Joint Board Chairman Says USF Work May Come to Nothing
SAN FRANCISCO -- The joint board may not be able to agree on long-anticipated recommendations to revamp universal service, a board leader said. “We might not be able to get anything out,” Ray Baum, the state chairman of Joint Board on Universal Service, said late Wednesday at the CTIA conference. “I'm cautiously optimistic,” Baum added. In any case, a Nov. 1 board target date for sending its recommendations to the FCC seems likely to slip. “We're going to make a vigorous effort” to send suggestions “by the end of next week,” he said.
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“We're in a delicate point in the discussions,” Baum said. “This could all come apart.” Rural incumbents feeling they've been short-changed want $300 million to $400 million more a year, he said. Baum opposes “giving them any more money,” he said. He would tell them, “'Hold still. Be glad where you are.’ This is no time to be giving the RLECs more money,” he said.
The board’s work has been tough slogging due to problems convening conference calls, Baum said. FCC Chairman Kevin Martin’s participation has been especially hard to arrange, he said. “This is not a criticism of the chairman,” Baum said. Martin is busy with many matters, including the 700 MHz spectrum auction, he said.
The board’s efforts may be for nought, even if does make recommendations, said Baum, who serves on Oregon’s Public Utilities Commission. “I'm not convinced this is going to be enacted, for lack of political interest,” he said, referring to restructuring the universal system the next couple of years.
Congress seems less interested in universal service’s growing cost and illogical distribution of its money -- the board’s focus -- than in expanding the program to include broadband, he said. An effort to shake up the system by awarding money through a reverse auction probably would be “overruled by Congress,” Baum said. The system needs to get away from subsidizing more competition in places with service and instead stress provision of access, including broadband, in places without enough service, he and other speakers emphasized repeatedly.
Baum disagrees with Martin about pegging the system to actual carrier costs, which rewards inefficiency, he said. But “I'm just one vote,” Baum said. “The FCC is just so politicized all the time” from getting hauled up to Capitol Hill regularly,” he added.
Without action soon, and with reform campaigns getting lost in the 2008 campaign and subsequent capital turnover, by 2009 the Universal Service Fund may grow $1.5 billion to $2 billion, Baum said. On the other hand, in a few years rural incumbents will be easier to deal with, since their financial and political strength has peaked and will decline with access-line losses, he said. “Everybody knows there’s been gold-plating by the RLECs,” with 10 to 15 percent of their universal service receipts constituting rebilling for facilities already built, Baum said.