Congressional leaders have revived notions of raiding the Universal Service Fund to help close the nation’s budget deficit, telecom lobbyists told us Friday. The lobbyists were told that House GOP leaders are still weighing whether to use universal service cash to help balance the nation’s books once the Joint Select Committee on Deficit Reduction completes its work.

Price cap carriers would be given $300 million for broadband deployment in unserved areas in the first year of universal service and intercarrier compensation reform under a proposed order being circulated at the FCC, telecom officials told us Thursday. The money would come on top of the legacy universal service support the price cap companies are already receiving, the officials said. Having received the money, the price cap companies will have to meet minimum standards for broadband deployment within two years, they said.

Sen. Jim DeMint, R-S.C., is “not optimistic” Democratic senators will support Republicans’ Congressional Review Act effort to kill FCC net neutrality rules, the ranking member of the Communications Subcommittee said Wednesday. Until the election, DeMint hopes to “minimize the damage” of the Democratic-controlled Senate and executive branch, he said. In other speeches also at a Free State Foundation event, Reps. Marsha Blackburn, R-Tenn., and Cliff Stearns, R-Fla., also railed against regulation. Stearns supported the FCC effort to revamp the Universal Service Fund, but said Congress should take the next steps of revamping USF contribution rules and updating the 1996 Telecom Act.

Audiovox’s fiscal Q2 net income jumped to $3.4 million from $645,000 a year earlier on strong sales by its newly acquired Klipsch business that sharply increased gross margins, company executives said on an earnings call.

FCC Chairman Julius Genachowski’s proposed universal service order would raise speed standards to 6 Mbps down/1.5 Mbps up, prune the so-called “right of first refusal” for incumbents, cut down the $2.2 billion set-aside for price cap carriers and reduce the transition time for rate-of-return carriers from 10 years to five, telecom and FCC officials told us Wednesday.

Sen. Jim DeMint, R-S.C., is “not optimistic” Democratic senators will support Republicans’ Congressional Review Act effort to kill FCC net neutrality rules, the ranking member of the Communications Subcommittee said Wednesday. Until the election, DeMint hopes to “minimize the damage” of the Democratic-controlled Senate and executive branch, he said. In other speeches also at a Free State Foundation event, Reps. Marsha Blackburn, R-Tenn., and Cliff Stearns, R-Fla., also railed against regulation. Stearns supported the FCC effort to revamp the Universal Service Fund, but said Congress should take the next steps of revamping USF contribution rules and updating the 1996 Telecom Act.

Rural telecommunications companies contributed $14.5 billion to the economies of the states in which they operated in 2009, said a Hudson Institute study prepared for the Foundation for Rural Service (FRS). Of that amount, about $10.3 billion was through their own operations and $4.2 billion was through the follow-on impact , the study said. Rural carriers improve economic development in urban areas as well, it said. Some 34 percent of the $14.5 billion final economic demand generated by rural telecom companies accrues to rural areas; the other two-thirds redounds to the growth of urban areas, it said. The rural telecom sector supported 70,700 jobs in 2009, both through its own employment and the employment that its purchases of goods and services generated, the study said. The study argued that the level of economic activity and employment is consistent with the values of access to advanced telecom services, as supported by the Universal Service Fund. If USF support declined or disappeared, companies would raise prices paid by customers and rural users would pay more for telecom services, the study said. Companies would also cut investment, affecting network quality overtime, it said.

Cable and rural telecom industry executives headline at Wednesday’s Senate Commerce Committee hearing on revamping the Universal Service Fund. Testifying are: NCTA President Michael Powell, National Telecommunications Cooperative Association President Shirley Bloomfield, U.S. Cellular President Mary Dillon and Frontier Communications Chief Legal Officer Kathleen Abernathy, the committee said Tuesday. Washington state Utilities and Transportation Commissioner Philip Jones also plans to testify, the committee said. The hearing is 2:30 p.m. in Room 253, Russell Senate Office Building. Cable companies “strongly support” efforts to update USF and intercarrier compensation, Powell said in written testimony that circulated among lobbyists Tuesday. Powell urged tweaks to the ABC plan. VoIP and circuit-switched calls must be treated the same, Powell said. He criticized telcos for “refus[ing] to pay the appropriate intercarrier compensation on VoIP traffic” that cable exchanges with them. Powell also supported capping the USF high-cost fund at its current level, $4.5 billion. And USF distribution should be technology-neutral, he said. “The FCC should put in place support mechanisms that harness marketplace competition, like competitive bidding or reverse auctions, to award subsidies to the most efficient provider, regardless of what type of technology that provider uses,” Powell said. “At that point, legacy high-cost support should end.” Frontier’s Abernathy urged adoption of the original ABC plan. “It is a carefully negotiated proposal among the carriers with the most history and involvement in universal service and intercarrier compensation,” she said.

The American Cable Association made a pitch Tuesday to reduce the first refusal rights in the pending universal service reform order. Association officials and members said they were heading into ex parte meetings with FCC staff this week, but were put off by Chairman Julius Genachowski’s remarks announcing the order (CD Oct 7 p1). “Thursday, we heard the speech and in there it’s clear that the chairman anticipates providing some level of right of first refusal,” ACA President Matthew Polka said in a conference call with reporters Tuesday. “We feel confident about our concerns about where the commission is heading.”

Retransmission consent costs will keep rising in coming years, agreed broadcast and cable industry officials and an analyst who tracks those prices. On opposite sides of whether the FCC should change retrans rules, the industry officials said neither the commission nor legislators seem poised to step in. The number of recent retrans disputes in terms of multichannel video programming distributor subscribers blacked out from getting a TV station on their MVPD has been small and the duration of outages has been short, said the broadcast lawyer and the analyst. The cable executive said the sheer number of disputes has been high, even if they've been in smaller markets.