The FCC wasn’t “unjust” making AT&T pay universal service contributions on revenue from an enhanced prepaid calling card service, the U.S. Appeals Court, D.C., ruled Fri. “Rather than exercising caution in light of ambiguous agency law, AT&T unilaterally chose not to pay universal service contributions without Commission sanction or approval,” the court said: “In doing so, it assumed the risk of an adverse Commission decision.”

Pessimism dogs the Senate telecom bill (HR-5252) as a shortened session’s legislative days dwindle, lawmakers hedge votes and leadership support is scant for the controversial, complex measure, Hill sources and lobbyists said. Sept. would be the earliest the bill could see floor time, Hill sources said, and even then only if major arm twisting could line up the 60 votes needed to avoid filibuster.

The FCC asked for comment on whether to change the way providers of telecom relay services (TRS) are compensated. In a further notice of proposed rulemaking (FNPRM) adopted at the agency’s agenda meeting Thurs., the FCC asked for views on: (1) Alternative cost recovery mechanisms, including one proposed by Hamilton Relay called the multistate average rate structure (MARS) plan. (2) Whether traditional TRS, Speech- to-Speech Service and IP Relay should be compensated at the same rate. (3) The appropriate cost recovery method for Video Relay Service. (4) What costs are considered “reasonable” under the current methodology, including whether marketing and outreach expenses, overhead costs and executive compensation can be compensated from the TRS Fund. (5) Ways to improve the management and administration of the fund, including ideas for assessing the performance and efficiency of the fund. FCC Chmn. Martin said the FNPRM begins a “far- reaching inquiry” into the TRS Fund, similar to a study of the Universal Service Fund that began last summer. The questions asked in the proceeding are part of an attempt “to protect and maintain [the TRS Fund’s] integrity,” Martin said. FCC Comr. McDowell said the goal “cannot simply be eliminating economic uncertainty for providers.” The FCC must “balance” that need “with our obligation to see that rates are set and funds dispersed in a responsible manner.” Pat Nola, CEO of Sorenson Communications, a provider of relay equipment, said the action is “an important step” toward finding “a long-term rate methodology for VRS and other TRS service.” The goal will be coming up “with a system that provides the right incentives for providers to expand VRS service to reach more deaf people,” she said.

A bill that would use universal service support as a hook to force schools and libraries to bar minors from commercial social-networking sites and chat rooms got mixed reviews in a Tues. House Commerce Telecom & Internet Subcommittee hearing. The Deleting Online Predators Act (HR- 5319), introduced this spring by Rep. Fitzpatrick (R-Pa.), might go too far in some ways and not far enough in others, members and witnesses said.

A collection system for the Universal Service Fund (USF) based on telephone numbers gained the support of a new telecom alliance called the USF by the Numbers Coalition. The coalition - made up of groups such as NCTA, CTIA and USTelecom and its members AT&T and BellSouth -- held a news conference call Tues. to “set the story straight” on misconceptions about the plan, it said.

Robotube Games is now focused on mobile and online games, but husband & wife Dennis and Jackie Peters, who head its parent company Heavybag Media, told Consumer Electronics Daily the company is interested in jumping into the handheld videogame business as well.

A bill that would require recipients of universal service support for schools and libraries to protect minors from commercial social-networking websites and chat rooms will be the focus of a House Commerce Telecom & Internet Subcommittee hearing today (Tues.). Witnesses include experts from state and county govt., as well as child advocates and industry officials. Members will examine the Deleting Online Predators Act (HR-5319) introduced by Rep. Fitzpatrick (R-Pa.) this year.

VoIP providers are setting up meetings to discuss their options in light of a surprise FCC decision ending their federal preemption protection if they use traffic studies to calculate Universal Service Fund payments, VON Coalition Pres. Staci Pies said. The FCC’s universal service reform order, released June 27, lets VoIP providers pay into the USF based on 65% of revenue, a figure known as a “safe harbor,” or submit traffic studies to show the amount of interstate revenue is lower. But if they use traffic studies the FCC no longer will deem them eligible for federal preemption, subjecting them to state regulation. The order said the FCC in the 2004 Vonage Order opted for federal regulation of VoIP because “it was impossible to determine whether calls by Vonage’s customers stay within or cross state boundaries.” But if a VoIP provider can tally its USF payment based on the actual percent of interstate calls, “the central rationale justifying preemption… no longer would be applicable” to that provider. That is, if they can pinpoint their traffic’s jurisdiction, the problem spurring the Vonage Order no longer exists, according to the new order. “It’s a Catch-22,” said Pies, a PointOne vp. NARUC Gen. Counsel Brad Ramsay said the “state friendly” language was welcome. The preemption decision wasn’t mentioned in the news release on the FCC vote June 21 (CD June 22 p1).

