The Universal Service Fund’s contribution factor will dip to 14.4 percent in the third quarter of 2011, the FCC said in a public notice released Tuesday. It’s a dip from the second quarter’s 14.9 percent, but it’s not enough of a dip to ease pressure on Chairman Julius Genachowski as he focuses on universal service distribution reform through the fall, officials said. “Whether the contribution factor goes slightly up or slightly down is irrelevant,” Commissioner Robert McDowell told us Tuesday: “What’s important is that it’s either at or near record highs, indicating that the system is broken."

CHICAGO -- Some House Commerce Committee members are skeptical of the need for AllVid rules the FCC has been aiming to propose, its Republican counsel said. The rulemaking notice being worked on by the commission doesn’t seem likely to be finished soon, said an aide to Senate Communications Subcommittee Chairman John Kerry, D-Mass. Both aides, who spoke at the Cable Show Tuesday, said an earlier panel demonstrated that cable operators and programmers are trying to make content more accessible to subscribers. (See separate story in this issue.)

The disparate lobbying on Universal Service Fund and intercarrier compensation regime reform has continued even as industry-wide consensus building talks press on. Last week, executives from mid-sized carriers CenturyLink, Frontier and Windstream joined an analyst from CostQuest on a conference call with commission staff to lobby on Universal Service Fund reform, CenturyLink said in an ex parte notice released Monday in docket 10-90. The telco executives urged “immediate adoption of reforms that would redistribute ongoing support within price cap carriers’ areas based on cost conditions in individual wire centers, rather than costs averaged across study areas or entire states,” the ex parte said. “We also explained how a regression analysis could enable prompt identification of the relative costs to serve price cap carriers’ individual wire centers,” the ex parte said. CostQuest has recently been retained to help industry come up with cost models as companies and trade associations try to come up with an industry endorsed universal service reform package (CD June 6 p1).

LOS ANGELES -- Mad Catz Interactive and Nyko plan to support the coming PS Vita handheld system with various third-party accessories, although it was too soon to provide many specifics, we were told at E3. The companies indicated they were pleased that the coming Wii U console will be backward compatible to support all their current third-party Wii accessories, but it was too soon to gauge if they will be able to field third-party Wii U controllers like the one that Nintendo bowed for the coming console at E3 (CED June 8 p1).

Former FCC Commissioner Harold Furchtgott-Roth to head Hudson Institute’s new Center for Economics of the Internet … Brad Gillen, formerly wireline aide to ex-FCC Commissioner Meredith Baker, now in Wireline Bureau advising on Universal Service Fund reform, agency officials say … Radio Television Digital News Association Executive Director Jane Nassiri steps down to pursue new ventures, effective in September; search committee appointed … Stephanie Craig, ex-Public Strategies, becomes TechAmerica communications director.

The FCC will spend “increasing energy” on broadband adoption programs, commission Chief of Staff Eddie Lazarus told an FCBA luncheon in Washington Friday. Adoption is Chairman Julius Genachowski’s top priority after spectrum and Universal Service Fund reform, Lazarus said. “I can guarantee you we will be working with everyone in this room,” Lazarus said. The commission is not clear on which “levers” it will use to increase broadband adoption, but one possibility is through merger conditions, as with the Comcast-NBCU deal. A former clerk to Supreme Court Justice Harry Blackmun, Lazarus said he thought broadband adoption was the “civil rights issue for its time.”

AT&T and T-Mobile made their case for why the FCC should approve their proposed merger in a 229-page “joint opposition” to the dozens of petitions filed by merger opponents last month (CD June 2 p4). Support for the merger is wide and deep and the deal is critical to getting AT&T the spectrum it needs going forward as demand for wireless continues to accelerate, AT&T argues. The filing invokes the name of the primary opponent of the merger, Sprint Nextel, more than 370 times, compared to, for example, only 35 times for Free Press and 17 for Public Knowledge.

Finishing public safety network legislation before Sept. 11 will be a challenge, said Senate GOP aides at an event Thursday hosted by Politico and Microsoft. The Senate Commerce Committee approved the spectrum bill (CD June 9 p2) by Chairman Jay Rockefeller, D-W.Va., and Ranking Member Kay Bailey Hutchison, R-Texas, on Wednesday. But the bill must still get floor time in the Senate and win over House Commerce Committee Republicans who are skeptical of giving away the 700 MHz D-block for free to public safety, the aides said. Also at the event, an FCC aide provided an update on the agency’s work revamping the Universal Service Fund.

The FCC Wireline Bureau has been circulating an interim order that it hopes will eliminate duplicate Lifeline/Link-Up payments, industry officials told us Wednesday. The interim order began circulating May 23 and is still being reviewed by the three commissioners, two industry officials said. The order sets up an “allocation” system that allows telcos to cut off Lifeline benefits when they discover that Lifeline customers are already receiving subsidies, the officials said. The order is directed at at least 12 states, including Florida and Tennessee, the officials said. The commission plans to have a larger Lifeline/Link-Up overhaul in the near future, but wanted to address the duplication problems immediately because Lifeline is the fastest-growing section of the Universal Service Fund, industry officials said. The agency continues to piece together a database of Lifeline benefits, but has already found houses with as many as four separate subsidies, the industry officials said. The number of Lifeline homes in Florida rose by 263 percent between 2007-09, FCC records show (CD Feb 25 p7). A commission spokesman didn’t respond to requests for comment.

Former Rep. Rick Boucher, honorary chairman of the Internet Innovation Alliance, said in an interview Wednesday that approval of the AT&T/T-Mobile merger, along with Universal Service Fund reform and approval of legislation giving the FCC authority to conduct incentive auctions, are critical to broadband deployment. “The president has set a goal of broadband reaching 98 percent of the American public within five years,” Boucher said. “This merger, standing alone, would almost achieve the president’s goals.” AT&T has committed to broadband deployment to more than 97 percent of the public within six years, he noted. “The balance of the gap could be filled, in most part, by reforming Universal Service and by going forward with incentive auctions, plus whatever private investment normally would be made.” Boucher expects the deal to be approved. “I'm confident that the benefits of universal broadband deployment will be seen as the achievement of perhaps the most important telecommunications policy goal today and that outweighs any of the alleged negatives that this merger might carry.” Boucher noted that in 18 of the 20 largest U.S. cities, people will still be able to buy services from five or more wireless providers even if the merger is approved. “The landscape would remain competitive,” he said. Boucher spoke in his capacity as honorary chairman of the IIA, which supports the merger, he said.