Lawmakers shouldn’t tap into the Universal Service Fund, said NARUC President Tony Clark and Telecom Committee Chair John Burke. House Republicans are thinking about using USF to help pay down the budget deficit (CD July 14, p1). Congress is considering tapping the fund to help pay down federal debt. To divert the funds from their intended use would be counterproductive and may undermine the country’s broadband goals, they said. USF receives no federal monies and shouldn’t even be under consideration in the budget debate, they said. USF is funded by fees consumers pay through their phone company to ensure affordable access across America, they said.

Promised FCC deadlines for Universal Service Fund and intercarrier compensation regime reform have been pushed back and Commissioner Robert McDowell said he’s worried that reforms may “slip away.” In an appearance on C-SPAN’s The Communicators, he said “I get concerned when I see dates continue to slip away.” And “I've seen this movie before,” he said in the videotaped interview.

Spectrum is figuring in debt reconciliation talks, as was expected, but with a twist -- an unexpected tie-in to health care spending, industry sources closely tracking budget negotiations said last week. Republicans hope that under an eventual deal with President Barack Obama they will divvy up major budget cuts that have to be made to the chairmen of the various congressional committees, officials said.

Division over the 700 MHz D-block is the main barrier to bipartisan spectrum legislation in the House, lawmakers said at a Communications Subcommittee hearing Friday. The Commerce Committee’s top Democrats and top Republicans have signed onto separate draft bills. The Democrats want to reallocate the D-block to public safety and the Republicans seek to auction it to commercial providers. While both sides voiced optimism about reaching consensus, debt limit negotiations threaten to suck up a key component of the legislation: Voluntary incentive auctions. (See separate report in this issue.)

The Universal Service Fund “is not materially increased by requiring very small companies to contribute,” the American Association of Paging Carriers said in a telephone conference with Wireline Bureau staff. The association “pointed out that the exemption level of $10,000 has remained unchanged since the USF was implemented as a result of the Telecommunications Act of 1996,” according to an ex parte released Thursday in docket 09-229. “AAPC further noted that some of its members include small companies with paging service revenues of less than $1 million,” the group said. “Using the 12% ’safe harbor’ interstate allocation allowed by the Commission, the contribution factor of 5.9% for the first quarter of 2000 exempted carriers from contributing to USF until they generated approximately $1.425 million in total service revenues. However, using the ’safe harbor’ allocation during the current quarter, the contribution factor of 14.4% requires contributions from carriers with as little as $590,000 in total service revenues. Similarly, the highest contribution factor to date (15.5%, during the first quarter of 2011) required carriers using the ’safe harbor’ allocation to contribute to USF with as little as $538,000 in total service revenues."

Congress will finish off Universal Service Fund reform, Rep. Lee Terry, R-Neb., said at a press conference Thursday kicking off rural telecom associations’ marketing push on rural broadband. Terry said he’s “extremely optimistic” there will be a deal by the end of August that’s supported by industry, the FCC and the House Commerce Committee. Also at the event, Sen. Mark Begich, D-Alaska, predicted that the Senate will get “very aggressive” on the issue.

The White House objected to the FCC budget set by the House’s appropriations bill for financial services and general government. The House bill, due for debate on the House floor this week, trims the commission’s budget to $319 million, down $17 million. “The funding level for FCC would make it increasingly difficult to manage its expanded responsibilities, such as auctioning additional spectrum, overseeing mergers, and reforming the Universal Service Fund,” the Office of Management and Budget said Wednesday in a statement of administration policy. “Because FCC is fully funded by fees, this reduction would not save taxpayer dollars.” The White House also objected to a provision stopping the FCC from using funds to act on its net neutrality order from December. “The FCC has carefully crafted rules to promote competition while balancing the technical needs of Internet providers,” OMB said. It said the White House could veto the appropriations bill, but only over issues not related to the FCC.

The White House objected to the FCC budget set by the House’s appropriations bill for financial services and general government. The House bill, due for debate on the House floor this week, trims the commission’s budget to $319 million, down $17 million. “The funding level for FCC would make it increasingly difficult to manage its expanded responsibilities, such as auctioning additional spectrum, overseeing mergers, and reforming the Universal Service Fund,” the Office of Management and Budget said Wednesday in a statement of administration policy. “Because FCC is fully funded by fees, this reduction would not save taxpayer dollars.” The White House also objected to a provision stopping the FCC from using funds to act on its net neutrality order from December. “The FCC has carefully crafted rules to promote competition while balancing the technical needs of Internet providers,” OMB said. The OMB said the White House could veto the appropriations bill, but only over issues not related to the FCC.

The FCC must not remove state jurisdiction over intrastate communications and preserve the joint governmental structure in its Universal Service Fund and Intercarrier Compensation proceeding, state officials said during a seminar held by the National Regulatory Research Institute Wednesday. Other top concerns for state regulators include cost and contribution methods, they said.

House Republicans are thinking about using the Universal Service Fund to help pay down the budget deficit, Congressional documents show and Hill and industry officials told us. Majority Leader Eric Cantor, R-Va., circulated a slide presentation among his colleagues Tuesday that contained cuts and savings proposed in talks with Vice President Joe Biden, including between $20 billion and $25 billion in “spectrum/USF” savings.