The Universal Service Fund’s high-cost fund should be capped at its year-end 2010 level and shouldn’t pay for service where there are competitive providers that don’t receive support, the American Cable Association said in an FCC filing Monday in docket 10-90. It said the commission’s revamp of the high-cost fund and creation of a fund for broadband service should give “a sufficient transition for smaller telephone companies now drawing high-cost support.” The commission should for eight years allow small phone companies to keep getting support if they agree to sell broadband, the association said. Its representatives met with Chief Sharon Gillett and other front-office staffers of the Wireline Bureau and with Wireless Bureau officials.

A dismal budget climate shouldn’t preclude support for broadband in tribal lands, Sen. Daniel Inouye, D-Hawaii, said at a Senate Commerce Committee hearing Tuesday. Inouye, the Appropriations Committee’s chairman, signaled that he would support increased FCC funding for that purpose. Advocates for Native American communities sought additional broadband funding, including through the Universal Service Fund and a new Native Nations Broadband Fund.

AT&T and USTelecom are trying to revive dormant efforts to create an industry-wide proposal on Universal Service Fund and intercarrier compensation regime reforms ahead of the FCC’s rigid schedule, multiple industry officials told us. Similar efforts have foundered in the past -- including a concerted attempt in 2006-07 -- but this time, “I think there is a possibility for a very broad industry coalition on this,” said USTelecom Vice President Jon Banks. “The FCC knows we're trying to do this,” he added. “Everybody -- ILECs, CLECs, cable wireless, rurals -- is trying to put together a path for the FCC to follow.”

April 4 FCBA International Telecom Committee brown bag lunch on Internet ecosystem, 12:30 p.m., Squire Sanders, 1201 Pennsylvania Ave. NW, Suite 500 -- http://xrl.us/bimfn6

AT&T will have a “steep climb” if it wants to take over T-Mobile, FCC Commissioner Michael Copps said. “You will remember in the Comcast merger that I said at the outset that it would have been a very steep climb for me. I ended up voting against it,” he said in a videotaped interview for C-SPAN’s The Communicators. “This is maybe even a steeper climb from the standpoint of a lot of power, a lot of influence given to one company in a world where two companies are going to control, like, 80 percent of the spectrum.” Copps worries about “what residue of competition will be left if the merger is approved,” what impact it will have on U.S. jobs and whether the bulk of the proceeds will flow into Europe’s telecom market, he said. T-Mobile’s parent is based in Germany.

It’s “too soon to tell” if industry-based “do not track" solutions like Microsoft and Mozilla’s new browsers will satisfy FTC requirements, Commissioner Julie Brill told an American Bar Association antitrust conference Thursday. She said the agency expects to release a final privacy report by the end of the year. Google and other industry players discussed ways they're implementing privacy-by-design frameworks into their business models.

Republicans want to cut FCC spending below the agency’s FY 2012 request of $354.2 million, they said at a hearing Wednesday of the House Appropriations subcommittee on Financial Services and General Government. It’s still important to find cost savings at the FCC, even if the agency offsets its costs by releasing new spectrum, said Subcommittee Chairman Jo Ann Emerson, R-Mo. Committee members also needled FCC Chairman Julius Genachowski on many specific issues, including data roaming, potential interference to GPS by LightSquared, and alleged privacy violations by Google.

Netflix continues to gobble up bandwidth, but the company’s explosive growth still hasn’t threatened cable, said a study released Tuesday by analyst Bruce Leichtman. Nearly 30 percent of survey respondents watched online video at least once per week through Netflix. Three percent of non-Netflix subscribers reported that they were watching streaming video, Leichtman said. While Netflix is growing exponentially, over-the-top streaming is growing only incrementally: 12 percent of the adults surveyed told Leichtman that they watched TV shows online once a week, up a percentage point from last year and up from 10 percent in 2009. “People watching TV online has barely moved,” Leichtman told us. “The reality is, in this over the-top emerging video world, there’s only two winners: Netflix and YouTube. Everyone else is losing out."

