The FCC should focus on “covert consolidation” in its ongoing quadrennial review of media ownership rules, several nonprofit panelists said Tuesday. They called deals where two or more TV stations in a market join forces, without combining all assets as in a typical merger or acquisition, a critical issue for industry M&A foes. Municipal and public, educational and governmental channel officials also spoke at the Alliance for Community Media event on how PEG channels can educate members of Congress on many telecom issues.

NTCA, OPASTCO and the Western Telecom Alliance, the three largest rural telecom associations, sent letters to Congressional Commerce Committee leaders asking them to urge the budget super committee to keep its hands off the Universal Service Fund, the associations said in a news release. In July, news that House Republicans were considering using the fund to close the budget gap set off a panic among telcos and nearly disrupted the negotiations that resulted in the incumbent-backed ABC plan (CD July 14 p1). The crisis passed, but telecom lobbyists are worried that Congress, having lit upon the idea once, will come back to it. In telecom officials’ minds, the funds aren’t appropriated by Congress and therefore can’t be dipped into by Congress. “Our nation must not take private monies to fund public debt,” OPASTCO President John Rose said in a news release. “USF is used to build and sustain our country’s robust communications infrastructure. Greater economic damage will occur in the long run, in the attempt to cut the deficit in the short-term."

FCC Chairman Julius Genachowski should consider waiving limits on high-cost universal service funds for America’s territories, said Department of Interior Assistant Secretary Anthony Babauta. Places such as American Samoa, Mariana Islands, Guam and Puerto Rico “are often hampered by their remote location and the high cost of support and diffusion of basic services,” Babauta said in a letter to Genachowski, dated and released Friday. “As such, the limitation on Universal Service Funding that can be collected has an adverse impact on the amount of high-cost support that competitive eligible telecommunications carriers in insular areas have been able to collect, therefore hindering the ability to bring the insular areas on a level comparable to urban areas.”

High-cost universal service disbursements to rate-of-return carriers grew by more than 4.4 percent from 2009 to 2010, while disbursements to competitive carriers fell by 4.8 percent, data released by the Universal Service Administrative Co. on Friday showed. Rate-of-return carriers received more than $2 billion in high-cost funds between January and December 2010, compared to $1.9 billion over the same months in 2009, USAC’s data showed. That’s nearly half of last year’s high-cost disbursements, the data showed. Competitive eligible telecom carriers received $1.213 billion in 2010 and $1.274 billion in 2009. In 2008, those CETCs received more than $1 billion in payments. Price cap carriers saw a decrease in their universal service allotments, from $676 million in 2009 to $653 million in 2010, USAC’s data showed. That’s a decline of more than 3 percent. Overall, the fund disbursed nearly $4.3 billion in 2010. More than $3 billion went to incumbents, while some $1.2 billion went to CETCs, USAC’s data showed. The fund shrank slightly from 2009 to 2010, down 0.6 percent.

Intercarrier compensation reform as proposed by the FCC likely won’t mean huge savings for wireless carriers like SouthernLINC, the company said in reaction to Chairman Julius Genachowski’s speech Thursday. “Ending arbitrage schemes would certainly be a welcome outcome of intercarrier compensation reform, as would any simplification to the administrative processes associated with intercarrier compensation that the FCC could bring about,” the company said. “We are unsure, however, whose wireless customers will derive sizeable benefits from ICC reform. SouthernLINC foresees only a modest savings resulting from dropping rates, and it does not believe that there is anything particularly unique about its customers’ calling patterns. The bulk of its traffic is already exchanged at very low per minute rates or is wireless-to-wireless traffic, either on its own network or exchanged with those of other wireless carriers and thus subject to bill-and-keep.” Worse, SouthenLINC said, “it appears likely that wireless consumers in general will continue to heavily subsidize wireline carriers.” The FCC should not approve any Universal Service Fund proposals that support only one service provider in any area, company representatives said in meetings with commission officials. “We urged the Commission to make support available in areas where it is necessary in a manner that, at a minimum, preserves the threat of competitive entry from any type of service provider using any type of technology,” the company said in a filing (http://xrl.us/bmfkbc). “Regulators simply cannot keep up with the pace of technological change, and subsidization programs that pick a single winner in a market necessarily will slow the deployment of new technology not only by potential new entrants but also by the ‘winner’ of the subsidy.” More troubling, it appears likely that wireless consumers in general will continue to heavily subsidize wireline carriers, SouthernLINC said. Genachowski’s remarks were vague, it said, but if wireless carriers are able to participate only in the Mobility Fund portion of the Connect America Fund, then wireless consumers will continue to heavily subsidize wireline networks through the CAF. Moreover, the FCC appears ready to experiment with a competitive bidding process only with wireless carriers, excluding wireline carriers from that risk as well, it said. While the goal of broadband for all is a laudable one, SouthernLINC said, financing the extension of broadband to rural America primarily through wires will distort the market, won’t necessarily fulfill the wants and needs of rural consumers, and will not promote “healthy competition."

