NCTA CEO Michael Powell sees signs from Universal Service Fund stakeholders that USF and intercarrier compensation can be reformed, as FCC Chairman Julius Genachowski seeks (CD Oct 7 p1). Industries with different proposals to use some of the USF to pay for broadband and to make changes to ICC generally understand they won’t get everything they want, he said in his first news conference. Powell said Capitol Hill is giving the commission room to work on the order that Genachowski wants voted on at the Oct. 27 meeting, and FCC members seem inclined to engage.

A number of Hill letters to the FCC in recent days focus on Universal Service Fund revamp issues like controlling the size of the fund. Reps. Mike Doyle, D-Pa., and Anna Eshoo, D-Calif., urged the FCC to ensure that consumers are protected. They urged the FCC to ensure that carriers demonstrate a need for any increase in the monthly bills of telephone customers as result of the reform. Doyle and Eshoo also said the agency should pursue technologically neutral solutions to encourage efficiency and strong competition among support recipients. The two emphasized that the FCC’s National Broadband Plan urges the agency to pursue special access reform in concert with reforming USF and ICC. Meanwhile, members of the House from Florida urged the agency to enact USF revamp that places “meaningful and enforceable” controls on the size of the fund, said 10 lawmakers in a joint letter. It’s time for the FCC to consider the input from all parties and implement USF and intercarrier compensation rules that “stringently control costs, encourage competition, reduce arbitrage, and focus the fund on serving rural consumers who need it,” said Rep. Fred Upton, R-Mich., and Rep. Greg Walden, R-Ore. The commission should set an annual spending cap of $4.5 billion for high-cost support, said a joint letter signed by 14 lawmakers including Reps. Joe Barton, R-Texas, and Marsha Blackburn, R-Tenn. Subsidies in areas served by unsubsidized providers should be eliminated, the joint letter said. High-cost support should be determined through the use of technology-neutral market-based mechanisms, it said.

FCC Chairman Julius Genachowski offered reassurance Thursday, in a speech at FCC headquarters as he prepared to circulate the FCC’s version of Universal Service Fund and intercarrier comp overhaul, most likely late Thursday evening. Genachowski’s speech was short on details on how his proposal differs from plans already before the commission, particularly the ABC plan. Instead, he reassured consumers they have nothing to fear and that the proposed reforms will, in the long run, drive down the size of their monthly phone bills.

Open Range Communications filed for bankruptcy Thursday despite receiving the largest loan commitment under the Agriculture Department’s Rural Development Broadband Loan and Loan Guarantee Program. The Rural Utilities Service approved a loan of $267 million for Open Range in March of 2008, under President George W. Bush appointee RUS Administrator Jim Andrew. Open Range owes RUS about $74 million in secured debt, said the company.

U.S. Cellular has taken a major financial hit because of the FCC’s current cap on payments to competitive eligible telecommunications carriers, the carrier said in a filing at the FCC (http://xrl.us/bmfeqx). The company said it expects to receive an estimated $227,000 per year in federal high-cost support, which is “roughly 13 percent of what U.S. Cellular would receive in the absence of the CETC cap.” As a result, “U.S. Cellular’s ability to improve service in many portions of its ETC area is severely restricted,” the carrier said. “Moreover, although U.S. Cellular opposes drastic reductions in high-cost support, U.S. Cellular has built in the assumption that its support will be phased down over the next five years as a result of pending USF reforms."

Reps. Lee Terry, R-Neb., and Mike Ross, D-Ark., gave the thumbs up to the incumbent-backed ABC plan and the complementary rural plan that goes with it. In a letter released Tuesday, the legislators said “details remain to be fleshed out by the FCC,” but “this framework clearly creates a path forward for comprehensive USF and intercarrier compensation reform.” The pair “strongly urge the FCC to maintain the key elements of the America’s Broadband Connectivity and Joint Rural Association proposals as you consider other proposals to revise the plan.” Echoing the talking points of the ABC plan proponents, Terry and Ross said they “believe the FCC should [pursue] a USF reform framework that is fiscally responsible, enforceable, and sustainable, providing opportunities for a wide range of robust broadband technologies to compete."

The FCC confirmed that Chairman Julius Genachowski will circulate a proposed order that he hopes will lead to reform the universal service and intercarrier compensation regimes. The FCC called a briefing with reporters where agency officials spoke on the condition they not be named and said Genachowski will deliver a speech Thursday laying out some of his proposals. FCC officials declined to discuss specifics in Tuesday’s briefing, set for Thursday at 10:30 a.m. at FCC headquarters, instead reiterating their talking points about why reform was necessary.

Assurance Wireless started selling service in Rhode Island, said the company which runs a Lifeline Assistance program supported by federal Universal Service Fund. The company will offer eligible residents a free cellphone and 250 free monthly voice minutes. Customers can pay for additional minutes, texting, international calling and more, Assurance said.

The FCC might not adopt any existing plan to revamp the Universal Service Fund in its entirety, state officials said at a webinar by the National Regulatory Research Institute Monday. Even if the commission is to adopt an order for the Oct. 27 meeting, it might not be a final order, said James Cawley, chair of the state member of the Federal/State USF Joint Board.

The FCC should shuck the cost-based model of the Universal Service Fund and adopt “a value-based approach” as it transitions USF to a national broadband fund, the Technology Policy Institute argued in a white paper released Friday. Senior Fellow Scott Wallsten said the current high-cost fund “does not incorporate how much consumers value the services” and doesn’t measure “the incremental, rather than average, effects of the program.” The new broadband fund, dubbed the Connect America Fund, “can overcome both problems and operate far more efficiently than the existing high-cost program ever could,” Wallsten argued. Moving to a value-based approach would require “regular studies” on what customers will pay for broadband services, he said. “This information would be used to help determine what types of service should be subsidized in unserved areas, which areas to fund, and the maximum amount that should be spent on subsidies."