The FCC should extend the mandatory service outage reporting requirements to interconnected VoIP and broadband service providers, says a draft NARUC resolution to be voted at its annual meeting Nov. 13—16 in St. Louis. A second draft resolution asks the agency to do a public inquiry asking to what extent wireline and wireless carriers and cable-TV companies have complied with the public interest broadband deployment and adoption obligations imposed on previous merger applicants; require all merger applicants making public interest commitments to submit on a semi-annual basis implementation progress reports to the FCC and state commissions; enforce prior and future merger application public interest obligations; and prohibit the use of or reliance on federal financial support from the Universal Service Fund by any wireless or wireline carrier or cable company or any other applicants. A draft resolution on cramming urges the FCC to implement mandatory cramming rules to all voice service providers that assess phone bills on consumers, including traditional wireline service providers, interconnected VoIP providers and wireless providers.

The House Communications Subcommittee plans to vote Nov. 16 on FCC process reform legislation, and won’t take up spectrum until after Thanksgiving at the earliest, Chairman Greg Walden, R-Ore., said at a press conference Wednesday. As expected (CD Nov 2 p8), Walden and Sen. Dean Heller, R-Nev., introduced two reform bills Wednesday in each the House and Senate. One FCC reform bill includes broad process changes first proposed in Walden’s draft bill from earlier this summer. A second bill would reduce the number and consolidate many of the reports the FCC is required to send to Congress.

Cablevision and GCI lobbied the FCC on the Universal Service Fund and intercarrier compensation the day before and just as an order overhauling both was adopted (CD Oct 28 p1), filings posted Friday to docket 10-90 show. Those cable operators were permitted to do such lobbying, under exemptions from sunshine rules. A lawyer for GCI reported speaking with a Wireline Bureau official, at his request, at 12:30 p.m. on Thursday, around the time the order was approved. “GCI’s proposed mechanism for setting and disbursing CETC support in rural Alaska under a statewide cap should take into account the fact that some carriers did not elect tribal status,” a filing said (http://xrl.us/bmhg3u). The day before, a lawyer for Cablevision spoke with an aide to Commissioner Mignon Clyburn, at the adviser’s request, a filing said (http://xrl.us/bmhg4e). It said there’s evidence in the proceeding’s record showing that ILECs persistently refuse to provide Internet Protocol-to-IP interconnections. The filing noted it was made a day late but that topics covered during the conversation had already been raised in Cablevision filings: “The opportunity to respond to a Sunshine Period ex parte presentation contemplated by same day filing requirement was made moot by the fact that the Commission acted on the day immediately following the presentation."

Verizon Executive Vice President Tom Tauke rejected claims that his company was a net beneficiary of the sweeping changes to the Universal Service Fund and the intercarrier compensation regime. “It’s something of a mixed bag,” he said in an interview on “The Communicators” on C-SPAN that was to have been telecast over the weekend. The company’s wireless division will gain from the FCC’s order, but its wireline division will lose, he said. Analysts and telecom observers had suggested that Verizon and AT&T were the biggest winners from last week’s order (CD Oct 28 p1). “But overall, it’s going to be good for the industry, it’s probably good for our company,” he said.

The telecom world largely responded cautiously as the FCC on Thursday adopted its Universal Service Fund and intercarrier compensation regime changes. But telecom officials and observers predicted lawsuits would begin pouring in after the 400-plus page order is published and digested. Meanwhile, the order itself hadn’t been finished, an FCC official told us. Staff were continuing to incorporate edits agreed upon by the commissioners late in the process but before the vote, and the order won’t be ready for release until at least the end of next week, the official said. Less-substantive changes are also still being made.

Lawmakers will continue to consider Internet gambling legalization despite significant concerns voiced at a hearing Tuesday held by the House Commerce, Manufacturing and Trade Subcommittee. A collection of professors, researchers and Native American gaming groups objected to the idea of legalizing Internet poker without implementing safeguards to address what they saw as myriad problems legalization would create. After the hearing a subcommittee spokesman said there is a “good possibility the subcommittee will likely have another hearing” to consider Internet gambling legislation.

AT&T is clinging “to an outdated and unworkable conception of intercarrier compensation” when it lobbies against cable operators’ request to allow CLECs to charge the same access rates as ILECs even when the CLECs don’t terminate calls, Comcast, Cox Communications and Time Warner Cable said in a letter filed Monday (CD Oct 24 p6). The dispute between the two companies flared up late last week, as the sunshine rules took effect and closed lobbying on the pending Universal Service Fund and intercarrier compensation system order. AT&T was trying “to maintain ILEC-centric rules,” but is striving “mightily to obscure a simple, fundamental point,” the cable companies said.

