A bill to create a market-oriented, competition-based communications regulatory system was introduced Thurs. at our deadline by Sen. DeMint (R-S.C.). Under it, communications firms would be regulated like other businesses, to protect consumers and ensure there’s no unfair competition, he said. Services alike from a consumer’s perspective would be treated alike. As such, phone service offered by a cable, land line or wireless firm would come under standard rules. The USF program would be reformed so all service providers contribute equally and funds go out more efficiently, transparently and in a technologically neutral way. Cable TV franchises would be phased out over 4 years. States’ enforcement roles would be preserved, preserving their authority to protect consumers and manage public rights-of-way. “We can no longer force a modern, dynamic industry to operate on archaic rules that destroy job creation, limit consumer choice and needlessly raise prices,” DeMint said. He urged Congress to “wake up” to the fact that today’s rules date to the days of rotary phones.

Prospects are good for passage of a telecom bill the President can sign this Congress, House Telecom Subcommittee Chmn. Upton (R-Mich.) told a Tues. National Journal breakfast. “Their bill is not all that far away from ours,” Upton said, referring to a Senate telecom bill introduced Mon. (CD May 2 p1). That bill, especially its franchise provision, offers a “hook” to get something into conference where the 2 can be reconciled, Upton said.

Senate Commerce Committee Chmn. Stevens (R-Alaska) Mon. introduced a telecom bill reflecting several members’ input but lacking strong Democratic support. The 10-title bill hits Universal Service Fund (USF) reform, municipal broadband, net neutrality, white spaces and broadcast flag, and would close the terrestrial loophole for cable. Bell companies applauded the Stevens bill.

The FCC is close to issuing an order classifying prepaid calling card services as telecom services subject to Universal Service Fund contributions and access charge payments, Medley Global Advisors said last week. The proceeding grows out of a Feb. 2005 FCC decision that AT&T had to make universal service contributions and pay intrastate access charges on revenues from an enhanced prepaid calling card. AT&T said its enhanced card was an information service, but the FCC ruled it a telecom service and subject to payments.

CenturyTel had $72.42 million in Q1 profit, down year- over-year from $79.99 million in Q1 2005. CenturyTel got its operating cash flow margin down to 48.8% from 51.9% in Q1 2005, “principally driven by the growth in revenues with lower margins,” like high-speed Internet, fiber transport and CLEC services, and the “decline in higher margin revenues” like those from USF and access lines, it said. Q1 profit figures include about $7 million in debt retirement by the service provider.

The FCC fined Northbrook, Ill.-based Globcom $715,000 for not paying into the Universal Service Fund or Telecom Relay Service Fund and not filing accurate revenue information on which payments are assessed. The FCC in late 2003 warned Globcom, a reseller of long distance telecom service, that it owed more than $681,000. The FCC said Globcom responded that it owed about that because its revenue filings were overstated through negligence. Communication between the FCC and Globcom continued since then. The FCC sought more information, for example on whether enough of Globcom’s revenue is international to reduce its payments into the funds. Globcom, meanwhile, missed filing deadlines. “Despite Globcom’s admission that it owes at least some portion of the invoiced amounts to the USF, and despite [a commitment] to make such payments to the universal service and TRS funds, Globcom has paid nothing to either fund since February 2003,” the FCC said. “In addition… the company has failed to file a single timely report” since the FCC issued the warning notice in 2003.

A comprehensive telecom bill that Sen. Smith (R-Ore.) is working on would revamp franchising, let municipalities build broadband networks and expand universal service fund (USF) contributions, according to a copy we obtained. The bill incorporates 2 measures Smith introduced last year: A video services bill (S-1389) revoking the franchise process, and a USF bill (S-1583) expanding contributions to all 2-way voice services (CD Aug 2 p1).

The FCC should grant a Cingular request that it reverse course and include revenues classified as “toll” charges under the wireless safe harbor for USF, CTIA said. Under FCC rules, the Commission doesn’t seek supporting data from wireless carriers on the percentage of calls that are interstate and so subject to USF fees, instead of intrastate, provided a carrier assumes that 28.5% of calls are subject to USF. The problem, Cingular told the FCC in a complaint, is that instructions on a 2002 worksheet for calculating USF payments keep it from applying the safe harbor to toll calls. Cingular said this apparent inconsistency in the worksheet requires it to make “significant additional contributions” for toll calls. “The Commission did not qualify the availability of the safe harbor and, indeed, it would have been antithetical to the purpose of the safe harbor for it to have done so,” CTIA said. “When it addressed the wireless safe harbor again in 2002, the Commission did not suggest any limitation on its application.” CTIA said the issue hits other carriers. “The inappropriately narrow application of the wireless safe harbor has concerned CTIA and its members for at least two years, and CTIA urges the Commission to grant Cingular’s request,” CTIA said.

Universal service support for rural wireless firms has grown “dramatically” the past year and soon will exceed $1 billion, McLean & Brown consultants said. At the same time, support for incumbent wireline telephone companies has been “essentially constant” since 2002, said the paper, an update of a March 2005 report by the Phoenix-based firm. The paper said incumbents face more than 6 wireless competitors in some rural areas, a further indication today’s fund distribution process for competitive carriers “is still fatally flawed and must be fundamentally reformed.” The paper said 58% of “study areas” set up for Universal Service Fund (USF) funding purposes have 2 or more wireless competitors and 29% have 3 or more. The report was financed internally, not commissioned by clients, said consultant Glenn Brown. It was praised by the Coalition to Keep America Connected, made up of incumbent telecom companies. “The paper notes that without fundamental reform of the portion of the program that subsidizes wireless [carriers], the entire fund is at risk,” the coalition said in a release. The paper said the FCC could ease the situation by: (1) Fixing the USF collection mechanism. (2) Limiting some rural areas to “just one carrier of last resort” eligible for USF support. “Not all areas can sustain multiple carriers without massively inefficient support,” the paper said. (3) Establishing separate funding mechanisms for wireline and wireless carriers. For most consumers, they are complementary products. (4) Reforming intercarrier compensation.

Mercedes-Benz USA weighed in on the debate over reform of the universal service fund contributions process, urging the FCC to exempt “core telematics” from any numbers-based system. Mercedes said core telematics is a vehicle-based public safety service relying on phone numbers and network airtime mobile carriers provide. Mercedes Tele Aid service, which links occupants of Mercedes vehicles to an emergency call center, is offered free for the first year, then costs $240 yearly, the car firm said. If the FCC wanted to levy USF contributions on telecom providers involved in core telematics transmission it could assess them under today’s revenue-based system, Mercedes said: “Although Tele Aid relies on phone numbers and CMRS airtime to enable customer vehicles to communicate with… call centers, Tele Aid does not provide the ability to call, or be called from, any other locations. Tele Aid is a public safety ‘information’ service, not telecommunications.”