CTIA met with Wireline Bureau Chief Tom Navin to recommend how to address the distribution side of Universal Service Fund (USF) reform. CTIA said high-cost support should be based on “one mechanism that calculates support based on the most efficient technology,” though wireless carriers are willing to explore other possibilities, including reverse auctions. CTIA pointed out that while support for wireless carriers has grown significantly wireline support is climbing more rapidly. “From 2000 to 2005, incumbent local exchange carriers accounted for roughly 2/3rds of growth in the size of the high-cost universal service mechanisms,” CTIA said. “In fact, incumbent LECs continue to receive roughly 80% of federal high-cost universal service support, even though there are now more mobile wireless subscribers than wireline switched access lines.”

The Senate Commerce Committee narrowed the preemptions in its sweeping telecom reform bill, at least in regard to state control of VoIP, as it began debate of the legislation Thurs. The committee agreed to amendments by Sen. Sununu (R- N.H.) that clarify that Congress is limiting only economic regulation of VoIP by the states, and won’t in any way prohibit the ability of the states to protect consumers, including on privacy and by passing anti-child pornography laws. The committee is expected to continue the markup Tues., in a session likely to extend into Wed.

Senate Commerce Committee negotiations on a hefty manager’s amendment to pending telecom reform legislation were expected to continue “well into the night and tomorrow,” a committee spokesman told us Wed. The committee is scheduled to markup Chmn. Stevens’ (R-Alaska) 3rd draft of the bill today (Thurs.). Some Hill watchers said the marathon meeting could spill into next week. The broad draft contains hot topics like net neutrality and preemption of state wireless regulation (CD June 21 p1), as well as issues like video franchising and Universal Service Fund (USF) reform.

Preemption provisions in the Senate telecom reform bill draft have drawn opposition by the National Governors Assn., which said they “threaten the long-standing partnerships between the federal govt. and states in determining the nation’s communications policy.” The bill is set for mark-up today (Thurs.) by the Senate Commerce Committee, amid what some observers see as growing opposition. NGA said Wed. the bill would usurp state authority by “preempting existing state broadband deployment laws that manage video service and telecommunications deployment within states; undermining state-wide franchising solutions that streamline and improve video franchising; replacing robust state consumer protection standards with federal standards established by federal bureaucrats; preventing state governments from enforcing basic state contract and consumer protection laws on cell phone providers; and preempting states’ ability to enforce any state law that regulates satellite providers.”

Senate Commerce Committee negotiations on a hefty manager’s amendment to pending telecom reform legislation were expected to continue “well into the night and tomorrow,” a committee spokesman told us Wed. The committee is scheduled to markup Chmn. Stevens’ (R-Alaska) 3rd draft of the bill today (Thurs.). Some Hill watchers said the marathon meeting could spill into next week. The broad draft contains hot topics like net neutrality and preemption of state wireless regulation, as well as issues like video franchising and Universal Service Fund (USF) reform.

The FCC Wed. placed universal service obligations on VoIP providers, setting a “safe harbor” of 64.9% of interstate revenue for their payments -- a figure based on the percentage of interstate revenue wireline toll providers report. The FCC also raised the wireless safe harbor from 28.5% to 37.1%. As wireless carriers already can, VoIP operators will be able to submit traffic study data to show they should pay less than the safe harbor percentages. FCC officials declined to comment on whether they will impose new rules on how such studies should be done.

House Commerce Committee Chmn. Barton (R-Tex.) took another swipe at the Universal Service Fund (USF), regaling onlookers at a hearing Wed. with examples of questionable use of USF support by seemingly flush rural telecom companies in Tex. A company in Big Bend, Tex., with 6,000 customers got $9.6 million in USF money, posted a 12.8% return on equity and paid $3 million in dividends to shareholders, he said: “It also runs a hunting ranch to entertain rural phone lobbyists.” A Tex. panhandle company got $2.6 million in federal USF money and “paid back more in dividends than it charged customers,” Barton said: A small telecom operating outside Houston gets “huge subsidies” to serve wealthy customers.

The Computer & Communications Industry Assn. (CCIA) has “grave concerns” about provisions of Senate Commerce Committee Chmn. Stevens’ (R-Alaska) telecom bill. In a letter sent Wed., CCIA Pres. Ed Black told Stevens that his proposal would do “serious damage to innovation and consumer rights, while doing little to promote the national goal of rapid deployment of broadband Internet service.” Black urged Stevens either to make several changes to the bill or delay a vote in order to assess the concerns of innovators, communicators and consumers. CCIA said it hoped greater consensus could be achieved, but with no compromise likely, “it was time to choose,” Black said. Specifically, CCIA said the draft does little to correct distortions created by the Universal Service Fund process and places the FCC at the heart of “a centrally-planned regime for regulating the design of computers, consumer electronics and software.” The Stevens draft burdens VoIP providers with “a layer of regulation soundly rejected nearly a decade ago” and fails to ensure “open and dynamic competition” on the Web. CCIA also took issue with the broadcast flag mandates in the draft. Black said they would make the FCC “the new federal gatekeeper of innovation.”

Schools and libraries are lauding Sen. Stevens’ (R- Alaska) telecom bill, saying it finally will legitimize the E-rate fund. The bill, which includes 3 E-rate provisions, is scheduled for markup tomorrow (Thurs.).

With the FCC apparently poised to impose Universal Service Fund (USF) assessments on all voice-over-IP (VoIP) providers this week, cable operators expanding into telephony with IP-based offerings face the unappetizing prospect of having to compete by markedly hiking their rates for those services or cutting into their profit margins.