Cable lobbied the FCC last week on the Universal Service Fund and intercarrier compensation, before Chairman Julius Genachowski circulated an order on the topics (CD Oct 7 p1), filings in docket 10-90 show (http://xrl.us/bmfj53). Comcast, Cox Communications, Time Warner Cable and American Cable Association executives had conversations with Wireline Bureau Chief Sharon Gillett and others in the bureau, an Office of General Counsel staffer and/or Zac Katz, aide to Genachowski who helped write the order. GCI and NCTA also wrote the agency about the ILEC-backed ABC plan. “Many incumbent providers are unwilling to interconnect and exchange traffic in IP format, yet also are unwilling to pay the applicable access charges when the traffic is exchanged in traditional Time Division Multiplex (TDM) format, with the cable operator bearing the additional cost of converting the TDM traffic to IP,” NCTA said (http://xrl.us/bmfj6u). “There is broad support for the end result proposed in the ABC Plan -- a unified termination rate of $0.0007 that applies to all traffic exchanged between telecommunications carriers in TDM format, without regard to the format in which it is originated or terminated.” The ACA asked that “any distribution of Connect America Fund” being set up to help pay for broadband be “consistent with the Commission’s objective to deploy broadband to unserved areas in a manner that is effective, efficient, and competitively neutral.” The group cited its “alternative” to the plan that was submitted to the agency with the NCTA (CD Oct 5 p13). Comcast, Cox and Time Warner Cable want USF reformed “in a manner that brings stability and predictability to ICC arrangements and eliminates on a going-forward basis wasteful ICC disputes between” ILECs and VoIP networks, the three companies said (http://xrl.us/bmfj64). They want “a seamless transition from the current system to a unified transport and termination rate for all voice traffic.” GCI, which seeks a plan for Alaska, where it’s the No. 1 cable operator, that may be different from the USF order for the continental U.S., said (http://xrl.us/bmfj7a) the ABC plan needs some changes “for the rules to achieve the objectives of unified and harmonized intercarrier compensation rates and reduced arbitrage.”

NCTA CEO Michael Powell sees signs from Universal Service Fund stakeholders that USF and intercarrier compensation can be reformed, as FCC Chairman Julius Genachowski seeks (CD Oct 7 p1). Industries with different proposals to use some of the USF to pay for broadband and to make changes to ICC generally understand they won’t get everything they want, he said in his first news conference. Powell said Capitol Hill is giving the commission room to work on the order that Genachowski wants voted on at the Oct. 27 meeting, and FCC members seem inclined to engage.

The FCC is tentatively set to vote Oct. 27 on TV-station disclosure, the agency said Thursday. That delivers some on Chairman Julius Genachowski’s pledge Monday to act on part of the recommendations of the report on the future of the media industry (CD Oct 4 p4). The report had recommended killing the proceeding and requiring TV stations to disclose the extent they cover their communities with filings available online, not just in paper form. The order on reconsideration of the 2007 enhanced disclosure rule accompanies a further rulemaking notice “proposing to replace television broadcast stations’ public files with online public files to be hosted by the Commission,” the agency said. Also Oct. 27, where the main item will be a vote on changing the Universal Service Fund and intercarrier compensation system (see story in this issue), will be a presentation by the Public Safety Bureau. The bureau will talk about preparations for the Nov. 9 nationwide test of the emergency alert system, in which all radio and TV stations and multichannel video programming distributors will take part.

A number of Hill letters to the FCC in recent days focus on Universal Service Fund revamp issues like controlling the size of the fund. Reps. Mike Doyle, D-Pa., and Anna Eshoo, D-Calif., urged the FCC to ensure that consumers are protected. They urged the FCC to ensure that carriers demonstrate a need for any increase in the monthly bills of telephone customers as result of the reform. Doyle and Eshoo also said the agency should pursue technologically neutral solutions to encourage efficiency and strong competition among support recipients. The two emphasized that the FCC’s National Broadband Plan urges the agency to pursue special access reform in concert with reforming USF and ICC. Meanwhile, members of the House from Florida urged the agency to enact USF revamp that places “meaningful and enforceable” controls on the size of the fund, said 10 lawmakers in a joint letter. It’s time for the FCC to consider the input from all parties and implement USF and intercarrier compensation rules that “stringently control costs, encourage competition, reduce arbitrage, and focus the fund on serving rural consumers who need it,” said Rep. Fred Upton, R-Mich., and Rep. Greg Walden, R-Ore. The commission should set an annual spending cap of $4.5 billion for high-cost support, said a joint letter signed by 14 lawmakers including Reps. Joe Barton, R-Texas, and Marsha Blackburn, R-Tenn. Subsidies in areas served by unsubsidized providers should be eliminated, the joint letter said. High-cost support should be determined through the use of technology-neutral market-based mechanisms, it said.

FCC Chairman Julius Genachowski offered reassurance Thursday, in a speech at FCC headquarters as he prepared to circulate the FCC’s version of Universal Service Fund and intercarrier comp overhaul, most likely late Thursday evening. Genachowski’s speech was short on details on how his proposal differs from plans already before the commission, particularly the ABC plan. Instead, he reassured consumers they have nothing to fear and that the proposed reforms will, in the long run, drive down the size of their monthly phone bills.