Rep. Doris Matsui, D-Calif., will soon reintroduce her Universal Service Fund revamp bill, she said at a conference Tuesday of the Schools, Health & Libraries Broadband Coalition. The bill will return “in the coming weeks,” the Communications Subcommittee member said. The bill would update the Lifeline and Link-Up programs to subsidize broadband for low-income people. Rep. Lee Terry, R-Neb., has said he also plans to reintroduce his comprehensive USF legislation from last year. Matsui expects Congress to spend a “considerable amount of time” on the proposed AT&T/T-Mobile merger, and she expects Walden will have hearings, she said. Congress has a “duty” to “thoroughly examine” what impact the merger will have on the marketplace, Matsui said. Spectrum and USF reform may be on the way, too, though the subcommittee has focused on net neutrality, she said. Matsui reiterated that she “strongly” supports the FCC’s net neutrality order.

Netflix continues to gobble up bandwidth, but the company’s explosive growth still hasn’t threatened cable, said a study released Tuesday by analyst Bruce Leichtman. Nearly 30 percent of survey respondents watched online video at least once per week through Netflix. Three percent of non-Netflix subscribers reported that they were watching streaming video, Leichtman said. While Netflix is growing exponentially, over-the-top streaming is growing only incrementally: 12 percent of the adults surveyed told Leichtman that they watched TV shows online once a week, up a percentage point from last year and up from 10 percent in 2009. “People watching TV online has barely moved,” Leichtman told us. “The reality is, in this over the-top emerging video world, there’s only two winners: Netflix and YouTube. Everyone else is losing out.” At least one-fifth of cable subscribers surveyed reported that they were thinking of cutting their spending on that service in the next six months, but Leichtman said he didn’t think cable companies are threatened by Netflix. The company’s subscribers were just as likely to cut costs in the near term as were cable subscribers, Leichtman wrote. “Despite a highly saturated market, coupled with slow housing growth, the multi-channel video market in the U.S. still grew by over 500,000 subscribers in 2010. This survey found few ‘cord cutters’ over the past year, and little difference in the intent to switch or disconnect service from prior years.” Leichtman’s conclusions contradict Credit Suisse, which late last year analyzed usage-based pricing trends in Canada and argued that Netflix and companies like it were a threat to traditional pay television (WID Jan 10 p4). Leichtman said he surveyed nearly 1,300 customers by phone and weighted his data to reflect the gender and age trends of the U.S., making it more representative than Credit Suisse’s efforts. Leichtman acknowledged that the hang-up rate for his survey was “typical” for phone polls, declining to discuss details. Credit Suisse’s data was suspect because some 30 percent of its survey respondents didn’t have cable subscriptions, Leichtman said. “How they got that sample, I don’t know.” None of this means that Netflix won’t someday threaten traditional TV, Leichtman said. “It hasn’t happened yet, as much as people want it to happen,” he said. “While the multichannel industry is slowing, that slowing in growth is more a function of slowdown of housing growth than it is of cord-cutting.” A Netflix spokesman didn’t comment. Netflix is destabilizing ISP networks, National Telecommunications Cooperative Association CEO Shirley Bloomfield said. “Let’s be real clear that this is a trend that’s only going to grow.” Earlier studies have reported that Netflix customers are chewing up to 20 percent of American bandwidth during peak hours. Bloomfield said that anecdotal evidence suggests that Netflix’s impact is even more dramatic. She said a North Dakota telco executive recently took a sick day and watched Spider-Man on Netflix. The executive called one of his staff and asked how much the movie had cost the telco to stream. It was nearly $30, Bloomfield said, saying that Netflix should pay into the Universal Service Fund. “They're benefiting from USF, but they're not paying into it,” Bloomfield said. “Their business model is built on our guys having the bandwidth capacity.” FCC Chairman Julius Genachowski is overhauling the USF distribution and intercarrier compensation regimes and has promised to move to orders by the end of the summer. Bloomfield said she hopes that the commission doesn’t “lose momentum” needed to fix contribution problems. And she said that tiered ISP pricing plans won’t work in rural parts of the U.S., where there are fewer broadband subscribers.