The FCC and small and mid-sized wireless carriers are headed to court in November in a case that examines whether the agency acted improperly in a December order that redirected high-cost Universal Service Fund money to a fund that will pay for broadband buildout (CD Jan 4 p2). The carriers challenging the order complain that while the reserved funds may ultimately be used for broadband, the commission does not place them under one of the four existing USF programs. Oral argument before the U.S. Court of Appeals for the D.C. Circuit is scheduled for Nov. 15 in Rural Cellular Association v. FCC.

The FCC must ensure sufficient funding for broadband adoption programs as it revamps the Universal Service Fund, Rep. Doris Matsui, D-Calif., said in a letter circulating on Capitol Hill Tuesday. “A truly complete USF program would include adequate funding to bring critical programs, like broadband adoption initiatives modeled after the Lifeline and Link Up, into the broadband era,” Matsui said. Matsui plans to send the letter to FCC Chairman Julius Genachowski as early as Friday, a Matsui spokeswoman said. “In today’s economy, the internet has become a necessity, not a luxury,” Matsui wrote. “We must do more to promote subscribership through adoption programs.” Many don’t subscribe because they lack the “necessary equipment, training or education opportunities to take advantage of the benefits of Internet use,” Matsui said. Others can’t afford “even basic broadband service,” she said.

America’s Broadband Connectivity plan and its rural complement are “a useful and constructive starting point for USF and ICC reform” but they don’t do enough to protect mid-sized telcos, the Independent Telephone & Telecommunications Alliance said in an ex parte notice dated Tuesday. If the FCC adopts the so-called “triple zero” option for intercarrier compensation, “it should commit to conduct proceedings … at a reasonable point in each plan’s transition process to make an affirmative determination regarding whether the industry framework is working as contemplated,” ITTA said. The industry plans also don’t address “what would happen should a carrier that is operating under rate-of-return regulation wish to move to price cap” which “introduces some uncertainties” into the proposed reforms, ITTA said. The association reiterated its position that “carriers should be free to change their regulatory status. … Given the sweeping changes anticipated by the new rules, carriers should have the flexibility … to assess the impact of those changes on their businesses,” the association said. Finally, the association said it was concerned about having access to the ABC plan’s cost modeling. A spokeswoman for the six companies behind the ABC plan said that the companies share those concerns about access to modeling data and are working hard to fix it.

The adoption of the America’s Broadband Connectivity Plan (ABC Plan) for Universal Service Fund and intercarrier compensation revamp would drive small rural carriers out of business, several state commissioners said during a FCBA briefing Monday. Meanwhile, all three revamp proposals ignore the role of wireless, industry officials said.

The FCC should “maintain the key elements of the America’s Broadband Connectivity and Joint Rural Association proposals” to revamp the Universal Service Fund as the commission considers “other proposals to revise the plan,” Reps. Lee Terry, R-Neb., and Mike Ross, D-Ark., said in a letter circulating on Capitol Hill this week. The letter to FCC Chairman Julius Genachowski hadn’t been sent and is dated Sept. 23. The FCC “must ask swiftly yet carefully to enact reforms that allow all Americans -- particularly those in hard-to-serve rural communities -- access to the burgeoning services and opportunities that are being created via innovations in broadband technology,” the lawmaker said. And 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 ABC and Joint Rural Association plans taken together “embody the core principles” of the National Broadband Plan, Terry and Ross said. “While many details remain to be fleshed out by the FCC, this framework clearly creates a path forward for comprehensive USF and intercarrier compensation reform.”

Two of the three judges who heard Vermont Public Service Board v. FCC cited the FCC’s plan to revamp the overall Universal Service Fund as they considered Vermont and Maine’s request to fix the FCC’s non-rural high-cost system. In a U.S. Court of Appeals for the District of Columbia Circuit hearing, judges questioned the use of outdated data by the FCC and the states’ failure to seek a waiver to request supplemental high-cost support. The case stems from a 10th U.S. Circuit Court of Appeals remand in the so-called Qwest II case, in which the commission said rural and urban rates “are reasonably comparable.” State regulators have challenged, claiming the FCC “failed to compare rural rates in each state to a national average urban rate.”

A group of consumer advocates and public officials urged the FCC to reject the incumbent-backed America’s Broadband Connectivity plan and the rural “consensus framework” for universal service reform. In a joint letter posted as an ex parte notice to docket 10-90 and organized by the National Consumer Law Center and the Utility Reform Network, the advocates said industry’s reform proposals should be “flatly rejected” (http://xrl.us/bmdmo8).

The Rural Utilities Service should halt its broadband loan program while the FCC is overhauling the universal service system, said a study sponsored by NCTA. “By tying RUS loans directly to USF support, RUS effectively creates a vicious circle: The more a firm invests in inefficient infrastructure, the more it gets in USF support; the more it gets in USF support, the more it can qualify for in RUS loans; the more it can qualify for in RUS loans, the more it can invest; and, the more it invests, the more it gets in USF support,” said study author Jeffrey Eisenach of Navigant Economics. Efforts to reach officials at RUS for response were unsuccessful.

The FCC is likely to get the Universal Service Fund revamp done in 2011, panelists said during a Regulatory 2.0 workshop Thursday. Congress should give the FCC as much flexibility as possible as it considers legislation giving the commission authority for incentive auctions for broadcast and other spectrum, they said.

TracFone Wireless is proposing changes to the FCC’s Lifeline program, to guard against fraud, said an ex parte filing (http://xrl.us/bmdeov). Among its proposals are requiring all eligible telecom carriers to collect date of birth and Social Security numbers from applicants, to verify, under penalty of perjury, that all Lifeline customers remain eligible and to put in place policies for de-enrolling subscribers that don’t use the service or don’t pay their bills. “The best way to minimize waste, fraud, and abuse of USF resources is to identify Lifeline enrollment and program processes that effectively prevent fraudulent and wasteful use of USF funds and to require all ETCs to use those processes,” the carrier said. “There is no rational basis for treating ETCs differently based on whether they are wireless or wireline, facilities-based or resellers, prepaid or post-paid (billed service) providers or based on any other distinction.” TracFone’s SafeLink program has 3.7 million customers, the company said.