A rural telecom company proposed a plan it said would let the FCC control Universal Service Fund growth without “drastic and untested reverse auctions.” In a letter to the agency, Panhandle Telecommunications Systems urged the FCC to continue letting multiple wireless competitors operate in rural areas but give them an “economic incentive” to use other wireless carriers’ networks where it isn’t economically feasible to build more facilities, PTS said. Wireless rivals’ universal service support should be based on their own costs, not the “identical support” process, which bases competitors’ support on incumbent local exchange carrier costs, PTS said. Under the plan wireless competitors would have to share their networks with other wireless carriers licensed in the same area and charge less than the standard roaming rate. This would discourage building more networks and lessen the drain on the USF, which finances those networks, the plan said. The proposal is by the competitive subsidiary of Panhandle Telephone Cooperative, making it more neutral than some, PTS said. Panhandle Telephone Cooperative is an incumbent local exchange carrier in Oklahoma, Texas and New Mexico. Its PTS subsidiary provides competitive wireless service in Oklahoma and Kansas and competitive local exchange carrier service in Texas. The reduced roaming rate would be based on “the national average cost to produce a wireless minute,” also called “local wholesale rate,” PTS said. This rate would be used to set USF support for wireless competitors, PTS said. A formula would be devised to let wireless competitors “calculate their own costs based on a national average cost without resorting to the highly- regulated and burdensome cost accounting methods currently required of some ILECs,” PTS said. The proposal includes a procedure for paying competitive wireline companies. They would have to do cost studies like those incumbent rate-of- return LECs do. “Since many rural CLECs are accustomed to preparing cost studies in their affiliated ILEC areas, they should be willing to prepare a similar study for their CLEC areas as well,” the letter said. The plan would cap USF support for a wireline CLEC at 1.5 times the support per line in the state where the company operates.

The California Public Utilities Commission said its top legislative priorities in 2008 would be reforming the state Lifeline subsidy program and rural telecom infrastructure grants program, and ensuring adequate financial controls on a new broadband universal service program. The PUC said that as retail telephone rate regulation continues to fade and as competition grows more intense, getting enough funds for Lifeline will become difficult if contributions and subsidies remain linked to carriers’ rates. The PUC said it wants to state Lifeline subsidies changed to a flat monthly credit instead of a percentage discount. This would allow accurate estimates of the annual Lifeline costs on which to base contributions, and would help make the state Lifeline program technologically neutral, it said. The PUC said it wants changes to the rural infrastructure grant program, including removal of a $2.5 million cap on per-project funding and an extension of the grant program through the end of 2012. The PUC said eliminating the cap would allow funding of worthy projects now disqualified because they are too big. The PUC also wants legislation putting “appropriate” financial controls on the new state Advanced Services Fund, a universal broadband service program that’s starting this year. The fund would support private broadband construction efforts in underserved areas.

The FCC asked for comments on TracFone’s request for eligible telecommunications carrier status to provide Lifeline service in Pennsylvania. ETC status allows a carrier to get universal service funding. TracFone told the FCC it plans to seek USF money just for Lifeline and not to provide service in high-cost areas. Comments are due Feb. 8, replies Feb. 25.

The California Public Utilities Commission said its top legislative priorities in 2008 would include ensuring adequate financial controls on a new broadband universal service program. The PUC wants legislation putting “appropriate” financial controls on the new state Advanced Services Fund, a universal broadband service program that’s starting this year. The fund would support private broadband construction efforts in underserved areas.

The Kansas Corporation Commission became the third state commission to rule that interconnected VoIP providers must contribute to the state universal service fund. The commission said adding VoIP providers to the base of state universal service contributors is consistent with federal law and FCC policy since they already contribute to the federal universal service fund. The KCC (Case 07-GIMT-432-GIT) said the ability of interconnected VoIP providers to jurisdictionally separate traffic is irrelevant if the federal fund’s safe-harbor mechanism is applied to their state contributions. The commission also dismissed arguments that it’s preempted by federal law. It said federal law and policy are silent on VoIP contributions to state funds, and when New Mexico and Nebraska ordered interconnected VoIP providers to contribute to their state funds, they didn’t face preemption claims. The KCC said it plans workshops within 60 days, to help set a formula for figuring VoIP universal service fund contributions and to settle other matters of follow-through.

The Kansas Corporation Commission became the third state commission to rule that interconnected VoIP providers must pay into the state universal service fund. The commission said making VoIP providers contributors is consistent with federal law and FCC policy since they already pay into the federal universal service fund. The KCC (Case 07-GIMT-432- GIT) said interconnected VoIP providers’ ability to separate traffic jurisdictionally doesn’t matter if the federal fund’s safe-harbor mechanism applies to their state contributions. The commission dismissed arguments that it’s preempted by federal law. Federal law and policy are silent on VoIP payments to state funds, and when New Mexico and Nebraska ordered interconnected VoIP providers to contribute to their state funds, they didn’t face preemption claims, it said. The KCC will hold workshops within 60 days to help set a formula for figuring VoIP universal service fund contributions and to settle other matters of follow-through.

A group of telecom carriers want to streamline the way e-rate discounts are given to schools and libraries, saying the system’s complexity can lead to errors. The carriers hesitated to answer questions on their proposal before knowing if groups representing schools and libraries endorse it. At least one such group, the State E-Rate Coordinators Alliance (SECA), has misgivings about the proposal.

A group of telecom carriers want to streamline the way e-rate discounts are given to schools and libraries, saying the system’s complexity can lead to errors. The carriers hesitated to answer questions on their proposal before knowing if groups representing schools and libraries endorse it. At least one such group, the State E-Rate Coordinators Alliance (SECA), has misgivings about the proposal.

The trade group for Wisconsin’s incumbent telcos urged the Public Service Commission to scrutinize applications by nonprofits seeking universal service grants for telecom access programs, to ensure they obey restrictions on state universal service funds. The Wisconsin State Telecom Association said some of 25 grant applications filed by last month’s deadline are questionable. It cited a proposal to use the money to expand student access to wireless services in secondary schools, warning that the PSC should consider that wireless carriers don’t contribute to the state universal service fund. The applicants seek a total of $537,000 in grants, against a $500,000 program budget for nonprofits’ efforts to facilitate access to affordable phone service. The WSTA said the law requires that grants go to programs providing consumers in high-cost areas with affordable basic exchange access, or that expand the reach of advanced telecom service. The WSTA urged the PSC to resist the temptation to trim the requests and award some funds to all applicants.

FCC action on early termination fees (ETFs) is expected early in 2008, with the commission expected to refocus at least in part on telecommunications issues following a major fight over media consolidation. The Universal Service Fund, 700 MHz auction, future use of the broadcast white spaces, and 800 MHz rebanding also are expected to get agency attention.