The Federal-State Joint Board on Universal Service issued long-awaited recommendations for reforming the Universal Service Fund late Tuesday that generally followed an outline released in September. The goal of the wide- ranging group of proposals is to reform the high-cost portion of the USF, which subsidizes service in rural areas. The FCC has a year to act on the recommendations.

The FCC launched its Rural Health Care Pilot Program Monday with $417 million earmarked for building broadband telehealth networks in 42 states and three U.S. territories. The universal-service money will subsidize up to 85 percent of the costs of designing, engineering and building regional and state networks, the FCC said. The networks will connect to the public Internet or one of two dedicated Internet backbones, Internet2 or National LambdaRail. The program, set up last year, “exceeded even our own high expectations,” the Commission said Monday in an order. The pilot attracted 81 applications, 69 of them meeting all criteria, the order said. The networks will support more than 6,000 rural health care facilities, the commission said. FCC Chairman Kevin Martin sees the program as “the basic building blocks of a digitally connected health system -- regional and state-wide broadband networks, all connected to a national backbone,” he said. The program aims to connect rural clinics, hospitals, universities and other facilities so rurally based care providers can reach medical specialists elsewhere. FCC Commissioner Michael Copps will do “everything I can” to make sure the pilot becomes s permanent program, he said. The order includes safeguards to make sure funds go for their intended purpose, commissioners said. The pilot, announced in September 2006, is meant make improved use of the rural health care portion of the Universal Service Fund, underused since the 1996 Telecom Act created it.

The FCC launched its Rural Health Care Pilot Program Monday with $417 million earmarked for building broadband telehealth networks in 42 states and three U.S. territories. The universal-service money will subsidize up to 85 percent of the costs of designing, engineering and building regional and state networks, the FCC said. The networks will connect to the public Internet or one of two dedicated Internet backbones, Internet2 or National LambdaRail. The program, set up last year, “exceeded even our own high expectations,” the Commission said Monday in an order. The pilot attracted 81 applications, 69 of them meeting all criteria, the order said. The networks will support more than 6,000 rural health care facilities, the commission said. FCC Chairman Kevin Martin sees the program as “the basic building blocks of a digitally connected health system -- regional and state-wide broadband networks, all connected to a national backbone,” he said. The program aims to connect rural clinics, hospitals, universities and other facilities so rurally based care providers can reach medical specialists elsewhere. FCC Commissioner Michael Copps will do “everything I can” to make sure the pilot becomes s permanent program, he said. The order includes safeguards to make sure funds go for their intended purpose, commissioners said. The pilot, announced in September 2006, is meant make improved use of the rural health care portion of the Universal Service Fund, underused since the 1996 Telecom Act created it.

The AT&T-Dobson Communications merger order could have long-term effects on the wireless marketplace, creating as it does a new, higher screen level for when a merger raises market power concerns, industry officials said. The order (CD Nov 16 p10) states that with the addition of 700 MHz spectrum to be auctioned next year, a merged carrier can hold up to 94 MHz of spectrum in a given market without triggering more detailed FCC review. The previous standard was 70 MHz. Sources said the provision was made part of the order at the suggestion of Wireless Bureau Chief Economist Walter Strack.

The Federal-State Joint Board for Universal Service has agreed to a permanent cap for the high cost part of the Universal Service Fund, most likely at 2007 levels, regulatory and industry sources said Wednesday. The proposal would also create separate funds for wireline, wireless and broadband.

The Internet gambling ban passed last year actually helps enforcement of state law, supporters told the House Judiciary Committee Wednesday. They sought to defuse interest in the state-by-state “opt-out” approach in a bill by House Financial Services Committee Chairman Barney Frank, D-Mass., citing wide agreement among state and local law enforcement officials that Internet wagering is regulation-proof by design. Chairman John Conyers, D-Mich., said he was impressed with the rigor of debate, telling witnesses to use two recesses to hammer out their “final advice” to the committee.

