FCC to Reclaim High-Cost Support
The FCC will take back high-cost universal service money given up by eligible telecommunications carriers and reduce the caps in the states where the relinquishing telcos had been operating, the commission said in an order published late Thursday. The commission said redistributing the forgone cash to competitors wouldn’t necessarily help deploy high-speed broadband and “could simply subsidize duplicative voice service.” The order (dockets 05-337 and 96-45) paves the way for commission to offer direct USF subsidies for broadband. It takes effect immediately.
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Commissioner Michael Copps dissented, saying USF should support broadband but he’s “concerned” that the order “does not adequately take into account what may be ongoing issues in the states.” A Nevada investigation into whether Verizon followed the rules in reporting its line counts for high-cost support (CD Dec 29 p5) is still open, Copps said. “I would be seriously concerned if this order is used to bless any activity that is currently under state review,” he said.
Thursday’s order is seen as a victory for the bigger telcos. Small telcos tried to ward it off, saying lowering the cap would stall broadband and other telecom buildouts (CD Nov 2 p6). Some small telcos claimed to have lost as much as 50 percent of their support under the 2008 high-cost cap (CD Oct 14 p7). Rural wireless companies are also worried that the order gives leverage to bigger, wireline carriers, said Steve Berry, president of the Rural Cellular Association. “It’s a very convoluted way of putting wireline carriers in control in deciding whether high-cost funds are going to be available,” he said. “Congress is going to have to take a look at this."
But “the counter-argument is that the competitors are still receiving USF support and Verizon and Sprint are not,” said David Cohen, USTelecom’s policy vice president. “So who benefits competitively from that?” The order was a good first step, but more work must be done, Cohen said. “Obviously, this is only an interim solution and the commission should be moving more expeditiously on more comprehensive USF reform and also on intercarrier compensation reform.” Orders on those matters are expected for February’s FCC open meeting (CD Dec 1 p1).
With Verizon and Sprint giving up USF cash in exchange for merger approvals, small wireless companies urged the FCC to redistribute the relinquished among other companies. The FCC rejected those requests in September but asked whether the money should go as a “down payment” for broadband or into a reserve fund (CD Sept 7 p1).
The order will help “rein in high-cost USF,” Paul Raak, the Independent Telephone and Telecommunications Alliance’s legislative affairs vice president, said in an e-mail. The Alliance said, “After the 18-month waiver the Commission should redistribute CETC money toward targeted broadband deployment by high-cost providers who are already deploying broadband and would commit to do more if they received adequate USF support."
Meanwhile, several states have opened proceedings on Verizon’s ETC status. In Nevada, Verizon is seeking to withdraw its application to transfer ETC status from Alltel, which it absorbed in 2008, and is asking to give up that status. The docket will be published this week along with a proceeding schedule, said a Nevada Public Utilities Commission spokeswoman. Commission staff will open a separate proceeding about whether Verizon is getting high-cost support without commission authorization, she said.
But Verizon still wants to transfer ETC status from Alltel to Verizon in Kansas. As a result of the integration, it’s no longer feasible to distinguish the network, business operations or subscribers of the companies for ETC compliance and reporting purposes, Verizon said. The carrier said the FCC approved its petition for pro forma amendment of the ETC designations held by Alltel and affiliated entities in Alabama, North Carolina and Virginia. Verizon said it does not want to expand its ETC designation. Smaller carriers like Viaero Wireless, US Cellular and Nex-Tech Wireless criticized Verizon’s request, saying granting it would allow the carrier to count additional lines for USF high-cost support -- lines that are served by a network that wasn’t the subject of Alltel’s original designation -- allowing Verizon to claim a larger percentage of the high-cost support available to CETCs in the state.
The Georgia Public Service Commission is “aware” of allegations of wrongdoing against Verizon, but no one has formally complained to Georgia officials, a spokesman said. “Any allegations that an ETC has engaged in the misuse of USF funds in Georgia would be taken very seriously,” he said. The Iowa Utilities Board is not aware of any USF wrongdoing, said John Ridgway, director of telecom.