Implementing the Universal Service Fund and intercarrier compensation order, tackling consumer issues like bill shock and cramming, and developing a framework for Next Generation 911 are priorities for FCC this year, bureau chiefs said during NARUC’s telecom committee meeting Tuesday.

The universal service contribution base has long been broken, and will be insufficient to deploy ubiquitous broadband service unless major reforms are made. That was the consensus among industry panelists at NARUC Tuesday. But there was no agreement on how to draw funds from a system in which some customers pay for telecommunication services and some pay for information services, and panelists said figuring out interstate retail revenue is complicated.

Consolidated Communications agreed to buy SureWest for $341 million in cash and stock, the companies said. The deal gives Consolidated SureWest’s 130,000 residential subscribers and 15,700 commercial businesses in the greater Sacramento and Kansas City areas. The combined companies will have about 1,775 employees. The move came less than two weeks after an analyst said Google could buy SureWest to boost its fiber initiatives. Consolidated will pay $23 per SureWest share, or an equal amount of Consolidated common stock. The per-share price represented a 47 percent premium to SureWest’s Friday closing stock price. The deal is expected to save $25 million in operating cost and $5 million to $10 million in capital expenditure, the companies said. Consolidated expects to incur merger and integration costs, excluding closing costs, of around $20 million to $25 million over the first two years after closing.

The FCC Wireless and Wireline bureaus jointly sought comment on rules for a reverse auction to award $300 million through the first phase of the new Universal Service Fund Mobility Fund. This will be the first auction to award high-cost universal service support via the reverse competitive bidding process outlined in October’s reform order. The auction will award one-time support to carriers that commit to provide 3G or better mobile voice and broadband services in areas where service is currently unavailable. The bureaus request comment on procedures for identifying eligible geographic areas, determining basic auction design, and establishing detailed bidding methodologies. With regard to aggregation of eligible areas for bidding, the bureaus seek comment on establishing more stringent coverage requirements, and the development of a target rate to evaluate whether recipients’ rural service rates are comparable to rates in urban areas. In response to the public notice, the Rural Cellular Association expressed concern that the FCC’s auction procedures could harm smaller, competitive carriers. “It will be nearly impossible for smaller rural and regional carriers to provide comparable services at comparable rates” to the large urban carriers like AT&T or Verizon, said RCA President Steve Berry. “Why penalize those carriers who have been providing services to customers in rural areas for years?” Comments are due Feb. 24, and reply comments are due March 9; the auction, designated Auction 901, is scheduled to begin Sept. 27.

The Universal Service Administrative Co. submitted quarterly fund size and administrative cost projections for the Universal Service Fund to the FCC Thursday (http://xrl.us/bmqk25). The projections will be used in next month’s calculation of the 2Q contribution factor, which determines the percentage of interstate end-user revenue that telcos must pay into the fund. The High Cost Support Mechanism, which subsidizes telecommunications services in rural areas, has a projected total demand of $1.125 billion. The estimated Low Income Support Mechanism funding requirement is $622.01 million, which includes $573.21 million for Lifeline, $46.11 million for Link Up, and $2.69 million for Toll Limitation Service. Both Link Up and Toll Limitation were cut from the program this week by the FCC (CD Feb 1 p1). The estimated Rural Health Care Support Mechanism demand requirement is $35.74 million. The Schools and Libraries Support Mechanism requirement is $562.5 million, which is one-quarter of the $2.25 billion annual cap on federal universal service support for schools and libraries.

Native American issues have gained increasing prominence in Washington and the Obama administration understands the importance of improving communications in Indian country, but more remains to be done, former FCC Commissioner Michael Copps said Thursday in a speech to the Tribal Telecom 2012 Conference in Phoenix. “There is “a new feel for your issues in Washington nowadays,” Copps said. “There is concern from the top down. The FCC is an independent agency, of course, but it can better do what it is capable of doing when other branches of government are of a similar mind. I don’t think I need to assure this crowd that the president is paying attention to you and your issues. Many of you have met with him and know that first-hand.” Copps said he learned early on as a commissioner the importance of tackling the issue of improving communications in Indian country. The National Broadband Plan, changes to the Universal Service Fund, various broadband grants through the Agriculture and Commerce departments, all have helped, but much more needs to happen, Copps said. He noted that a “staggering” 90 to 95 percent of Native American households still don’t have broadband. “How will all this get done?” he asked. “First of all, let me tell you how we will not get it done. We will not get it done if government leaves it to business or business leaves it to government. ‘Going it alone’ is not how we met the infrastructure challenges of the past. That’s not how this country built its bridges and harbors and railroads and interstate highways and rural electricity. We built those things by the public sector and the private sector working together -- the private sector being the locomotive bringing its tools and expertise to the job and the public sector providing a vision for where the country needed to go and real incentives to bring critical infrastructure to places where business alone had neither the means nor the reason to go."

Several more appeals of the FCC Universal Service Fund order surfaced late last month. Gila River Telecom and the Gila River Indian Community filed a petition for review in the 10th U.S. Circuit Court of Appeals. U.S. Cellular, the Arizona State Commission, Docomo Pacific, PR Wireless and Nex-Tech Wireless filed separate petitions for review in the U.S. Court of Appeals for the D.C. Circuit. The Arizona appeal was filed Jan. 27 while the others arrived Jan. 30. The petitions called the FCC order arbitrary, capricious and unlawful.

The amount of Universal Service Fund support Gila River Telecommunications receives is expected to fall by $1.6 million in 2012, compared to the previous year, as a result of new USF rules approved in October, representatives of the Gila River Indian Community (GRIC) said in a meeting at the FCC. “Such a loss of support could have a detrimental effect on the pricing and/or level of telecommunications services in the GRIC and [the company’s] ongoing efforts to deploy fiber-to-the home and businesses,” Gila River said in a filing at the commission (http://xrl.us/bmqbxg). “Such an impact is contrary to the public interest.”

The FCC approved an order Tuesday rewriting the rules for the Universal Service Fund Lifeline program. Commissioners Robert McDowell and Mignon Clyburn found aspects of the order lacking, but both voted to approve the order as a whole. McDowell dissented in part and concurred in part. Clyburn issued a concurrence on one part of the order.

The FCC’s net neutrality order has become “the hotel Sunday brunch of administrative procedure,” with the reconsideration petitions and rounds of court appeals, said Austin Schlick, FCC general counsel. Verizon offered a “very creative theory” that it could file an early challenge -- and it had to go to the U.S. Court of Appeals for the D.C. Circuit -- because the order amounted to a licensing decision, he said Monday at a webcast Practising Law Institute seminar in New York. With the court’s dismissal of a filing by the carrier before the order was final, “the legal aphorism ‘Pigs get fat and hogs get slaughtered'” applies, Schlick said. But the punchline is that a court lottery held after timely appeals were filed in several circuits determined that “the case goes where Verizon wants it to go,” he said: the D.C. Circuit, which had ruled against the FCC on closely related issues in the Comcast case.