Rep. Jo Ann Emerson, R-Mo., urged the FCC to move forward with its overhaul of the Universal Service Fund and intercarrier compensation. In a letter dated Tuesday to FCC Chairman Julius Genachowski, Emerson cited “a serious problem with broadband connectivity in rural America.” Emerson chairs the House Appropriations subcommittee that oversees the FCC. “The Commission needs to continue with reform of these two programs in a manner that is aimed at meeting the objective of accelerating broadband deployment to rural areas -- and doing so in a fiscally responsible way -- by carefully targeting support and keeping the high-cost Universal Service Fund within its current budget,” Emerson said. In a separate letter to Genachowski dated Sept. 23, the congressional delegation from Idaho applauded the FCC and the industry’s overhaul efforts. “We are encouraged by the recent discussions with Idaho stakeholders,” said Sens. Mike Crapo and James Risch and Reps. Mike Simpson and Raul Labrador, all Republicans from the state. “You have already received a careful review process and feedback that gives you and the FCC an opportunity to reform and update the USF and its core mission mandate and goals."

Rate-of-return carriers would receive more than $13 billion in Universal Service Fund cash over the next six years under the ABC plan, executives from the incumbent companies behind the plan said last week in a meeting with FCC staff. USF support for rate-of-return areas would start at $2 billion in 2012 and reach $2.3 billion in 2017, executives said, according to an ex parte notice posted Wednesday to docket 10-90. The program would generate $161 million in budget surplus over the next five years, the executives said in their presentation (http://xrl.us/bmesfk). Under the ABC plan, the “legacy” high cost Universal Service Fund would spend a little more than $2 billion over four years, starting with $821 million in 2012 before dropping to zero in 2016, the ABC executives said. The Connect America Fund would start by spending $440 million in 2012 and reach more than $2.2 billion by 2017, the executives said. The executives were from AT&T, Frontier, USTelecom, Verizon, Windstream and CenturyLink.

The America’s Broadband Connectivity (ABC) plan for Universal Service Fund reform would “disenfranchise consumers -- particularly those in rural areas -- who stand to benefit from the availability of broadband technologies like satellite broadband,” said Dish Network. It and sister company EchoStar recently met with an adviser to FCC Commissioner Mignon Clyburn (http://xrl.us/bmerve), an ex parte filing said. The agency is considering ways to reform USF, including the ABC plan. That plan “would misallocate USF support, undermine competition, and deprive rural customers of high-quality and cost-effective services offered by competitive providers,” Dish said. It pointed to the success of the Rural Utilities Service Broadband Initiative Program that partly subsidized satellite broadband service through a $58.7 million grant to EchoStar subsidiary Hughes Network Systems. Hughes saw more than 95,000 orders for the satellite broadband service from eligible customers, said Dish.

The Rural Cellular Association offered a compromise on the size of a proposed Mobility Fund as the FCC moves forward on Universal Service Fund overhaul. A $300 million fund as proposed in the ABC Plan, or even a $500 million fund, “would dramatically undervalue the ability of wireless providers to deliver broadband service to high-cost, rural communities,” RCA said in a letter to the commission (http://xrl.us/bmercx). In the past, the group advocated a $1.5 billion annual fund, the letter noted. “RCA could support a $800 million Mobility Fund, approximately one-fourth of what the wireless industry contributes, if the FCC also allocates a sufficient amount for annual operating expenses and if the largest wireless carriers and rural local exchange carriers are prohibited from participating in the Mobility Fund."

CTIA’s top priority is getting Congress to pass spectrum legislation, and the association thinks it’s not a question of if, but when a bill will be approved, CTIA President Steve Largent said during a press conference Wednesday. CTIA officials also said Universal Service Fund reform remains a significant issue for wireless carriers, with the FCC poised to take up an order at its Oct. 27 meeting. Largent said he’s confident the 1755-1780 MHz band will be reallocated for wireless broadband.

Rural telcos and state regulators worry the pending universal service and intercarrier compensation regime reforms will result in consolidation in their sector. Earlier this week, ex-FCC commissioner Harold Furchtgott-Roth accused the agency of pushing rural telcos toward consolidation in the Universal Service Fund rulemaking notice (CD Sept 26 p13).