More than 70 percent of Americans polled back capping the high-cost portion of the Universal Service Fund, and 62 percent oppose using USF subsidies to widen broadband access in rural areas, said Cap the Fund, a group opposing more USF spending. “This program requires us to trust the government not to throw money to services that could be better provided by non-subsidized companies,” said Mac Haddow of the Seniors Coalition, a Cap the Fund member.

Frontier Communications and SureWest Telephone urged the California Public Utilities Commission to not cap access charges of mid-sized incumbents at the level of AT&T or Verizon. The telcos made the suggestion in a lawful ex parte communication to PUC staff members. They were responding to an administrative law judge’s proposal two weeks ago recommending a statewide access charge cap set at the levels charged by AT&T or Verizon in their respective parts of the state. Under the proposal, any local exchange provider that is not operating under rate-of-return regulation couldn’t charge more for access than AT&T or Verizon. This order (Case R-03-08-018) would affect mid-sized incumbents and competitive local carriers. Frontier and SureWest said they would suffer a disproportionately large revenue reduction on a per-line basis if they had to cut their access charges to the big incumbents’ level. They also said their ability to recover the lost revenue might be impaired by proposed PUC policies to reduce the size of the state’s high-cost universal service fund.

The West Virginia Public Service Commission approved an agreement between Verizon, the state Consumer Advocate Division and the PSC staff on how universal service subsidies will be split between rate support and network upgrading. Verizon anticipates receiving $21.6 million in universal service subsidies next year. Under the approved agreement (Case 07-1989-T-P), Verizon will apply $5.7 million toward rate support. It will apply the remaining $15.9 million to network construction, and will match the federal funding with $7.9 million of its own money. Any funds not spent in 2008 will be carried over to 2009. A provision within the agreement will encourage broadband upgrades at remote loop terminals serving fewer than 200 lines by letting Verizon reduce its matching obligation by $250,000 for each remote terminal upgraded to broadband. Upgrading terminals serving between 200 and 300 lines will net a $150,000 reduction. New installations of broadband-capable remote terminals would net a $350,000 reduction. The reduction total will be capped at $1.5 million.

The Wisconsin Senate passed a lightly amended version of an Assembly bill to transfer video franchising from municipalities to the state Department of Finance. The Senate passed AB-207 on a 23-9 vote after rejecting amendments intended to add consumer protections and protect funding for public access channels. The bill passed the Assembly in April, but was held up in the Senate through the summer and early fall while the legislature addressed the state budget. The Senate added an amendment to require large video providers to pay an annual $2,000 franchise fee instead of a large one-time fee, while small providers would pay $2,000 the first year and $100 annually in subsequent years. Another amendment would require that all video providers in a market show University of Wisconsin sporting events upon university demand if any one provider carries coverage. The bill now returns to the Assembly for concurrence Dec. 11. The measure includes a video consumer bill of rights that opponents said would weaken service quality standards and consumer protections now provided under municipal franchises. For instance, outage credits wouldn’t begin until service was out for 24 hours, but many local franchises now require a credit for outages over four hours. But attempts to add more protection failed. Consumer protections would be enforced through the state Department of Agriculture and Consumer Protection, but opponents said the bill doesn’t increase the agency’s budget to handle the video workload. Opponents’ attempts to provide such funding failed. The bill bans redlining but doesn’t impose any buildout requirements on state-franchised entrants. Opponents said this would mean rural areas never will see video competition, but attempts to mandate rural buildouts failed. Incumbents can opt out of existing municipal franchises but would have to continue existing support for public access channels for three years. The bill would cap municipal franchise fees at 5 percent, and would bar additional fees such as those that support public access channels in many cities. Presently, many local franchises include a separate fee of 1 or 2 percent that supports public access programming. Critics said this provision effectively kills off public access programming, but they failed with attempts to amend the bill to secure public access funding. Opponents also failed to pass an amendment requiring video providers to keep call center jobs in Wisconsin. AT&T lobbied heavily for the bill, fielding 15 lobbyists and spending $205,000, according to state records. AT&T now provides video service in the Milwaukee metro area, but would be able to expand statewide if this bill is enacted.