The FCC banned two people from participating in the Universal Service Fund E-Rate program for schools and libraries, it said in two notices of debarment. Keith Madeiros and Thomas Kennedy, both of Connecticut, are banned for three years, the FCC said. Neither opposed the bans, the FCC said. Meanwhile, the FCC began five E-Rate inquiries, suspending the parties involved. The FCC sent notices of suspension and initiation of debarment proceedings to William Holman, Allan Green, Judy Green, George Marchelos and Earl Nelson, all of California.

Sprint Nextel submitted a plan at the FCC offering its version of Universal Service Fund reform. The “Comprehensive Universal Service Reform (For Everyone)” plan aims to reduce high-cost support, carrier contributions and consumer bills while treating “all industry segments equitably,” Sprint said Wednesday. It’s also “the only plan that can be implemented immediately,” said Sprint Nextel General Counsel Len Kennedy. Adopting the plan would cut annual carrier contributions $3.1 billion annually, Sprint said, estimating that carriers now contribute $4.6 billion yearly. The plan would drop the contribution rate to 6 percent from 11.3 percent, Sprint said. High-cost support for competitive eligible telecom carriers would drop 85 percent, Sprint said. Small rural incumbent local exchange carriers’ share of high-cost support would rise to 81 percent from 41 percent, Sprint said. The plan would let incumbents replace “much of the high-cost support with new service revenue obtained by increasing in modest increments the federal cap on subscriber line charges,” Sprint said. The Sprint plan “works largely within current FCC rules and can be easily administered,” the company said in a letter to the FCC. The plan has three components, it said. The first would raise SLC caps for all ILECs and reduce their high-cost support by the same sum. The second would recalculate required contributions to the High-Cost Loop Support and Local Switching Support funds by “consolidating study areas of holding companies with more than one million ILEC lines initially at the state level and later statewide.” The final component “caps or ends all high-cost support in a study area depending upon the level of CETC penetration.” Alltel lauded the Sprint plan. “Sprint’s recognition for the continuing need for technological-neutrality in universal service is noteworthy,” a spokesman said. “We look forward to working with Sprint on how best to achieve fair and equitable long term universal service reform.” Other carriers and telecom groups we contacted didn’t comment by our deadline.

Competitive carriers and their investors arrayed in droves against a Verizon forbearance petition seeking relief from loop and transport unbundling requirements in parts of Virginia Beach, where Cox is the incumbent cable operator. Comments on the request were due Tuesday. Sprint Nextel, a longtime special access reform advocate, also joined the fray. The opposition wasn’t unexpected: CLECs and Sprint also are fighting a Verizon forbearance petition seeking similar relief in Rhode Island.

The Missouri Office of Public Counsel said it would oppose any attempts to mediate a settlement of its complaint seeking to terminate Windstar’s state operating authority for wilfully ignoring a final state court judgment. A state court in February found Windstar had failed to remit funds collected via state universal service and relay service surcharges, failed to file its 2006 annual report and failed to make quarterly service quality reports for the first half of 2007. The court ordered Windstar pay $25,000 in restitution to the state funds and plus a $20,000 fine, and file the missing reports. The Public Counsel’s April 23 complaint (Case TC-2008-0346) alleged Windstar didn’t appeal the decision so its failure to promptly obey represented willful disregard of the state courts. The counsel said there’s nothing to negotiate or mediate since the court order was clear on Windstar’s violation and what the carrier had to do. It said negotiations would delay the inevitable choice for Windstar to either pay up and file or get out of the state. The counsel also called for expedited hearings on its complaint. The PSC has given Windstar until May 23 to respond to the complaint, with the staff’s recommendation due June 22.

Kill the high-cost universal service fund identical support rule because it’s no longer sound policy, Sen. Byron Dorgan, D-N.D., said Wednesday in a letter to FCC Chairman Kevin Martin. It no longer makes sense for USF rules to tie competitive eligible telecommunications carriers’ support to what incumbent local exchange carriers receive, rather than ETCs’ own costs, the letter said. Nor is the reverse auction model the solution, the letter said. “Reverse auctions leave too many unanswered questions about stranded investment and the lack of incentive for a carrier to improve and expand their network, let alone maintain their current systems,” Dorgan said. “With winning bidders receiving the least amount of universal service support, this would in all likelihood leave Americans living in rural and high-cost areas without adequate, affordable communications services.”

