McDowell Open to ‘Corrective Action’ if USF Order Causes ‘Systemic Issues’
FCC Commissioner Robert McDowell understands rural carriers’ concerns about cost recovery when the new Universal Service Fund rules start phasing in July 1, he said Monday. “As this thing gets phased in, if there are fundamental systemic issues, we will take corrective action,” he said during a wide-ranging Q-and-A session with NTCA CEO Shirley Bloomfield at NTCA’s legislative and policy conference. That’s one of the benefits of the “iterative” nature of the Universal Service Fund/intercarrier compensation order, he said.
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If a company thinks it might not survive in the short term, that’s what the waiver process is for, McDowell said: “And we'll learn from that, if necessary. … I understand your fear and anxiety as things are coming home to roost.” McDowell encouraged companies to share specific data -- “the more granular, the better” -- on the exact costs and unique circumstances they face.
For companies concerned about paying back Rural Utilities Service loans, “the executive branch has a role here as well,” McDowell said, saying the RUS “should be looking to work with you” to restructure loans where possible. “Let’s all be mindful, let’s be sensitive, let’s try to share information in real time with each other. We're all in this together,” he said. A Rural Utilities Service spokeswoman did not respond by our deadline.
McDowell expressed his belief that contribution reform will get through by the end of the year. “The chairman and I have been talking about what are we going to do about contribution reform,” he said. In December he was hoping the rulemaking notice would be out by March, but that hasn’t happened. In any case, the chairman controls the timing, he said. “I still have his assurance that it will be launched and concluded this year, and I'll take him at his word,” McDowell said. “But we have to move quickly.” In Q1 of 1998 the contribution factor was around 5 percent; today it’s over 17 percent. That’s a “huge automatic tax increase on American consumers.” McDowell and Genachowski testified Monday before a House appropriations subcommittee on the FCC’s proposed budget for FY2013 (See related report in this issue).
McDowell noted that a new spectrum auction will take years to play out. In the meantime, there is a great promise for unlicensed spectrum in rural areas, especially the TV white spaces, he said. He also discussed implementation of the FCC’s data roaming order passed last April, which uses its Title III authority to require carriers to offer data roaming on commercially reasonable terms and conditions (CD April 8 p1). Although he dissented from that order, and expects it to be “struck down pretty resoundingly” by the U.S. Court of Appeals for the D.C. Circuit, he wants companies to let him know if they are precluded from signing roaming agreements. “I want to know who, when and where,” he said. He urged small telcos afraid of retribution to “let your association be your mask."
McDowell asked that companies talk to the FCC about what they're doing to help stimulate broadband adoption. “As consumers gobble up more bandwidth through the use of different apps, you should have pricing freedom” -- the freedom to charge more for bandwidth “like any other good or service,” he said. Usage-based pricing makes sense for bandwidth, which “is a scarce commodity” just like food or gas, he said. “Stand strong on that, and I'll stand with you.”