The FCC is still on target to act on the proposed AT&T- BellSouth...

the merger runs out, he said. Asked if the federal court review of the SBC-AT&T and Verizon-MCI mergers could delay FCC action on BellSouth, Martin said the Tunney Act review is mainly directed at DoJ’s merger review, so he doesn’t think it will affect the FCC’s timing. On another issue, he said the agency is sensitive to the effect on rural telephone companies of any changes in intercarrier compensation or universal service. Rural carriers rely on these programs financially so changes have to be made in a way “that respects rural carriers'” dilemma, Martin said. The arrival of competitors also eligible for universal service subsidies has placed a big strain on the program, he said. A solution may be to institute reverse auctions for universal service funding, he said. Another may be to base universal service payments to competitors on their actual costs of providing service, he said. Competitors now receive payments based on the incumbent telecom company’s costs, which usually are higher because of infrastructure investments, he said. Asked about net neutrality, Martin said the FCC believes in a “balance” in which network providers “can’t block access to websites, but can manage their networks” by charging different prices.