Three rate-of-return carriers may convert some operations to price cap regulation, the FCC said Tuesday. Frontier, Puerto Rico Telephone and Consolidated Communications separately petitioned the FCC to approve the change using a regulatory framework established in a March 18 order granting a similar request by Windstream. The waivers serve the public by encouraging encourage the carriers to “maintain and enhance efficient operations” and require “reduction of some of the carriers’ access rates,” the FCC said. The FCC also granted conditional waivers letting the three carriers keep receiving interstate common line support via the universal service high-cost fund. FCC rules reserve ICLS for rate-of-return carriers, giving interstate access support to price cap carriers. But the FCC tentatively concluded that carriers converting to price cap regulation are ineligible for IAS. Without ICLS waivers, conversions “could result in the loss of explicit support by these carriers to offset the interstate portion of their loop costs that are not recovered through interstate access charges.”

The FCC should ensure bidding is competitive on a contract to manage the E-rate program (CD May 2 p2), Sen. Sam Brownback, R-Kan., told Chairman Kevin Martin in a Friday letter. Bids on the contract closed Monday and a spokesman said USAC wouldn’t comment on the number of bidders. Last week Brownback asked Martin to send his office by close of business Friday an addendum to the memorandum of understanding between the commission and the Universal Service Administrative Co. Brownback’s office said Monday it had not received the MOU addendum. “We are working with Sen. Brownback’s office to follow up on additional information they requested,” an FCC spokesman said. According to Brownback, companies interested in bidding have had trouble obtaining documents on the contract from USAC, a non-profit set up to manage the fund. “There appears to be great interest in this contract that could ultimately be worth over $200 million,” Brownback told Martin. “The fact that USAC originally attempted to enter into a sole-source contract with [incumbent] Solix raises further concerns about USAC’s impartiality and interest in a competitive bidding process,” he said. “I take great umbrage in your insinuation that I am placing ‘political pressure’ on FCC to interfere with this process because of ‘one disgruntled prospective bidder,'” Brownback added. “I do not care which bidder ultimately wins this contract, as long as every competitor gets a fair chance to participate.” More competition is better, he said, calling a “well-written” proposal inviting competition “the only way to achieve the goal of reducing the improper payments, and eliminating waste, fraud and abuse in these programs.”

Kill the identical-support rule but don’t impose reverse auctions as a way to bring more equity into the high-cost universal service fund, 35 House members from both parties told FCC Chairman Kevin Martin in a Monday letter. Competitive local exchange carriers now get the same high- cost USF support as incumbent local exchange carriers, though their fixed costs may be lower, the letter said. “This policy has greatly contributed to the explosive growth of the USF,” it said. The FCC needs a cost recovery approach basing support for CETCs on their needs, not others’, it said. But implementing an agency proposal of the “untested mechanism” of reverse auctions would “stymie infrastructure build-out to the most rural areas,” the letter said. It would be better to pursue reforms “not at cross purposes with basic universal service policy,”, it said. Nor does it make sense to require rural carriers to provide service in high-cost rural areas while advancing proposals that “would pull the rug out from under their investments,” the letter said. The FCC approach could leave rural residents without adequate, affordable communications, it said.

The FCC, as expected, approved a cap on payments to competitive eligible telecommunications carriers under the high-cost Universal Service Fund program. Also as expected, wireless carriers voiced deep concern about the cap exerting a chilling effect on their efforts to participate in the USF program. Wireless attorneys said some carriers may challenge the order in federal court. An accompanying FCC statement issued Friday said the cap clears a path for further reform.

Fresh comment on universal-service and intercarrier- compensation proceedings is needed “promptly” now that the FCC has imposed an interim cap on the universal service high- cost fund (see separate report in this issue), the agency said Friday. The cap is a “crucial first step toward comprehensive reform” of those “directly interrelated” compensation systems, the FCC said. The commission asked for new comments in 12 open proceedings, to applause from Verizon. “It is critical to clarify the rules for VoIP and other IP-enabled services and confirm that all such services are ‘interstate’ services subject to the FCC’s authority,” said Susanne Guyer, Verizon senior vice president for federal regulatory affairs. “IP is an important growth engine for the entire sector, and the commission should encourage competition and a level playing field so customers enjoy new services faster.”