Lobbyists from rural telcos pressed their case for reform of the Universal Service Fund and the intercarrier compensation regime at the FCC last week, the groups said in an ex parte notice posted to dockets 10-90 on Friday. Representatives from OPASTCO, the Western Telecommunications Alliance, National Exchange Carrier Association, NTCA and from Fred Williamson Associates met with Zac Katz, adviser to FCC Chairman Julius Genachowski, Wireline Bureau Chief Sharon Gillett and other staff from the Wireline Bureau. They pushed the reforms in comments in the USF and intercarrier comp dockets (CD April 19 p3), which they said would meet the commission’s objectives of fiscal responsibility, accountability and modernization, “while at the same time preserving the core tenets of a rate-of-return framework that has proven strikingly effective and efficient in enabling substantial rural broadband penetration (and upgrades to existing plant) in recent years at a minimal (3 percent) annualized growth rate in support.” The rurals said their proposal would also avoid “legal and practical complications” around Title II. “Given that the Commission has previously concluded that broadband Internet access services are non-regulated and thus not subject to Title II requirements, a host of legal and practical complications would arise in attempting to identify and address non-regulated costs and revenues without any structure to define the proper accounting of them or to ensure the just and reasonable nature of them -- which, by definition, means they will need to be in some form ‘regulated,'” the lobbyists said in their ex parte notice. It’s “unclear which non-regulated services might be included” in USF reform, but the rural plan “would establish a support mechanism for broadband-capable networks that works within and is entirely consistent with the plain language of Section 254, the Title II regulation of transmission networks, and the Commission’s prior determination to classify broadband Internet access service as a non-regulated service."

The FCC should demand quarterly reports from AT&T on the company’s “especially aggressive” broadband pricing plan, said the New America Foundation and Public Knowledge Friday. “Unlike competitors whose caps appear to be at least nominally linked to congestions during peak-use periods, AT&T seeks to convert caps into a profit center by charging additional fees to customers who exceed the cap,” they said in an open letter to Wireline Bureau Chief Sharon Gillett. “In addition to concerns raised by broadband caps generally, such a practice produces a perverse incentive for AT&T to avoid raising its cap even as its own capacity expands."

The FCC should demand quarterly reports from AT&T on the company’s “especially aggressive” broadband pricing plan, said the New America Foundation and Public Knowledge Friday. “Unlike competitors whose caps appear to be at least nominally linked to congestions during peak-use periods, AT&T seeks to convert caps into a profit center by charging additional fees to customers who exceed the cap,” they said in an open letter to Wireline Bureau Chief Sharon Gillett. “In addition to concerns raised by broadband caps generally, such a practice produces a perverse incentive for AT&T to avoid raising its cap even as its own capacity expands."

The FCC Wireline Bureau is seeking public comment on Verizon’s petition to reconsider a retroactive cap on Universal Service Fund payments to Alltel (CD May 4 p9). Comments are due June 3, replies June 20, to dockets 05-0337 and 06-122.

A bill to update Colorado’s telecom law was shelved amid industry concerns that some provisions could lead to years of disputes. The Senate Business, Labor and Technology Committee voted to postpone bill SB-262 (CD April 27 p7), which would order the state’s Public Utilities Commission to withdraw price controls for all services except basic local exchange service and emergency service. It also proposed to phase out the state’s Universal Service Fund.

The FCC is moving forward on drafting an order on a Universal Service Fund and Intercarrier Compensation revamp and is working on accelerating the process, said Carol Mattey, deputy chief of the Wireline Bureau, during a D.C. Bar panel Wednesday. Industry panelists urged immediate action on VoIP and a more targeted USF.

Few media items of major import are likely to get FCC action in the foreseeable future, as the agency continues to focus on other areas, predicted all the agency and industry officials we asked. Votes on proposed AllVid and program carriage rules (CD May 3 p8) appear to be the near-term exceptions to what may prove to be the rule, they predicted. It may be a while before the commission releases a long-anticipated mathematical model showing how TV stations’ coverage areas would be affected by the repacking of TV channels the FCC seeks as part of its hoped-for incentive auction plan. Broadband, spectrum and changing the Universal Service Fund and intercarrier compensation system likely will keep dominating the commission’s attention, said agency and media industry officials.

The FCC “should abandon” its proposal for reverse auctions and instead create three new, separate funds to overhaul the universal service system, state members of the Joint Board on Universal Service told the commission in comments posted late Monday. The state members said the three new funds should be: (1) A “provider of last resort” fund to be “a comprehensive cost-based support mechanism to provide sufficient support to carriers that accept provider-of-last resort duties, adjusted for broadband services. (2) A “mobility fund” that would provide “grants to finance the building of wireless towers in areas the FCC designates as under-served or unserved by wireless broadband.” (3) A “wireline broadband fund” that would award grants “to finance broadband wireline facilities in areas the FCC designates as under-served or unserved by wireline broadband.” The comments were posted to docket 10-90.

FARMINGTON, Pa. -- The NTIA has convened a working group to formulate the Obama administration’s position on pending Universal Service Fund changes, NTIA Administrator Larry Strickling said at an FCBA conference over the weekend: “The issue is important enough that the White House should have its own position on that.” The work group is led by John Morabito, head of the NTIA Office of Policy Analysis & Development, Strickling told us Saturday.

Vermont and Maine regulators are trying to attack the FCC’s “underlying universal services policies” rather than the commission’s “narrow” decision to preserve its non-rural, high-cost funding mechanism, commission lawyers James Carr and Maureen Flood said in a brief filed Wednesday with the Court of Appeals for the D.C. Circuit. But the state regulators “have failed to make” their case that the FCC abused its discretion under the Administrative Procedure Act, the commission’s lawyers said. The case stems from a remand in the so-called Qwest II case, in which the commission found that under section 254(b)(3) of the Telecom Act that rural and urban rates “are reasonably comparable.” The state regulators have challenged, claiming, among other things, that the FCC “failed to compare rural rates in each state to a national average urban rate.” But Carr and Flood said that claim was “barred by section 405(a) of the [Telecom] Act because petitioners never presented it to the agency.” In any case, the commission isn’t bound statutorily or by court ruling to follow that methodology, Carr and Flood said. “Nor was the FCC required to lower the rate benchmark that is used to determine whether rural rates in a particular state satisfy section 254(b)(3),” Carr and Flood wrote. “When the FCC has reasonably interpreted the relevant statutory terms, as it did in the [Qwest II] Order, setting the rate benchmark is a line-drawing exercise that falls within the agency’s unique expertise,” Carr and Flood wrote. A victory for the state regulators would have created “a $2.725 billion annual increase in universal service funding,” Carr and Flood wrote.