Ex-FCC official Blair Levin is singling out Commissioner Robert McDowell in Levin’s efforts to push the Universal Service Fund away from its traditional support for rural, wireline operators. “In his Wall Street Journal editorials and his Commission statements, [McDowell] has stated his fervent commitment to capitalism and free markets,” Levin said on the Innovation Policy Blog. “I was hoping he would take the same analytic view of universal service. After all, our current system of rate of return regulation -- a system born more than a century ago designed to serve a completely different market -- involves using the government’s power to assess consumers to subsidize private companies and insure their permanent profitability, no matter what changes in technology or consumer preferences there are in the market.” It’s hard to know how to characterize the current system, Levin said: “But you can’t call it capitalism or the free market at work.” Levin told us, “Rob McDowell goes into The Wall Street Journal and talks about free markets, free markets, free markets. He has watched millions of dollars be spent and not said anything.” The FCC has to say at some point, “Here’s what the end point looks like,” Levin said. The McDowell office declined to comment Monday since a USF overhaul proposal is on the sunshine agenda for Tuesday’s open meeting.

Congress is unlikely to move quickly on a Universal Service Fund overhaul, industry and FCC officials said. The commission is scheduled to take up Tuesday a broadly worded rulemaking notice on the high-cost fund and the intercarrier compensation system. Chairman Julius Genachowski and his staff made clear Monday that the commission is taking a long view of the revamp, with a senior FCC official calling it “a multiyear project.”

Nevada Attorney General Catherine Cortez Masto is looking into allegations that Verizon improperly obtained high-cost Universal Service Fund support, a spokeswoman for Cortez Masto told us. The attorney general’s office has received a petition by staff at the Nevada Public Utilities Commission urging the FCC to revoke Verizon’s Eligible Telecom Carrier status. The petition accused Verizon of using Alltel’s ETC designation to gain funding for non-legacy Alltel lines. Similar complaints from Verizon rivals were filed in other states like Wisconsin. Verizon dismissed the allegations as “unwarranted,” in an ex parte filing with the FCC, saying it filed “pro forma amendments” that “were fully contemplated by the commission’s orders.”

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Requiring Voice over Internet providers to pay legacy access charges “would be a fundamental mistake,” the Voice on the Net Coalition said in comments on the Universal Service Fund and intercarrier compensation rulemaking notice. “The commission is about to embark on real reform of the intercarrier compensation system precisely because the legacy system does not work with modern communications technologies,” VON Executive Director Glenn Richards said in a letter to FCC Chairman Julius Genachowski posted to dockets 01-92, 07-135, 04-36 and 09-51. “Access charges are part of a regime that regulators designed 30 years ago before the advent of IP-based services.”

FCC Chairman Julius Genachowski abandoned trying to use Title II authority in the net neutrality order, but his proposed overhaul of the Universal Service Fund may revive the reclassification debate, an industry official and a former Obama administration adviser each told us. Genachowski wants to refocus the fund to support high-speed broadband, and his staff has drafted a notice of proposed rulemaking that the commission is expected to vote on next week. Congress is poised to jump into the universal service deliberations (CD Jan 28 p4).

Satellite broadband should play a larger role in a revamped Universal Service Fund than AT&T Senior Vice President Bob Quinn suggested Thursday (CD Jan 28 p4), WildBlue replied. “We don’t understand the mindset that says satellite broadband is just ‘part of the mix,'” said WildBlue General Counsel Lisa Scalpone. “In reality, satellite broadband is the most important part of bringing the cost of the USF fund down -- and lowering the USF tax bill that has to be paid by the American taxpayers. If you can avoid $15 billion of taxes and still provide 10 Mbps service to every unserved household in America, why wouldn’t we do that? It seems wasteful to overfund broadband service through a higher tax rate on the American taxpayers without considering that satellite broadband will have 10 times its current capabilities by year’s end and can solve much of the problem in the most cost effective manner."

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The FCC will consider reverse auctions as part of its overhaul of the universal service fund, two commission officials confirmed. The FCC is already structuring a pilot program that would allow reverse auctions for the mobility fund, but Chairman Julius Genachowksi’s proposed rulemaking notice sets up a separate set of reverse auctions, the officials said.

FCC Commissioner Meredith Baker wants more attention given to satellite spectrum repurposing or incentive auctions, and less for now to broadcasters’ spectrum, she suggested in a recorded interview that was to have aired over the weekend and run again Monday. Speaking on C-SPAN’s The Communicators, she renewed her call for a comprehensive approach to spectrum policy. It must go beyond the recent conversations about redeploying TV stations’ airwaves for wireless broadband and focus on satellite and other areas, she said last week.