FCC Chairman Julius Genachowski is expected to circulate by Tuesday a proposed rulemaking notice that will focus on using universal service funds to support broadband deployment, an FCC official said. The notice has been expected (CD Dec 1 p2). It’s expected to focus on reform of the high-cost fund and intercarrier compensation but will not discuss the contribution factor, the official said. The notice is expected to focus on the short- to medium term, essentially turning USF into a “broadband for America” fund, but will ask questions on how to handle a long-term overhaul of the system, the official said. There is broad consensus that universal service is long overdue for a rethink, but Genachowski and his staff are walking a fine line because it will be difficult to make changes without asking some sectors to give up on millions of dollars in support.

CTIA supports “elements” of the Federal-State Joint Board on Universal Service’s recommended decision on changes to the low-income Universal Service Fund program, the group said in an FCC ex parte filing. The association reported on a meeting last week with Wireline Bureau officials. CTIA supported the board’s recommendation of the use of a national database for determining consumer eligibility for low-income Lifeline support, the filing said. “CTIA urged the Bureau to ensure that establishment of the database is done in a comprehensive manner that accommodates modern communications and addresses issues of waste, fraud and abuse,” the filing said. “Additionally, CTIA urged the Bureau to consider the national scale of the USF low-income programs and avoid a patchwork of 50 separate databases for eligibility without a national aggregation point."

FCC Chairman Julius Genachowski is expected to circulate by Tuesday a proposed rulemaking notice that will focus on using universal service funds to support broadband deployment, an FCC official said. The notice has been expected. It’s expected to focus on reform of the high-cost fund and intercarrier compensation but will not discuss the contribution factor, the official said. The notice is expected to focus on the short- to medium term, essentially turning USF into a “broadband for America” fund, but will ask questions on how to handle a long-term overhaul of the system, the official said. There is broad consensus that universal service is long overdue for a rethink, but Genachowski and his staff are walking a fine line because it will be difficult to make changes without asking some sectors to give up on millions of dollars in support.

Frontier Communications, which took over Verizon’s lines in 14 states last July, is set to increase rates for its FiOS video products due to rising cost, executives said in an interview. Broadband deployment and other Verizon transaction obligations as well as access revamp will be Frontier’s priorities this year, they said.

Frontier Communications, which took over Verizon’s lines in 14 states last July, is set to increase rates for its FiOS video products due to rising cost, executives said in an interview. Broadband deployment and other Verizon transaction obligations as well as access revamp will be Frontier’s priorities this year, they said.

The IRS properly assessed AT&T more than $505 million in taxes from universal service payments made to the company because the funds should be considered income and not capital contributions, a three-judge panel of the 5th U.S. Circuit Court of Appeals in New Orleans ruled last week. AT&T had lost its case on summary judgment at a lower court and appealed, arguing that its money it got from USF was capital contributions that shouldn’t count as gross income for tax purposes. The panel upheld the summary judgment, ruling that under both the relevant statutes and the Supreme Court’s 1973 U.S. v. CB&Q Railroad decision the government’s intentions in handing out the money are determinative. AT&T officials did not respond to a request seeking comment. An FCC spokesman declined to comment. The court’s decision concluded that the transferor didn’t intend the funds to be a contribution to capital, tax expert Rob Willens said. The funds instead were intended to be a supplement to AT&T’s income to compensate it for the lost revenue and increased costs it incurred in serving low-income, high-cost users, he said. Transfer of funds, as the court said, didn’t exhibit the “characteristics” of a contribution to capital as set forth by CB&Q, Willens noted. He said states would also tax these amounts because most, if not all, states use federal taxable income, with certain adjustments, as the tax base.

Interconnected VoIP subscriptions jumped 22 percent to 26 million in 2009, while the number of switched access lines fell 10 percent to 127 million, the FCC said Wednesday in a report on local telephone competition. The number of wireline retail connections fell by 6 percent to 153 million in 2009, the report said. The report may show a decline in the total number of wirelines, but VoIP still relies on wireline broadband connections and many wireless services still rely on wireline facilities, said a spokeswoman for the National Telecommunications Cooperative Association. Policymakers “must make sure that high-cost support mechanisms are available to support the deployment and maintenance of critical network facilities,” she said.

The FCC Wireless Bureau made significant progress over the last year following up on March’s National Broadband Plan, Chief Ruth Milkman said in an interview Wednesday, after speaking at an FCBA lunch. Milkman also said the bureau plans to play an active role in the Universal Service Fund proceeding early in 2011.

Interconnected VoIP subscriptions jumped 22 percent to 26 million in 2009, while the number of switched access lines fell 10 percent to 127 million, the FCC said Wednesday in a report on local telephone competition. The number of wireline retail connections fell by 6 percent to 153 million in 2009, the report said. The report may show a decline in the total number of wirelines, but VoIP still relies on wireline broadband connections and many wireless services still rely on wireline facilities, said a spokeswoman for the National Telecommunications Cooperative Association. Policymakers “must make sure that high-cost support mechanisms are available to support the deployment and maintenance of critical network facilities,” she said.

House Commerce Committee Chairman Fred Upton, R-Mich., won’t back down in his push to reverse FCC net neutrality rules, he said. “We're going to pursue this big time,” Upton said Tuesday in an interview with the American Enterprise Institute. “We're going to look at every tool in the toolbox to try and stop this.” Upton and Communications Subcommittee Chairman Greg Walden, R-Ore., will start net neutrality hearings next month, Upton said. “At the end of the day, I think our side will win.” Asked about other telecom priorities, Upton said to expect hearings and bipartisan legislation on spectrum. Privacy and the Universal Service Fund are other issues that Upton intends to pursue on a bipartisan basis, he said.