VoIP providers are setting up meetings to discuss their options in light of a surprise FCC decision ending their federal preemption protection if they use traffic studies to calculate Universal Service Fund payments, VON Coalition Pres. Staci Pies said. The FCC’s universal service reform order, released June 27, lets VoIP providers pay into the USF based on 65% of revenue, a figure known as a “safe harbor,” or submit traffic studies to show the number is lower. But if they use traffic studies the FCC no longer will deem them eligible for federal preemption, subjecting them to state regulation. The order said the FCC in the 2004 Vonage Order opted for federal regulation of VoIP because “it was impossible to determine whether calls by Vonage’s customers stay within or cross state boundaries.” But if a VoIP provider can tally its USF payment based on the actual percent of interstate calls, “the central rationale justifying preemption… no longer would be applicable” to that provider. That is, if they can pinpoint their traffic’s jurisdiction, the problem spurring the Vonage Order no longer exists, according to the new order. “It’s a Catch-22,” said Pies, a PointOne vp. NARUC Gen. Counsel Brad Ramsay said the “state friendly” language was welcome. The preemption decision wasn’t mentioned in the news release on the FCC vote June 21.

The telecom industry voiced mixed feelings about an Iowa Telecom request to receive universal service funding through the nonrural program even though it’s a rural company. In comments filed July 3, some said the FCC should approve the request, some said the FCC shouldn’t let Iowa Telecom “game” the system and AT&T said it sympathizes with Iowa Telecom but thinks the FCC should reform the process rather than make a special concession. Iowa Telecom sought the special treatment because the nonrural program is based on forward- looking economic costs (FLEC), rather than the embedded costs used in the rural program. Under FLEC, the company could get Universal Service Fund (USF) support; under the embedded cost standard, it can’t. Iowa Telecom’s former owner invested very little in the network, making Iowa Telecom’s embedded costs so low it can’t get USF support under the rural mechanism, the company told the FCC. In comments filed July 3, Embarq urged that Iowa Telecom’s petition be granted because the company is in an unfair position due partly by outdated universal service rules. “Ten years have passed since the Commission first acknowledged that FLEC was the proper costing approach to be used when calculating explicit federal support” and yet it still calculates rural costs on an embedded cost methodology, Embarq said. The Independent Telephone & Telecom Alliance (ITTA) said “by historical accident… Iowa Telecom appears to be caught in a trap in which its federal and state wholesale and retail pricing mechanisms… do not align with the method by which rural carriers become eligible for high-cost loop support.” ITTA said Iowa Telecom “should not be penalized either for the low inherited book value of its assets or for the more generalized concerns about the application of FLEC to rural carriers.” AT&T agreed Iowa Telecom is in “an untenable position” but said the better route would be for the FCC to act in a pending proceeding aimed at reforming the high cost support mechanisms. “Iowa Telecom’s petition exemplifies the irrationality of the Commission’s existing mechanisms and the need for comprehensive universal service reform,” AT&T said: “Without such support, Iowa Telecom faces the Hobson’s choice of imposing significant rate increases or foregoing network investment necessary to provide advanced services to its customers.” But the National Assn. of State Utility Consumer Advocates (NASUCA) said “no company should be able to game the Universal Service Fund… to maximize its ’take’ under the fund.” Iowa Telecom “is a rural carrier and is limited to the support allowed under the USF for rural carriers.” Sprint Nextel accused Iowa Telecom of trying to gain a “windfall” of “ineligible” USF support. Sprint Nextel said Iowa Telecom already got some relief by gaining forbearance from access charge rules “ostensibly so the Iowa Telecom can fund its infrastructure upgrades.” It’s not necessary for the FCC to grant the company “an additional exemption,” Sprint Nextel said.