Universal service reform must be “competitively neutral,” said Lukas, Nace telecom lawyer David LaFuria in a meeting with Angela Kronenberg, adviser to Democratic Commissioner Mignon Clyburn. “We also discussed the ABC plan, including how a right of first refusal will impede the development of high-quality broadband in rural areas for many years,” LaFuria said in an ex parte notice released Tuesday on docket 10-90 (http://xrl.us/bmenxe). “We also discussed the need for ongoing support of mobile broadband networks in rural America.” LaFuria, who represents rural wireless carriers, said “there is a need to invest additional funds in mobile broadband networks, even if it means increasing the size of the federal fund for a period of time so that sufficient support is available to ensure that rural citizens have access to services that are reasonably comparable to those available in urban areas,” the notice said. LaFuria also urged the commission not to “phase down support” for competitive eligible telcos, such as his clients, “until the Commission adopts a replacement mechanism,” the notice said. “It has been ten years since the last significant reform and it is therefore important that any phase down be properly coordinated with the implementation of a reformed mechanism,” LaFuria said.

House Democrats urged a focus on broadband adoption as the FCC considers an overhaul to the Universal Service Fund. Rep. Doris Matsui, D-Calif., circulated the letter last week (CD Sept 22 p16) and got signatures from 34 Democrats, including House Commerce Committee Ranking Member Henry Waxman, D-Calif., Communications Subcommittee Ranking Member Anna Eshoo, D-Calif., and Rep. Ed Markey, D-Mass. Matsui sent the letter Tuesday to FCC Chairman Julius Genachowski. The letter “makes the crucial point that in reforming USF, the FCC must give a greater priority to adoption efforts than it has in the past,” Aspen Institute fellow Blair Levin, author of the National Broadband Plan, said in a statement. “Some at the FCC have said that dealing with adoption now is ‘putting the cart before the horse,’ but if the current USF Reform effort results in excessive spending in high cost areas, as some have urged, we will have a lavish cart but no money for a horse, and end up stuck on the side of the road.” The FCC welcomes Matsui’s “leadership in support of broadband adoption and fiscally responsible reform of the high-cost fund,” an FCC spokesman said. “In reforming all components of the Universal Service Fund, the Commission is focused on helping American consumers by increasing broadband availability and adoption and limiting the burden of USF contributions."

Cablevision became the latest cable operator to lobby the FCC on Universal Service Fund reforms, with its first such meetings on the subject since May, filings posted in docket 10-90 show (http://xrl.us/bmem2c). The agency should eliminate a subsidy to ILECs where an unsubsidized company sells service or begins doing so after there’s a USF broadband fund, the company said. The Dec. 31 cutoff proposed in the ILEC-backed USF reform plan “would effectively lock in a subsidy for any area that lacks a competing broadband provider today,” Cablevision recounted executives having told Wireline Bureau staffers and aides to all four FCC members. “Cablevision proposed that the forward-looking cost model proposed to identify high-cost areas and the level of support should be based on the most efficient available terrestrial technology rather than on the incumbents’ costs,” the company said. “In persistently high-cost areas where USF subsidies will remain necessary, we suggested that the Commission mandate portable subsidies that can be used with either the ILEC or a new entrant.” NCTA meanwhile sought “expeditious” USF high-cost support and intercarrier compensation reform, in a meeting with an aide to Commissioner Mignon Clyburn, the association said. “The Commission should provide certainty regarding the ability of providers to receive compensation for terminating calls, regardless of the technology used by the end user of the call.” NCTA said its executives told an aide to FCC Chairman Julius Genachowski of “the importance of ensuring that broadband is deployed to unserved areas as quickly as possible in a competitively neutral and nondiscriminatory manner.” Alaskan cable operator GCI also reported meeting with Wireline Bureau officials about its Alaska Broadband Plan, as the agency may vote on a USF and intercarrier comp order on Oct. 27 (CD Sept 27 p1).

Any delay in FCC approval of a Universal Service Fund overhaul would be disappointing, said Free State Foundation President Randolph May. “But if a few days delay means more, rather than less, meaningful reform, I can live with it,” he said in an email. “In the meantime, I'd like to see Chairman [Julius] Genachowski use his bully pulpit to explain the stakes to the American consumer this way: ‘Folks, the only way to reduce the 15 percent tax that now applies to all your long distance calls is to reduce the amount of subsidies now going to support inefficient rural telephone companies using outdated technologies.'"