxiously waiting for the FCC to move forward on finalizing our efforts to reform the rural healthcare program,” he said. “So have I. As part of the implementation of that plan, the commission has already reformed some of the other USF programs on a piecemeal basis.” McDowell said that in a “perfect world” the agency would have taken on all USF spending programs at the same time, while also completing contribution reform. “Consistent with my long-standing advocacy for truly comprehensive reform, I will continue to press the commission to complete all of its reform efforts, including reform of the rural healthcare program, as quickly as possible,” he said. McDowell said he saw the importance of telehealth during a trip to Alaska during his first year as a commissioner. “The most memorable portions of the trip were the health clinics,” he said. “There I could see how medical images from the most remote corners of Alaska were transmitted to specialists in Anchorage. I learned how using telehealth technology can actually save money because, in many instances, having that technology close at hand means the patient can avoid flying hundreds of miles to a hospital.” McDowell noted that while the FCC created the healthcare program in 2007, it asked for comments on possible changes in 2010. “The commission has not only garnered valuable information from those who commented but also has learned a tremendous amount from participants in the pilot program,” he said. “All of this information will be incredibly valuable as the commission moves to the next step in the reform process."

FCC Chairman Julius Genachowski said he’s “pleased” TV station blackouts on subscription-video providers seemed to have been kept in check as retransmission consent contracts expired and often were renewed at year’s end. Retrans blackouts and “very serious disruptions to consumers” were kept to “a minimum” in the cycle of agreements that expired around Dec. 31, he said Wednesday. “I know that took some work on the part of cable operators and broadcasters to get there -- so that’s good news.” Cable executives also speaking to an American Cable Association conference said FCC retrans rules need fixing, while broadcast officials said the system works.