All major parties to the Texas Public Utility Commission’s review of the state’s universal service programs agreed to a settlement proposal for the high-cost fund that would reduce fund 36.5 percent -- $144 million annually -- in steps over three years. The proposal (Case 34723) would reduce the universal service surcharge on landline and wireless phone bills to 3.4 percent from 4.4. Signers included AT&T, Verizon, the PUC staff, Office of Public Utility Counsel, the USF Reform Coalition of cable and wireless telecom providers, Embarq, Windstream and rural landline competitive carriers. The PUC, complying with a legislative mandate, opened a comprehensive review of the fund in the fall. The PUC staff had recommended cutting the $395 million high-cost fund 60 percent to $165 million -- but competitive carriers supported deeper cuts and incumbents called for roughly doubling the fund. The PUC urged negotiations. Other provisions of the agreement would end universal service subsidies in deregulated exchanges with population higher than 30,000. Subsidies in deregulated exchanges with fewer than 30,000 people could continue if market rates exceeded “reasonable” levels specified. Large incumbents would be allowed rate increases to offset the reduction in universal service subsidies. The pact also would increase the Lifeline discount. The signing parties agreed to not seek any changes to high-cost or Lifeline programs from the PUC or state legislature before 2012.

Kansas Gov. Kathleen Sebelius signed a bill to require that interconnected VoIP providers contribute to the state universal service fund. To avoid a potential federal conflict, SB-49 makes the requirement effective only if it’s not preempted by federal law. Similar mandates were adopted in New Mexico and Nebraska, but a federal court in Nebraska this year ruled that federal law preempts imposition of state universal service contributions on interconnected VoIP providers.

Global Crossing faces a $10.5 million fine because its subsidiaries failed to “contribute fully and timely” to the universal service and telecom relay service funds, the FCC said in a notice of apparent liability for forfeiture. The Global Crossing units have 30 days to pay or challenge the penalties, the FCC said.

FCC Chairman Kevin Martin is still “enthusiastic” about an a la carte approach for choosing cable channels, he told House appropriators at a budget hearing Tuesday. The policy would give consumers a way to cope with the industry’s “high prices” and to opt out of programming they don’t like, Martin said. He made similar comments to the Senate Commerce Committee Tuesday.

CapTheFund.org had collected 1,509 consumer comments by Feb. 7 supporting a cap on universal service fund high-cost support, it said Tuesday. The comments also support proposals to use reverse auctions and limit the ‘identical support’ mechanism that bases USF subsidies on the cost of running incumbent telecom companies. The FCC deadline for comments is April 17.

A Universal Service Fund cap order may not circulate for several more weeks, FCC sources said. “We're just kind of waiting for the chairman to come back with edits,” a commission source said.

Universal service reform could hurt infrastructure deployment in the U.S. Virgin Islands, the territory’s Public Services Commission told the FCC last week. It asked the FCC to exempt the islands from funding caps “for a period long enough” to let the area “catch up” to average development on the mainland. The Virgin Islands is “only now beginning to see competitive telecommunications services,” the PSC said. If the FCC doesn’t grant an exemption, it should phase in Universal Service Fund changes over at least five years, with most “change becoming effective toward the end,” it said.

LAS VEGAS -- The pending FCC order approving a Universal Service Fund cap does not have a sunset date, as was recommended by the Federal-State Joint Board on Universal Service, sources said Thursday. The order grants more than 40 pending applications for eligible telecom carrier (ETC) status. It also caps the fund at March 31 levels. FCC Chairman Kevin Martin has yet to circulate text of the order, complete with proposed edits, but is expected to do so in days. Sources said the order will likely have at least three votes if it contains expected language, with Martin and Commissioners Robert McDowell and Deborah Tate in support.

The Nebraska Public Service Commission asked a federal appeals court to overturn a district court finding that federal law barred the PSC from requiring Vonage and other interconnected VoIP providers to contribute to the state universal service fund. The PSC told the 8th U.S. Court of Appeals in St. Louis that the trial court acted incorrectly in concluding the state can’t enforce its universal service order because VoIP is an information service and state jurisdiction is therefore preempted. Meanwhile, Vonage asked the district court to make its temporary injunction against the PSC permanent and issue a summary judgment in Vonage’s favor.

The Kansas legislature passed a bill (SB-49) to require interconnected VoIP providers pay into the state universal service fund. But the measure sent to Gov. Kathleen Sebelius (D) includes a provision nullifying the requirement if it is prohibited by federal law. The state Corporation Commission in January joined New Mexico and Nebraska in requiring VoIP providers to support the state universal service fund. But in recognition of a federal court ruling that Nebraska was preempted from enforcing its decision, the Kansas bill was amended to include the nullification clause.