Sprint Nextel began in Kansas its Lifeline program Assurance Wireless, the company said. The service includes a free cellphone and 250 free monthly voice minutes for eligible residents. Customers eligible for the program, which is funded by federal Universal Service Fund, include those who participate in Medicaid, Food Stamps/SNAP, General Assistance, Head Start, Supplemental Security Income, Temporary Assistance to Needy Families, United Tribes Food Distribution Program, Bureau of Indian Affairs General Assistance, Tribally Administered Temporary Assistance for Needy Families or the National School Lunch Program’s Free Lunch Program. Customers may also qualify based on low household income.

A proposed decision by the FCC to send AT&T’s buy of T-Mobile to an administrative law judge is expected to put more pressure on AT&T to reach a settlement with the government, industry and government officials tell us. AT&T officials have a meeting set up with the Department of Justice Monday to discuss a possible settlement (CD Nov 23 p1). A meeting that had been scheduled for Monday of this week was cancelled at the last minute.

The FCC approved Windstream’s $2.3 billion acquisition of Paetec. In a non-docketed public notice Tuesday, the FCC said its staff concluded that the $2.3 billion deal would “serve the public interest” and wouldn’t harm competition. Announcing the deal in August, Windstream said the deal would add about 100,000 fiber miles to Windstream’s network and help Windstream beef up its wireless backhaul, Ethernet, Multi-Protocol Label Switching and hosting businesses (CD Aug 2 p14). The proposed acquisition received only one formal opposition when the city of Rochester, N.Y., said it would lose taxpayer money that had been set aside to help Paetec build its new corporate headquarters there. Rochester settled with Windstream separately and dropped its opposition Nov. 13, the FCC said in the public notice. Most analysts said CLECs such as Paetec fared the worst under the FCC’s newly published Universal Service Fund order (CD Oct 28 p1). Earlier this month, we asked Guggenheim Partners analyst Paul Gallant if he saw mergers and acquisitions coming for the CLEC sector. He said: “The regulatory front isn’t going as well as CLECs would like, and their scale disadvantage means there is always M&A chatter around these companies. But CLECs’ edge is the ability to grab new opportunities quickly. An example is Time Warner Telecom, which is beginning to offer cloud computing to its telecom customers."

FCC Chairman Julius Genachowski circulated a rulemaking notice on video relay services, an FCC official told us. The notice circulated shortly before the commission’s massive Universal Service Fund order circulated (CD Oct 28 p1), the official said. Among other things, the notice asks questions about how to build a pilot program that would help poor people access broadband, whether to move away from allowing vendors to charge per minute to require them to charge per customer, and how to build interoperability requirements, the official said.

Rep. Tim Griffin, R-Ark., sought to ban Lifeline support for wireless services under the Universal Service Fund. His HR-3481, introduced last week, would kill funding for mobile for the program aimed at low-income households in one sentence: “A provider of commercial mobile service may not receive universal service support under sections 214(e) and 254 of the Communications Act of 1934 … for the provision of such service through the Lifeline program of the Federal Communications Commission.” Griffin is a freshman who serves on the House Judiciary Subcommittee on the Internet. The bill was referred to the Commerce Committee. The FCC declined to comment. “I have heard from numerous Arkansans who have shared stories of dead relatives receiving free cell phones in the mail, individuals abusing the system by obtaining numerous free cell phones and recently I saw a electronic kiosk in a convenience store promoting free cell phones, all through a government run and taxpayer funded program called Lifeline,” Griffin said. “My bill returns the Lifeline program back to its original structure by ending federal subsidies for free cell phone services. This costly government cell phone program is costing American consumers, and my bill puts an end to it."

The FCC will take on the contribution side of Universal Service Fund reform early next year, with an order likely by mid-year, FCC Commissioner Robert McDowell predicted Monday during a question and answer session at an Federal Communications Bar Association lunch. McDowell said he has a commitment from Chairman Julius Genachowski to move forward quickly following the commission’s approval last month of an order reforming the distribution side of the USF (CD Oct 28 p1). “The chairman and I have talked,” he said. “Certainly, we have to do something."

The Rural Cellular Association panned the FCC universal service overhaul (CD Nov 19 Bulletin). “I appreciate the FCC’s work to modernize USF, but unfortunately the Order confirms our previous concerns that wireless services are significantly underfunded,” RCA President Steve Berry said. “Adequately funding wireless services would have encouraged competitive carriers to participate -- needless to say, this was a missed opportunity for the FCC to promote industry competition and the build-out of advanced high-speed mobile services."

The FCC acted within its authority when it denied petitions from Maine and Vermont regulators to increase Universal Service Fund support to rural carriers, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit said Friday. Under a “narrow” order responding to a 10th Circuit decision in the so-called Qwest II case, the FCC defined “reasonably comparable” rates “as requiring rural area rates to fall within two standard deviations of the average national urban rate,” Judge David Tatel wrote in Friday’s 21-page decision on behalf of himself and Judges Karen LeCraft Henderson and Thomas Griffith. Trying to comply with the 10th Circuit’s Qwest II remand requiring it to “preserve and advance universal service” through its definition of reasonably comparable, the FCC pointed out (CD Sept 19 p10) that telephone subscriptions were at an all-time high and “concluded that the two-standard-deviation definition had actually helped advance universal service,” Tatel said in the ruling. Vermont and Maine regulators challenged the order, claiming the Qwest II decision “expressly directs the Commission to revise its two-standard-deviation high-cost support mechanism.” Tatel said “Vermont misreads Qwest II.” Neither the state regulators nor their attorney responded to requests for comment.

It’s fine to reimburse Lifeline telecom carriers for actual instead of projected support, but the FCC should urge the Universal Service Administrative Co. “to substantially reduce the average time for processing” claims, CompTel told the FCC in comments posted to docket 11-42 on Friday. USAC’s current, projections-based disbursement “procedures are neither efficient nor conducive to promoting the Commission’s goal of eliminating waste, fraud and abuse in the disbursement of universal service fund,” CompTel said. CompTel was joined by Michigan regulators, who said in comments published Friday that “the change will result in program savings by reducing overestimated payments” (http://xrl.us/bmiym9). But CLECs are worried that “the downside” of moving to a system that disburses cash based on actual costs “is the financial shortfall” that telcos “will suffer during the month that USAC transitions,” CompTel said (http://xrl.us/bmiynf). “Both the Commission and USAC acknowledge that [telcos] will not only receive little or no reimbursement during the transition month, but may even incur a negative reimbursement that will be netted against the next month’s payment or invoiced to the” telco, CompTel said. The FCC could make things easier by ordering USAC “to shorten the window between receipt of a completed 497 and disbursement of payment in order to minimize the adverse financial impact on cash flow,” CompTel said. Companies use form 497 to report costs to USAC. If a Lifeline/Link-Up item is to be considered at the Dec. 13 FCC meeting, a draft order must circulate by Tuesday, by FCC tradition. Industry officials have scheduled a series of last-minute meetings for early next week. It appears that several reform ideas are still in play, including an overall cap on the fund, or a cap on reimbursements to Link-Up subscribers, telecom officials said.

Rep. Lee Terry, R-Neb., has recurring concerns about whether the FCC’s Universal Service Fund order, approved last month, does enough to spur the growth of wireless (CD Oct 28 p1), the vice chairman of the House Communications Subcommittee said Wednesday at a National Journal conference on the future of technology. Spectrum and regulatory reform largely dominated the discussions.