The FCC should ignore recent AT&T and Verizon proposals asking it to preempt states on intercarrier compensation, the National Association of Regulatory Utility Commissioners said. The carriers asked the FCC to “reaffirm” that all regulated VoIP services fall under federal jurisdiction. In a Tuesday letter, NARUC said the requests “mischaracterize the current state of both the law and the facts with respect to non-nomadic VoIP traffic.” The FCC never found fixed VoIP subject to federal preemption, and the 8th U.S. Appeals Court in St. Louis has affirmed that, the group said. “Because there is no question it is possible to separate intrastate non-nomadic facilities-based VoIP calls from interstate calls, the FCC has no jurisdiction over such calls.” NARUC also disputed the carriers’ request for a uniform intercarrier compensation regime applicable to all traffic. The FCC has no power to do that “through preemption or without instigating a substantial increase in State or federal universal service funds,” NARUC said. Nor can the FCC use federal funds to reduce intrastate access charges without changing separations rules, it said. “Any such proposed changes must be referred to the Federal-State Joint Board on Separations before any final FCC rules can be adopted.”

Maritime radio service providers must pay into the Universal Service Fund, the FCC said Tuesday. The agency denied a Maritime Communications request that it review a Universal Service Administrative Co. decision denying two other radio providers’ joint request for refund of $1.3 million in USF contributions. Automated maritime telecommunications service is a commercial mobile radio service, and FCC rules say CMRS must contribute to USF, the agency said.

Sen. Barack Obama, D-Ill., supports a net neutrality law empowering the FCC to pursue discrimination complaints against network operators, Obama technology advisor and ex- FCC Chairman William Kennard told C-Span’s Communicators. Kennard termed recent FCC censure of Comcast for blocking file sharing traffic a “tentative” first step, but said agency jurisdiction is “murky” and could lead to lengthy legal appeals.

Qwest received $28.5 million in assistance from the universal service program’s high-cost fund in 2007, the company told House Oversight Committee Chairman Henry Waxman, D-Calif., in a letter Monday. Waxman had asked Qwest and 23 other carriers to respond by Monday to questions on how they spend USF subsidies as part of an ongoing inquiry (CD July 28 p6). Waxman is concerned that phone customers are paying surcharges of 11 percent or more to support the fund, he said. Several carriers told us Monday they did not want to release their responses to Waxman, although they had completed the letters. Qwest said it received no high-cost assistance in rural states such as Iowa, New Mexico and North Dakota. “Qwest’s region-wide support … equals the amount of support provided to non-rural eligible telecommunications carriers in West Virginia and was just one-seventh of the non-rural high cost support awarded in Mississippi,” said a letter to Waxman from Shirley Bloomfield, Qwest’s senior vice president of federal relations. The carrier told Waxman that high-cost support should be targeted to rural areas served by non-rural ILECs.

If the FCC cuts access fees as it overhauls intercarrier compensation, the agency will probably include an access charge replacement mechanism for rural local exchange carriers, said Medley Global Advisors analyst Jessica Zufolo in a Monday note. “There is currently considerable sympathy at the FCC toward the RLEC industry,” Zufolo said. But a changing and uncertain political atmosphere means RLECs might be forced to compromise by year end on compensation and the Universal Service Fund, she said. RLEC advocate Sen. Ted Stevens, R-Alaska, may not return to Congress given his recent indictment, while the House is increasingly scrutinizing USF high-cost support, she said.

Universal Service Administrative Co. audits impose an “unnecessary burden” on small rural telecom companies, said the Gardonville Cooperative Telephone Association. In a letter to FCC Chairman Kevin Martin, the group said the Office of Inspector General should set audit procedures for USF oversight. “Such standardized procedures would go a long way toward mitigating concerns about the inconsistency of the current process,” it said. The association said auditors contracted by the Universal Service Fund high-cost program “are often entirely inexperienced, with little or no knowledge of the telecommunications industry and FCC cost accounting rules.” Auditors are “extremely inflexible” on audit dates and document deadlines, it said. The group worries about the reporting of audit findings, it said. “In the most recent round of audits, the amount of funds estimated to be potential improper payments far exceeded the actual amounts found in the audits,” it said. And rural telecom providers fear USF audits may lead to accusations of Customer Proprietary Network Information violations, the group said. For example, auditors have demanded copies of customer billing records, it said: “These requests naturally place company management in an awkward position of determining whether to comply with auditors’ demands, or violate the law.” The FCC should clarify whether and to what extent auditors may access CPNI, it said.

An AT&T proposal to lower intrastate access rates to interstate terminating access rate levels is “deficient,” said the National Telecommunications Cooperative Association. Commenting on an AT&T request for interim declaratory ruling and limited waivers related to intercarrier compensation and Universal Service Fund reform, NTCA urged the FCC to accept AT&T’s proposal only if it also adopts an NTCA plan filed last month (CD July 14 p9). NTCA agreed with AT&T that the FCC should move intrastate costs to interstate cost recovery rates including subscriber line charges or originating interstate access charges, and that the FCC should declare that Internet traffic must pay access charges. But NTCA said AT&T’s bid to lower intrastate access rates is “specifically tailored for price-cap carriers, and provides no relief to rural consumers served by [rate-of-return] carriers.” NTCA wants interstate access rates capped at current levels until a permanent access replacement mechanism is set. Access costs not recovered from capped rates would come from USF Interstate Common Line Support (ICLS), it said. NTCA filed comments two days ahead of a Thursday deadline. An AT&T spokesman said “comprehensive reform would fix the vast majority of the problems that these various petitions seek to resolve.”

Commissioners strongly prefer voting ahead of time on two circulating wireline items set for the Aug. 22 FCC meeting, a commission official said Tuesday. One such item is a rulemaking asking how to implement the New and Emerging Technologies 911 Improvement Act of 2008, signed last month by President Bush. The other item seeks comment on ways to improve management and administration of the Universal Service Fund. The USF item responds to a GAO audit citing concerns about waste, fraud and abuse, FCC Chairman Kevin Martin told reporters earlier this month (CD Aug 5 p1).

The FCC should use phone numbers for Universal Service Fund contribution, said the USF by the Numbers Coalition. Members from AT&T, Verizon, CTIA, USTelecom and IDT met last week with Amy Bender, aide to Chairman Kevin Martin. Group members not represented at the meeting are NCTA, GCI, Megapath and the VON Coalition. The FCC assesses USF contributions based on a carrier’s interstate revenue. The coalition wants contributions based on how many phone numbers a carrier owns. That would be easier, provide certainty to consumers and stabilize USF funding, said the coalition.

The FCC will reform intercarrier compensation and the Universal Service Fund together, perhaps this year, Tom Tauke, Verizon executive vice president, told reporters Thursday. “If [reform is] going to happen, it’s going to happen in a package,” Tauke said. Two months ago, he doubted intercarrier reform could happen this year, he said. Taking compensation together with USF distribution and contribution is “a lot to swallow,” but court pressure and growing industry consensus makes him optimistic, Tauke said. Now is the “last best chance” for the telecom and technology sector to ally and reform an “unsustainable” system, he said.