The largest-ever internal FCC probe might have been less vulnerable to complaints of inadequacy had investigators spoken with more current and former agency leaders, the Office of Inspector General said Monday. In its twice yearly review of its efforts, the office addressed criticism by Sen. Barbara Boxer, D-Calif., and Commissioners Jonathan Adelstein and Michael Copps. All three termed the report a whitewash (CD Oct 9 p2). Besides describing efforts to interview two former Media Bureau officials who claimed their bosses discouraged the reports’ release, the IG’s analysis said it might have been a good idea to talk to FCC members and former Chairman Michael Powell about complaints that media-ownership reports were quashed.

Without regulatory reform, historic revenue sources won’t match the expenses of rural incumbent local exchange carriers, said Organization for the Promotion and Advancement of Small Telecommunications Companies. OPASTCO filed the report to refresh the record in Universal Service Fund and intercarrier compensation proceedings at the FCC. If regulators keep the status quo, small rural incumbents’ 2008 revenue shortfalls will be 5 percent, rising to 9 percent in 2009 and 13 percent in 2010, OPASTCO said. “Companies more reliant on local service revenues and intrastate access will fare worst, while those more reliant on USF and interstate access will experience more modest impacts,” it said. Wireless, VoIP and CLECs will “continue to erode” line counts and use minutes, it said. Broadband and special access will keep growing but more slowly than they have, it said. “Beyond 3 years, there is no assurance that USF will be sufficient, or that it will even keep pace with inflation,” OPASTCO said. Regulators should replace declining revenue streams with contributions from unregulated services, it said.

At least three commissioner’s offices still haven’t heard from Chairman Kevin Martin about his plan to complete broad intercarrier compensation reform by mid-November, multiple FCC sources told us. Commissioner offices have met only with industry lobbyists scrambling to learn what the FCC intends to do, we're told. But at a Friday press briefing, Martin stood by a six-month pledge he authorized a lawyer to make May 5 in oral argument at the Court of Appeals for the District of Columbia Circuit (CD May 13 p2). “The commission should be in a position to try and find a way to address both broader intercarrier compensation and potentially at least some of the broader Universal Service reform,” the chairman said, terming the issues connected. The interim USF cap was a “critical first step” toward that goal, he said.

Make the Universal Service Fund cap permanent, three anti-tax groups urged the FCC in a joint written statement Thursday. The National Taxpayers Union, Americans for Tax Reform and Americans for Prosperity also supported imposing reverse auctions, killing the identical support rule that bases subsidies on the incumbent’s cost and “wiping out fraud, waste and abuse of USF tax dollars,” they said. “Phone taxes are out of control in America,” the groups said. “Wireless customers pay a crippling $21 billion per year in taxes and fees. American consumers deserve less taxation and more common sense from their government.” The Seniors Coalition and the Maryland Taxpayers Association also signed on.

The FCC fined Local Phone Services almost $437,000 for failing to file four telecommunications reporting worksheets and failing to make 10 monthly contributions to the Universal Service Fund. “The Commission cannot and will not tolerate any entity’s failure to contribute to the USF as required by our rules, and we will use our forfeiture authority to penalize and deter violations,” the FCC said in a forfeiture order. Local Phone has 30 days to pay.

The FCC should “step up” and tackle universal service issues, since congressional efforts are stagnant, Rep. Lee Terry, R-Neb., said in a conference keynote Tuesday for the Western Telecommunications Alliance and the Organization for the Promotion and Advancement of Small Telecommunications Companies. Terry said he told FCC Chairman Kevin Martin over the phone that “it doesn’t look like we're going to be able to do USF this year.” Terry asked Martin if that means “the FCC perceives that they need to step up,” he said: “He said ‘Yes.'”

The FCC should take a closer look at how using reverse auctions to distribute Universal Service Fund support would affect small carriers financially, said the Office of Advocacy for the U.S. Small Business Administration. The FCC proposed the use of reverse auctions in one of three continuing proceedings on revamping USF. In reply comments, the office said new USF rules “could impose an economic burden” on small incumbent and wireless carriers. The FCC should study how reverse auctions have worked in other industries and use a test market to see how they would work in telecom industry, it said. And the FCC should study how numbers-based USF contributions “may reduce some of the administrative burdens associated with USF reporting for small carriers,” the office said. USF contributions are now based on interstate revenue.

AT&T urged the FCC to impose the interim cap on Universal Service Fund high-cost support “as quickly as possible,” to “minimize the uncertainty now faced by” competitive eligible telecommunications carriers. “Many states require CETCs to make build-out commitments and USF certifications beginning in June and it is difficult for CETCs to respond to these requests before the state cap amounts are determined,” AT&T said in a meeting with the Wireline Bureau, according to an ex parte filing. AT&T also suggested that the FCC publish statewide cap amounts and quarterly reduction factors by state “to help CETCs manage in the new capped environment.”

NEW ORLEANS -- Expressions of concern were coupled with predictions that there would be little action on telecom legislation in this election year, said a panel of Hill staffers at the NCTA convention. A discussion about network neutrality legislation produced few fireworks, with House Commerce staffers from both sides agreeing that market solutions would be the first option rather than legislating a regulatory framework. Amy Levine, counsel to Chairman John Dingell, D-Mich., said that “where we go from here depends a lot on what happens out in the marketplace.”

Dozens of companies and other interested parties likely to comment on three FCC notices of proposed rulemakings on the future of high-cost universal service support program have 2 more weeks to file. An already-delayed reply deadline for Monday was extended by the commission until June 2. On May 1, six groups jointly sought a 3-week extension to “develop well-considered and thorough responses,” the commission said. “We find, however, that two additional weeks is sufficient time for commenters to complete their reply comments.” So far only the Wisconsin Public Service Commission has replied, according to the electronic FCC docket. The state commission reiterated its interest in coordinating USF reform with intercarrier compensation reform. “Change for change’s sake is not a reasonable pursuit, and the [commission] urges the FCC to fully consider all relevant issues and intertwined implications that attach to major USF reform,” the PSC said.