Groups representing small wireline carriers asked the FCC to clarify another part of its Nov. 18 Universal Service Fund order, on the “local urban rate floor” carriers must meet to qualify for high-cost support. “It is not clear ... whether the rules permit carriers sufficient time to implement rate changes that would enable the carriers’ eligibility for high-cost loop support,” the groups said in a petition filed at the FCC (http://xrl.us/bmpow7). “The rules could be read to imply that new governing rates were to have been effective January 1, 2012 -- only 2 days after the Order became effective -- and that any steps taken by carriers thereafter to increase rates to maintain unreduced levels of HCLS [High Cost Loop Support] for the twelve months beginning July 1, 2012 are already moot.” The petition was signed by the Independent Telephone and Telecommunications Alliance, National Exchange Carrier Association, NTCA, OPASTCO and Western Telecommunications Alliance.

The NTCA called on the FCC to grant Citizens Tel Cooperative a waiver after the small Virginia-based telco missed an Oct. 3 deadline to certify the Universal Service Fund monies it received will be used “for the provision, maintenance, and upgrading of facilities and services for which support is intended.” The company maintains the employee who was supposed to submit the filing didn’t until Oct. 6. “Citizens has demonstrated in its Petition good cause to grant the waiver and that the waiver, in this situation, is in the public interest,” NTCA said (http://xrl.us/bmpnx7). “There is no pattern of abuse, nor any intent to defraud. It is readily apparent that the missed reporting deadline was the result of an internal mistake. Further, once the mistake was identified, the certification was promptly submitted and immediate steps were taken both to rectify the problem as well as to implement new internal procedures to ensure future compliance."

Negotiations among the three FCC members on the Lifeline order scheduled for a Jan. 31 vote are expected to get under way in earnest later this week. Questions remain about the mechanisms in the order for controlling the size of the Lifeline fund and are expected to be the subject of more discussion headed into the meeting. FCC Chairman Julius Genachowski put the Lifeline order on the Sunshine notice, released Tuesday afternoon, scheduling the order for a vote at next week’s meeting and cutting off further lobbying. Both Genachowski and FCC Commissioner Robert McDowell are in Geneva for the early part of this week, attending the opening of the World Radiocommunication Conference.

The Rural Utilities Service advised broadband loan applicants to wait to submit applications until RUS provides updates to its financial models. The new models are “imminent,” it said in a stakeholder announcement released Monday. The recent FCC order revamping the Universal Service Fund made it necessary for RUS to revise the models, RUS said. The new models will allow RUS to better evaluate the “financial feasibility of new projects,” it said. “We believe these updates are necessary to take into account regulatory changes and we regret any confusion that may have occurred as a result.” A rumor circulated last week that RUS was canceling the broadband loans program, but an Agriculture Department official said it was false. “RUS is currently accepting applications for both the infrastructure and the Farm Bill programs, which have not been suspended,” the stakeholder announcement said. OPASTCO is monitoring the situation closely, said Vice President Randy Tyree.

NARUC filed its appeal of the FCC’s Universal Service Fund order at the U.S. Court of Appeals for the D.C. Circuit Friday, as planned (CD Jan 13 p1). The group has “major concerns” about several preemptive elements in the order, particularly about the Eligible Telecom Carrier designation, said NARUC President David Wright and Telecom Committee Chair John Burke. The order preempts state authority “in a way that is unsanctioned by existing law,” they said in a statement.

The latest numbers emerging as the FCC pushes forward on an order addressing Lifeline funding reveal sharp growth in the cost of the Universal Service Fund program. Lifeline spending was up sharply in Q4 2011, ending in September, to $525 million, but it remains unclear whether that number is an anomaly or means real, across the board growth in the Lifeline program. Meanwhile, a senior FCC official said Chairman Julius Genachowski is committed to putting in place significant controls on the size of Lifeline program, which are projected to save $2 billion over a period of years versus the status quo.

Almost three months after the FCC approved a Universal Service Fund/intercarrier compensation reform plan, major industry players continue to seek significant changes. Comments were due last week on a further rulemaking notice approved as part of the order. How USF dollars ultimately will be divided as the fund is reconfigured to primarily pay for broadband is the key question addressed in most filings. They show that the FCC still has a huge job ahead as it continues to tackle changes to the USF. Numerous petitions for reconsideration have been filed in response to the Oct. 27 order. A second round of comments focusing on intercarrier compensation issues is due Feb. 24. Next week, the commission will begin to tackle Lifeline reform. Also looming are likely changes to the contribution side of USF.

Rural telecom associations want more, not less support to deploy broadband, said joint comments filed Wednesday by OPASTCO, the National Exchange Carrier Association, NTCA and Western Telecom Alliance. FCC efforts so far on Universal Service Fund and intercarrier compensation mechanisms for rural LECs “have consisted entirely of caps, cuts and phase-outs to cost recovery components,” they said. At minimum, they said the FCC should provide USF support for standalone broadband, middle-mile costs and conversions to IP-enabled switching.

The FCC’s Universal Service Fund overhaul depends on a strong state role in monitoring and evaluating the results, said the Wisconsin Public Service Commission in a filing with the federal commission (http://goo.gl/vzwi5). The WPSC urged a strong state role in ensuring compliance with Connect American Fund obligations, measuring and reporting broadband speeds and other verifications, comparing services, and interconnection and backhaul for community networks. States should also have a strong role in developing the CAF for rate-of-return carriers, the WPSC said. It also expressed concern that the rural fund might not be enough to maintain existing and build out new networks. The state commission also urged the FCC to consider potential impacts on a case-by-case basis as it shifts the fund from voice to broadband.

FCC Commissioner Mignon Clyburn wants rural telcos to participate in a broadband adoption pilot program, she said at the OPASTCO conference Wednesday. The pilot program is the next step in updating the Universal Service Fund Lifeline program for low-income consumers, she said. Participation of OPASTCO members is “crucial because the low-income needs in rural America are very different than those in urban America,” Clyburn said. Clyburn suggested the companies work together: “I encourage you individually and as an organization, to collaborate with one another, as I understand that planning and executing a pilot may be resource-intensive. In fact, if sharing your resources and expertise in this endeavor is preferred, a consortium approach to the pilot may be the most effective and efficient way for you to proceed.” While the pilot program will focus on service costs, it should also address equipment costs and digital literacy, Clyburn said: “We need to tackle all of the obstacles that keep consumers from purchasing broadband service.” Serving rural areas “means not only high-cost areas,” but also low-income consumers, Clyburn said. “If we don’t address the cost of accessing the network for those consumers, then not only are we leaving them behind, we are not reaping the full rewards and value of our total investments in the networks.” The FCC plans to vote on a Lifeline order at its Jan. 31 meeting.