It’s “clearly inequitable” that phone companies get high-cost support from the Universal Service Fund in areas where cable operators Allegiance Communications and Metrocast have systems, their executives told an aide to FCC Commissioner Michael Copps, a Thursday filing recounted. The American Cable Association, of which the companies are members, said in the filing that ACA wants the commission to focus on supporting broadband in unserved areas. That’s as the agency seeks to use USF money to fund broadband, in the Connect America Fund, said the filing in docket 10-90.

MOUNTAIN VIEW, Calif. -- The FCC aims to adopt a universal service overhaul by August, Chairman Julius Genachowski said. “Over the next few months, we'll be able to significantly reform this program,” he said Thursday night at the Commonwealth Club civic forum. Genachowski mentioned the Universal Service Fund (USF) more than intercarrier compensation. But the matters are intertwined in a February rulemaking notice and a blog post last month by the commissioners that he discussed.

The FCC should allow an “appropriate transition” before implementing Universal Service Fund and intercarrier compensation regime reforms, Frontier Chief Legal Officer and former commissioner Kathleen Abernathy told staff in meetings earlier this week. “This transition would ensure stability during the reform and ensure that Frontier can continue investing hundreds of millions of dollars to achieve the Commission’s goal of deploying broadband to rural America,” Abernathy told Commissioner Mignon Clyburn’s adviser Angela Kronenberg, according to an ex parte notice filed on dockets 09-51, 07-135 and others.

The Voice on the Net Coalition opposed a motion by the California Public Utilities Commission’s Consumer Protection and Safety Division to broaden a rulemaking to include consideration of whether VoIP providers should be regulated as telephone companies under state law and subject to the commission’s consumer protection rules. The motion would improperly expand the proceeding beyond a study of state Universal Service Fund assessments without notice to all those that might be interested, the coalition said. It said the PUC shouldn’t deal with broad issues of regulatory treatment of VoIP and the obligations proposed for providers are pre-empted by federal law.

The House Communications Subcommittee has concerns about overbuilding of ISPs by broadband projects that got federal money, said Chairman Greg Walden, R-Ore. “We will be watching” to make sure that money is spent appropriately, he told reporters on Wednesday. He referred to a study NCTA released that day that found such overbuilding. Jeffrey Eisenach and Kevin Caves of Navigant Economics studied three Rural Utilities Service awards in Kansas, Minnesota and Montana. The federal money for those projects totaled $231.7 million, 7 percent of the $3.5 billion that RUS got for broadband loans and grants under the 2009 American Recovery and Reinvestment Act. The Broadband Initiatives Program awards process “was fair and open,” an RUS spokesman said. “The projects highlighted in the NCTA study are in rural areas that lacked sufficient broadband for rural economic development, as required by the statute. All were carefully vetted on the ground by RUS field staff, received strong support from the local community, and will vastly increase broadband capacity in their communities.” The economists found that “more than 85 percent of households in the three project areas are already passed by existing cable broadband, DSL, and/or fixed wireless broadband providers,” they said at http://xrl.us/bjofip. “In part because a large proportion of project funds are being used to provide duplicative service, the cost per incremental (unserved) household passed is extremely high,” more than $349,000 for each of the 452 households lacking broadband service, Eisenach and Caves wrote. The cost is more than $30,000 per unserved home, if wireless service is excluded, they said. “We conclude that the RUS Broadband Initiatives Program, as currently structured, is not a cost-effective means of extending broadband coverage to unserved households.” NTCA got in a jibe at NCTA in a statement supporting RUS. The agency’s stimulus funding and regular broadband loan program “are essential to achieving policymakers’ goal of universal broadband availability,” NTCA CEO Shirley Bloomfield said. “Unfortunately, opponents of these programs often gloss over the fact that the community-based telcos have committed to providing broadband in those remote and less populated areas -- despite the exorbitant costs associated -- while the cable companies focus on the more lucrative towns. Rural consumers suffer when providers stand on the sidelines and choose not to provide service in rural areas -- and then criticize the very programs that make it possible."