FCC Chairman Julius Genachowski’s proposed Universal Service Fund reforms are “inconsistent with the White House’s vision and direction,” a breakaway group of rural carriers wrote to President Barack Obama last week. “Your administration has announced its commitment to broadband deployment and regulatory reforms that will spur job creation and overall economic expansion,” said the Rural Broadband Alliance’s letter, according to an alliance release Monday. “However, the FCC is preparing reform measures that will completely undercut such investment and growth by sidestepping the broadband issue while simultaneously cultivating an environment of continuing regulatory and economic uncertainty throughout much of rural America.” The alliance was formed in July by several rate-of-return carriers angry that the big rural associations were about to make a separate peace with price cap carriers on USF reform (CD July 29 p1). Pending USF reforms and the intercarrier compensation regime will have a “relatively muted” impact on mid-sized, price cap carriers, analysts at UBS predicted Monday. Most of the companies “have lowered their exposure to subsidies with their recent acquisitions” and the FCC’s proposed reforms “will also allow [the mid-sized carriers] to offset most of the pressure with increases in subscriber line charges and/or with access to the new Connect America Fund,” analysts Batya Levi and John Hodulik wrote. USF and intercarrier comp represent 4 percent of revenue, 8 percent of earnings before interest, taxes, depreciation and amortization, and 12 percent of free cash flow for CenturyLink; 5 percent of revenue, 8 percent of EBITDA and 15 percent of cash flow for Windstream; and 8 percent of revenue, 12 percent of EBITDA and 18 percent of cash flow for Frontier, the analysts said. “However, our models already incorporate significant revenue declines in this revenue stream, capturing most of the impact of the new reform,” Levi and Hodulik said. “If the competitive environment does not allow the carriers to raise the SLC or if the carriers are unable to tap the new fund, then we would have to cut our … estimates by 3-5 percent for revenues, 6-8 percent for EBITDA and 9-10 percent for FCF.” The mid-sized price cap carriers offered up the ABC plan, but they have been increasingly dismayed by the direction of USF reforms over the past few weeks (CD Oct 19 p1).

Incumbent carriers are using “the government to ensure that they do not have to compete,” NCTA President Michael Powell said on the association’s website Monday. “Considering the overall objective of delivering broadband to all Americans, it is astonishing that the FCC is considering a regime in which the largest incumbent telcos would be granted the inherent right to all of the available money in certain areas, before any other industry (which are equally able and committed to serve) has a chance to compete.” Powell was referring to the right of first refusal provisions in the pending Universal Service Fund order. “Cable is the leading broadband provider in the nation, but it will have to stand in line behind wireline telephone companies,” he wrote. “Wireless is one of the most exciting ways for accessing the Internet (homage to Steve Jobs) yet they stand in the consolation line as well. And what is the harm of allowing competition?” Cable executives and lobbyists pushed hard in the final week of USF lobbying. Docket 10-90 showed no fewer than seven ex parte notices filed by cable lobbyists last week. Formulas to cap rate-of-return carriers’ operating or capital expenses “should be decided by the full Commission rather than on delegated authority at the Bureau level,” the four largest rural telecom associations told aides to FCC Chairman Julius Genachowski in a meeting last week. Rural carriers are worried that Genachowski’s intercarrier compensation regime reforms “could result in year-over-year decreases in access recovery that are not tied to costs,” said lobbyists for NTCA, the National Exchange Carrier Association, the Western Telecommunications Alliance and OPASTCO, according to an ex parte notice released Monday in docket 10-90 (http://xrl.us/bmgxa9). The rurals also urged the FCC not to consider wireless companies as “unsubsidized competitors” when excluding USF support for areas where unfunded carriers are already offering broadband.

Any phase down of Universal Service Fund support for competitive eligible telecom carriers should be gradual and give carriers a chance to adjust, said U.S. Cellular Executive Director Grant Spellmeyer in a call with Zac Katz, aide to FCC Chairman Julius Genachowski. “During the course of that discussion, U.S. Cellular advocated that any phase down of existing CETC support adopted by the Commission be subject to a full five year (60 month) schedule commencing on July 1, 2012,” the company said in an ex parte filing (http://xrl.us/bmgwij). “In the alternative, U.S. Cellular recommended that if the phase down were to be completed by the end of the fourth year that it not commence until January 1, 2013, so as to permit existing build plans already made for ETC areas for 2012 to be fully realized. It would also allow time for the FCC to complete further rulemakings on CETC support anticipated to occur in 2012.” If the commission doesn’t allow time for phase downs it could “adversely impact tower construction during 2012,” the carrier said.