USCellular CEO John Rooney Wednesday raised an alert about proposed changes in Universal Service Fund rules, likely teed-up for the FCC’s Nov. 4 agenda meeting. He said the changes could have a devastating effect on wireless carriers seeking money from the USF. Rooney said the proposed rule changes are huge for companies like USCellular, but they're getting limited attention with a little more than a month before the meeting. US Cellular also submitted to the FCC new poll data showing people want USF support for wireless in five states.
Rural carriers asked Congress to intervene in FCC efforts to overhaul intercarrier compensation. In a scathing letter to House and Senate members, CEO Michael Brunner of the National Telecommunications Cooperative Association condemned a $0.0007 uniform terminating access rate proposed for all traffic by AT&T, Verizon and others. The agency is “seriously considering” the proposal, which Brunner predicts would “wrongly relieve communications industry titans… of more than $8 billion in annual access and intercarrier compensation responsibilities,” he said: “For rural carriers alone, this disruption could jeopardize more than $2 billion” annually. The plan also would affect rural telecom lenders, which hold $9.1 billion total in loans, he said. Brunner condemned the idea of using the Universal Service Fund to replace carriers’ lost access revenue. USF “has already been strained by unbridled program growth resulting from regulatory lapses,” he said.
Pushing for a Universal Service Fund contribution revamp, AT&T and Verizon met Monday with Amy Bender, an aide to FCC Chairman Kevin Martin. AT&T and Verizon contend that carriers should contribute to USF based on their phone number count, instead of interstate revenue (CD Sept 15 p2). The National Association of State Utility Consumer Advocates urged the FCC to reject numbers-based contribution. In a letter to Martin and other commissioners, NASUCA said moving to numbers is “unnecessary, will create new opportunities for arbitrage, and will not benefit consumers.” The interstate revenue base for USF “has been remarkably stable for the past six years,” it said. And a numbers system would require exemptions so some carriers don’t overpay, the association said. The exemptions would open new opportunities for fraud, it said. And because a numbers system would treat interstate and intrastate traffic the same, a customer who doesn’t call long distance often would have to pay higher USF fees, the association said.
Telecom carriers receiving universal service support for rural services would have to provide roaming services to any carrier upon request, according to a bill (HR-7000) introduced Wednesday by House Oversight Committee Chairman Henry Waxman, D-Calif. Roaming services would have to be offered on “just and reasonable terms” anywhere, the bill said. If carriers don’t want to allow roaming, they could seek FCC permission to opt out of USF support, the bill said.
The Kansas Corporation Commission ordered interconnected VoIP providers to begin contributing to the state universal service fund starting in January. The commission said VoIP providers can determine their intrastate revenue by direct measurement, company specific traffic study or by using the FCC’s “safe harbor” revenue split for the federal universal service fund that assigns 35.1 percent of total revenue to intrastate service. The commission said if a provider wants to use some other method, it must file a proposal. The order said interconnected VoIP providers can be identified through public sources like advertisements, state and federal reports, or through companies and customers. The commission said its order (Case 07-GIMT-432-GIT) applies to both nomadic and fixed VoIP services as long as they interconnect with the public switched telephone network. VoIP-to-VoIP calls that don’t originate or terminate on the PSTN are exempt from contribution.
Global Crossing supported Verizon’s proposal to revamp intercarrier compensation and the Universal Service Fund (CD Sept 15 p2). In a meeting last week with the Wireline Bureau, the Internet backbone provider said the FCC should move to a $0.0007 terminating rate over three years and adopt a numbers-based system for USF contribution, according to an ex parte filing. But Global Crossing urged the FCC to include transport and “proceed quickly” with revamping originating access. “Even if the Commission creates lower and more uniform termination rates, access customers will see only limited benefits of those reforms if the Commission retains the existing outdated and artificial classifications of originating traffic,” it said. To avoid massive reconfiguration costs after the FCC imposes the overhaul, the agency should give carriers an 18-month window to make changes without incurring fees, Global Crossing said. “Reconfiguration of just one circuit can cost up to $20,000 or more, plus any early termination penalties that may apply for the remaining term of the underlying contract,” it said. The FCC should reject Verizon’s proposal to allow its affiliated CMRS provider to start imposing termination charges on interconnection partners, the company said. It believes the FCC should eventually set “default interconnection and intercarrier compensation rules based on bill and keep principles,” and “CMRS providers today are closer to such an ideal than any other segment” of the industry, it said. And Global Crossing urged the FCC to “narrowly tailor” any access recovery mechanism it sets up, to avoid delaying investment in IP technology.
Keep interconnected VoIP eligible for Universal Service Fund E-Rate schools and libraries support, a cross section of industry and E-Rate applicants said in Thursday comments on a rulemaking. But commenters differed on funding year 2009 eligibility for filtering software, dark fiber and other new services.
Embarq filed a plan to more narrowly target Universal Service Fund support. Embarq urged the FCC to target USF support to price-cap study areas on a wire-center basis, rather than the current implicit-support method that uses study area averaging. The carrier previewed the plan earlier this month with the Wireline Bureau (CD Sept 2 p6). The Thursday filing, which included a letter to commissioners and a 47-page white paper, varies slightly in specifics, but mostly fleshes out what it pitched then, an Embarq spokesman said.
Recent talk of overhauling intercarrier compensation and USF has sparked fevered telecom industry debate. On a Thursday FCBA panel, officials and lawyers representing AT&T, Sprint Nextel, Windstream, OPASTCO and competitive local exchange carriers reviewed recent proposals by Verizon and others advocating a uniform $0.0007 terminating access rate for all traffic. USF contribution was among few items on which they appeared to agree.
The FCC wants comment on two carriers’ requests to review Universal Service Administrative Co. decisions, the agency said in public notices Wednesday. CTE Telecom disputes a USAC ruling saying CTE inaccurately designated certain revenue as enhanced services, rather than as DSL services. NextGen Telephone disputes a USAC ruling saying NextGen should report subscriber line charges as interstate revenue subject to federal Universal Service Fund contribution. NextGen said the charge should be allocated by usage, because the carrier levies the charge on all customers, including ones without interstate service. Comments on each are due Oct. 17, and replies Nov. 3.