FCC Chairman Kevin Martin circulated late Friday changes in an order approving a Universal Service Fund cap that likely mean approval of a cap within days, we've learned. Counting Commissioner Robert McDowell’s support, Martin has three votes for the high-cost fund cap. Commissioner Deborah Tate backed the cap while Commissioner Michael Copps cast a no vote.

A flaw in a proposal for a new administrator of the E-Rate program may keep qualified vendors from bidding on the contract, Sen. Sam Brownback, R-Kan., told FCC Chairman Kevin Martin in an April 11 letter we obtained. “I am concerned that the RFP [request for proposal] may be flawed,” Brownback said in the letter, requesting many documents on commission work with the Universal Service Administrative Company, which oversees the program.

The Texas Public Utility Commission was to vote Friday on an agreement to cut the state universal service fund 36.5 percent the next three years. Approval was expected. The proposal (Case 34723) would cut the fund $144 million and the monthly universal service surcharge on landline and wireless phone bills to 3.4 percent from 4.4 percent. The agreement was signed by the state’s major incumbent and competitive carriers, cable and wireless companies, the PUC staff and the state utility consumer advocate. The commission, adhering to a legislative mandate, opened a comprehensive review of the fund last fall. The PUC staff had urged cutting the $395 million high-cost fund 60 percent to $165 million, but competitive carriers wanted deeper cuts while incumbents demanded the fund roughly double. The commission urged talks. Other provisions of the agreement would end universal service subsidies in deregulated exchanges exceeding 30,000 residents.

The Missouri Office of Public Counsel (OPC) asked state regulators to terminate Winstar’s state operating authority for not complying with a state court judgment that it pay $45,000 in restitution and penalties for not remitting funds collected from deaf relay and universal service surcharges. The state Circuit Court in St. Louis in February found Windstar in violation of state laws and Public Service Commission rules, ordering that it pay $25,000 in restitution to the relay and universal service funds, plus a $20,000 fine into the state Public School Fund. The OPC (Case TC-2008- 0346) told the PSC that Windstar hasn’t paid the judgment and hasn’t explained why, so it should have to show cause why its state certificate shouldn’t be revoked for ignoring the order.

EU lawmakers this week unveiled counter-proposals to European Commission (EC) plans to revamp electronic communications regulations. Reports by the European Parliament’s Industry, Research and Energy and Internal Market and Consumer Protection committees enjoy strong support among MEPs, their authors said at a Wednesday press briefing. The most potentially contentious issue will be “where to find the budget,” French Socialist MEP Catherine Trautmann said. The EC welcomed the proposals, complaining they didn’t go far enough on spectrum management reform.

U.S. Cellular met with members of the Federal-State Joint Board on Universal Service to argue against a cap on the fund, which is now before FCC commissioners, it said. The carrier said in an FCC filing that it stated at the meeting that “there is no crisis in USF funding,” with the fund down 16 percent last year. It called the cap “the wrong move at the wrong time,” institutionalizing discrimination that exists in the fund. U.S. Cellular pointed out that Mississippi now gets $140 million from the high-cost fund, compared to $2 million in Missouri and $100,000 in Illinois. “Since 1999, Wireless has drawn $3 billion and wireline has drawn $25 billion,” the carrier said.

Arizona and Tennessee joined seven other states in urging that the FCC deny an AT&T forbearance petition seeking relief from accounting rules requiring separate recording of intra- and interstate costs (CD April 23 p9). “There is really no effective substitute” for such controls, the Arizona Corporate Commission said in a letter urging commissioners to reject similar petitions by Verizon and Qwest. The data AT&T wants to stop collecting are “often the only public source of available data” on costs, revenue and access line counts, the Tennessee Regulatory Authority said. Tennessee uses the data to evaluate competition and may need them if it adopts a state universal service fund, it said. Tennessee knows “changes may be necessary in the existing FCC rules” to address AT&T’s woes, it said. But the FCC should defer to the Federal-State Joint Board on Jurisdictional Separations, which already is working on the issue, it said. Besides Arizona and Tennessee, the AT&T petition has drawn opposition from the Joint Board’s state members, the National Association of State Utility Consumer Advocates, Washington, Michigan, New Mexico, Ohio, California, Wisconsin and New Jersey. FCC commissioners have until midnight Thursday to vote on AT&T’s petition.

The FCC granted universal service fund waivers sought by the Illinois Commerce Commission, Farmers Mutual Telephone Company, and the Wyoming Public Service Commission. The groups sought waivers of high-cost universal service support filing deadlines.

Members of the Supreme Court grilled both sides Monday, as they examined whether a company representing hundreds payphone owners has standing to sue in federal court for funds owed its clients. The case, pursued for nearly a decade, involves more than $100 million in charges.

Public schools could tap universal service funds for enhanced emergency notification services under a bill (HR- 5806) introduced last week by Rep. Bobby Rush, D-Ill. School that don’t have emergency notification systems would get the first shot at the money, the bill said.