The FCC is in the “home stretch” of its Universal Service Fund and intercarrier compensation regime overhaul, Chairman Julius Genachowski said Tuesday. Speaking after the commission’s monthly meeting, Genachowski said he didn’t “think it’s news” that the relevant orders won’t be ready in August, given his aides have said the same (CD June 16 p2). Genachowski said he’s confident that orders are coming soon. “The staff is working very hard,” he said at a news conference. “The stakeholders are working very hard.” It’s “very important” that USF is retooled for Internet service “in a way that tackles inefficiency” and “waste,” as well as closes “the rural-urban divide” and meets U.S. broadband goals, Genachowski said.

The FCC turned aside NTCA’s request for a clarification or waiver that would have allowed rate-of-return carriers to pass on the costs of federal Universal Service Fund audits to the interstate jurisdiction. “We find that the rule does not need clarification and that NTCA has not demonstrated that good cause warrants waiver of this rule to allow rate-of-return incumbent LECs to directly assign the costs associated with these audits to the interstate jurisdiction,” Wireline Bureau Chief Sharon Gillett said in Thursday’s order, posted to docket 80-286.

The FCC should “not jeopardize the ongoing viability” of rural broadband in its Universal Service Fund and intercarrier compensation regime overhauls, a Louisiana regulator said in an ex parte letter posted to docket 10-90 and released Thursday. “Any reforms to the existing USF High-Cost and ICC mechanisms adopted by the FCC should not compromise the Rural Telephone Companies’ ability to continue to deploy the capital necessary to offer broadband telecommunications and information services,” said Louisiana Public Service Commissioner Jimmy Field in a letter to FCC Chairman Julius Genachowski. “Under all circumstances, the FCC should ensure that any reduction or elimination of funding does not affect the ability of the rural incumbent carriers to recover existing investments made under current rules.” Rural telcos have promised to “pull out all the stops” in an effort to ward off what they consider threats to their survival in the pending reforms (CD July 5 p6). Field said: “Many of the proposals outlined in the FCC’s USF and ICC NPRM, if adopted, could jeopardize universal service in the rural areas of Louisiana. In particular, the short-term reforms to the current USF rules proposed in the NPRM, together with the potential direction of ICC reform, risk substantial rate increases for rural consumers in Louisiana, and may cause the quality of broadband service in rural areas of Louisiana to fall behind the rest of the nation.”

A revamped Universal Service Fund should prioritize areas “without any broadband or where no provider offers service at a baseline level of transmission speed” determined by the FCC, said Senate Communications Subcommittee Chairman John Kerry, D-Mass., and Sen. Mark Warner, D-Va. In a Tuesday letter to FCC Chairman Julius Genachowski, the senators also urged that USF support broadband on a technology-neutral basis and include strong accountability and oversight. The fund should support “areas that are least likely to be built out over the next three-to-five years because their geographic and/or demographic profile make them insufficiently profitable based on commercial business models,” Kerry and Warner wrote. The FCC should annually update what constitutes a baseline level of service and “set goals for minimum target speeds for broadband that would be required to qualify for funding,” they said. To better target broadband funding, the FCC should require states to disaggregate study areas, the senators said. And the agency should cap spending “to provide an incentive for service providers to devise lower cost solutions that meet nationwide needs for both fixed and mobile broadband,” they said. “Funding should require a match from service providers and should be conditioned on reasonable access and interconnection requirements.

Large and mid-size telcos have moved closer together on Universal Service Fund and intercarrier compensation regime reforms, but several questions remain -- as does the gulf between small rural carriers and the rest of industry, the public record shows and FCC officials told us. Executives from USTelecom, Windstream, CenturyLink, AT&T and Frontier met with wireline advisers to three commissioners last week, USTelecom Vice President Jonathan Banks said in an ex parte notice filed late Friday. The executives were invited in by the staffers, two FCC officials said. The executives said they have agreed in principle to reforms that roll out in stages over several years, the officials said.

Rural telco associations are urging their members to swarm the FCC and Capitol Hill as part of an all-out effort to help shape the pending Universal Service Fund and intercarrier compensation regime reforms. “All three associations are working to get as many member companies to Washington, D.C., as possible over the next two or three months to pull out all the stops in conveying to policy-makers both their general concerns about reform as well as details on the specific impacts of the FCC’s reform proposals,” NTCA, OPASTCO and the Western Telecom Alliance told members in an email blast late last month.

A handful of rural rate-of-return telco executives took aim at the USTelecom-led efforts to create cost models for Universal Service Fund and intercarrier compensation regime reforms, an ex parte notice released Monday showed. USTelecom had brought in analyst CostQuest to create cost models as it continues to lead industry-wide talks on wholesale reform. CostQuest executives have been sitting in on ex parte meetings since at least May to discuss some of their findings (CD May 24 p14).

The FCC designated Standing Rock Telecom, a tribally owned wireless carrier, as an eligible telecom carrier (ETC), effective immediately. As a result, Standing Rock will be eligible to receive federal Universal Service Fund money to bring wireless service to the sparsely populated Standing Rock Sioux Tribe Reservation, which straddles the border of South and North Dakota. Additionally, the FCC held that redefinition of a rural telephone company service area is unnecessary when the ETC is designated throughout the rural service areas within the FCC’s jurisdictional authority (i.e. those rural telephone company service areas within Reservation boundaries). Therefore, unlike in the earlier Wireline Bureau ETC Designation Order, no state commission consent is needed before Standing Rock’s ETC designation takes effect, the FCC said.

Some changes proposed as part of Universal Service Fund reform, such as single-winner reverse auctions, would create much more harm than good, especially for smaller carriers, representatives of SouthernLINC Wireless said in meetings last week with FCC officials. “As the industry continues to consolidate, the presence of regional mobile service providers who focus solely on their local service areas -- as opposed to national wireless service providers whose primary focus traditionally has not been the rural, insular and high cost areas of our country -- provides the types of alternatives which are necessary to ensure that consumers and businesses enjoy the benefits of competition,” SouthernLINC said in an ex parte filing. The filing said that USF reform “should not lead to the inadvertent elimination of these alternatives in the name of achieving slightly faster broadband speeds by subsidizing only a single service provider.” If the FCC gets the rules wrong, the result could be the “remonopolization of communications services” in rural America, the carrier said.

Top congressional staffers are lending a hand in the ongoing talks on an industry-endorsed Universal Service Fund reform proposal, telco and Capitol Hill officials said in interviews. Ray Baum, senior policy adviser on the House Communications Subcommittee and longtime friend of Rep. Greg Walden, R-Ore.; Nick Degani, legal counsel to the subcommittee; and Brad Schweer, legislative director to Rep. Lee Terry, R-Neb.; have all taken an active part in the industry talks in recent weeks, telco officials and Baum said. Since the November elections, Congress had steered clear of USF, focusing on net neutrality, spectrum, FCC reform and AT&T’s plan to buy T-Mobile. Walden earlier this month said he was “encouraged” by the FCC’s USF efforts, and urged industry to come up with a reform package soon (CD June 8 p5).