Some rural telcos are worried that cuts to the Rural Utilities Service budget in the fiscal 2011 continuing resolution could upset rural broadband investment. But other groups are breathing a sigh of relief that the budget deal, up for a House vote Thursday, dropped a proposal to prohibit the FCC from acting on its net neutrality order. The resolution would fund the government through September. The resolution would provide $22.32 million for RUS broadband loans, which industry officials said would support up to $400 million in loans. But it would rescind $39 million in carry-over balances from previous years. The measure also would authorize $13.4 million to pay for broadband transmission under the Distance Learning and Telemedicine program but rescind $25 million in carry-over balances. The resolution would fund the FCC at $336 million, the amount that the commission got for fiscal 2010 but less than the $352 million that the FCC requested. The commission has tweaked its plans so it can work with less money than sought, FCC Managing Director Steven VanRoekel told us. The resolution would give the NTIA $41 million, consistent with current levels. The resolution also would impose a 0.2 percent spending reduction across the government. “The FCC is aware that all agencies faced austerity measures in the budget process and we worked to develop operational levels to support our important work within the FY10 numbers,” VanRoekel said by email. “From a practical standpoint, it means we had to make some funding cuts, like removing plans to hire additional advanced staff and instead get creative with an early retirement program, to streamline operations to come into the FY10 numbers.” The NTIA would have enough money under the resolution to cover its broadband stimulus oversight duties, an agency spokeswoman said. The RUS declined to comment. Chairman Greg Walden, R-Ore., of the House Communications Subcommittee said after a hearing Tuesday afternoon that he probably will support the resolution but he needs to take a closer look. “OPASTCO is concerned about the proposed cuts to RUS, both in its broadband program and administrative budget,” a spokeswoman for the group said by email. In written testimony submitted Tuesday to the House Appropriations Committee, OPASTCO Vice President Randy Tyree said proposed cuts to RUS are all the more dangerous with the FCC considering an overhaul of the Universal Service Fund and intercarrier compensation. The overhaul “may limit rural carriers’ ability to upgrade the broadband speeds provided to rural customers and to extend service to additional rural customers,” he said. “If rural carriers’ revenue streams are not stable during a transition to a new regulatory regime or once that new regime is in place, it will be very difficult for them to obtain financing from either private or public sources. Reduced access to financing will lead to reduced investment in rural networks.” But other rural carriers said they were glad that the broadband programs would receive at least some money. The National Telecommunications Cooperative Association “is pleased that the CR provides funding for the RUS Broadband Program and the Community Connect Program for the remainder of FY 11,” CEO Shirley Bloomfield said by email. “Yet some rural areas continue to be left behind by providers that stand on the sideline -- choosing not to provide service to rural areas -- and then criticize the programs that make it possible. The RUS programs are necessary for the companies that have committed to providing broadband service beyond lucrative urban areas to overcome market obstacles in rural areas.” With the net neutrality rider likely scuttled until the end of September, the Congressional Review Act is now Republicans’ weapon of choice against the FCC’s December order, Walden said Wednesday at the American Cable Association Summit. “That’s the best way” to fight the commission on net neutrality, he said, and he hopes that the Senate will soon take up the resolution of disapproval that the House approved last week. Walden hasn’t decided the fate of the net neutrality budget rider that he successfully pinned to HR-1, the original House continuing resolution, he said. “We'll see what happens.” Some analysts considered the net neutrality rider more likely to pass than the Congressional Review Act joint resolution of disapproval, because as a rider it was just one piece of a larger battle over federal spending (WID Feb 22 p4). The House passed the joint resolution, but it faces a steep climb with the Senate controlled by Democrats and a veto threatened by President Barack Obama.

The House Communications Subcommittee has concerns about overbuilding of ISPs by broadband projects that got federal money, said Chairman Greg Walden, R-Ore. “We will be watching” to make sure that money is spent appropriately, he told reporters on Wednesday. He referred to a study NCTA paid for and released that day that found such overbuilding. Jeffrey Eisenach and Kevin Caves of Navigant Economics studied three Rural Utilities Service awards in Kansas, Minnesota and Montana. The federal money for those projects totaled $231.7 million, 7 percent of the $3.5 billion that RUS got for broadband loans and grants under the 2009 American Recovery and Reinvestment Act. The Broadband Initiatives Program awards process “was fair and open,” an RUS spokesman said. “The projects highlighted in the NCTA study are in rural areas that lacked sufficient broadband for rural economic development, as required by the statute. All were carefully vetted on the ground by RUS field staff, received strong support from the local community, and will vastly increase broadband capacity in their communities.” “More than 85 percent of households in the three project areas are already passed by existing cable broadband, DSL, and/or fixed wireless broadband providers,” the economists said at http://xrl.us/bjofip. “In part because a large proportion of project funds are being used to provide duplicative service, the cost per incremental (unserved) household passed is extremely high,” more than $349,000 for each of the 452 households lacking broadband service, Eisenach and Caves wrote. The cost is more than $30,000 per unserved home, if wireless service is excluded, they said. “We conclude that the RUS Broadband Initiatives Program, as currently structured, is not a cost-effective means of extending broadband coverage to unserved households.” NTCA got in a jibe at NCTA in a statement supporting RUS. The agency’s stimulus funding and regular broadband loan program “are essential to achieving policymakers’ goal of universal broadband availability,” NTCA CEO Shirley Bloomfield said. “Unfortunately, opponents of these programs often gloss over the fact that the community-based telcos have committed to providing broadband in those remote and less populated areas -- despite the exorbitant costs associated -- while the cable companies focus on the more lucrative towns. Rural consumers suffer when providers stand on the sidelines and choose not to provide service in rural areas -- and then criticize the very programs that make it possible."

Some rural telcos are worried that cuts to the Rural Utilities Service budget in the fiscal 2011 continuing resolution could upset rural broadband investment. But other groups are breathing a sigh of relief that the budget deal, up for a House vote Thursday, dropped a proposal to prohibit the FCC from acting on its net neutrality order. The resolution would fund the government through September.

Some claimed as inevitable a transition to broadband from public switched telephone networks, while others cautioned that IP-to-IP networks lack the economy and regulation that public switched telephone network (PSTN) has. The comments came at a Regulatory 2.0 Workshop hosted by Pillsbury Winthrop on Tuesday.

The government must do more to defeat the “massive and worsening” cyber threat to parts of the U.S. infrastructure, Sen. Sheldon Whitehouse, D-R.I., said Tuesday at a Senate Crime and Terrorism Subcommittee hearing he chaired. Cyber crimes hurt companies’ bottom lines, he said. Crucial pieces of the nation’s infrastructure “have been probed by malicious actors” and “in some cases compromised,” Whitehouse said. “Even in times of budget cutting the cyberthreat is simply too dangerous to leave under-resourced."