FCC Chmn. Martin’s universal service fund plan could cause lower-income seniors to cut back long distance calling, according to a study funded by the Seniors Coalition, which bills itself as an alternative to AARP. Estimating the Martin plan would add $1-$2 monthly to phone bills, the group said 83% of seniors oppose changing the USF fee.

A coalition of rural telecom associations criticized FCC Chmn. Martin’s idea of a “reverse auction” to fund universal service programs (CD March 30 p6). “The reverse-auction process ignores the real world characteristics of building and maintaining a high-cost, capital intensive network,” said the Coalition to Keep America Connected. “In theory, an auction process for high cost support may reduce pressure on the fund, but it will not create a favorable environment for network investment that will be needed to usher in IP video and next generation advanced services and applications.”

More industries would contribute to the Universal Service Fund (USF), with distributions more tightly controlled, under a bill introduced Thurs. by Reps. Terry (R- Neb.) and Boucher (D-Va.). The bill would allow USF funds to go to pay for broadband services. “Reforming USF is a significant step in closing the gap between rural Americans and urban Americans, allowing for all of America to compete in the global marketplace with both products and ideas,” Terry said in a statement.

Universal Service Fund (USF) payments would go toward providing broadband services under a bill introduced Thurs. by Reps. Terry (R-Neb.) and Boucher (D-Va.). The bill would allow USF funds to go to pay for broadband services. “Reforming USF is a significant step in closing the gap between rural Americans and urban Americans, allowing for all of America to compete in the global marketplace with both products and ideas,” Terry said in a statement. The bill probably won’t be moving soon, since House Commerce Committee Chmn. Barton (R-Tex.) has no plans to include a USF portion in the telecom bill headed for markup in the Telecom Subcommittee next week. But if the House passes the telecom bill, and action moves to the Senate, the Terry-Boucher measure could become important. The Senate bill is certain to include a USF piece, and when the bills go to conference, the House would need to be ready with a plan. Any provider of a service that uses telephone numbers, IP addresses or offers network connections to the public for a fee would have to contribute to the fund under the Terry-Boucher bill. Broadband would be declared a universal service, making explicit support for buildout of broadband lines. Within 5 years, recipients of funds would have to be offering high speed broadband service with a download receiving rate of a least one Mbps.

Consumers in 12 states would be hardest hit by a proposal before the FCC to move to a numbers-based system for contributing to the Universal Service Fund, the Keep USF Fair Coalition said Thurs. The coalition said consumer bills would go up the most in Cal., Fla., Ill., Md., Mass., Mich., Minn., N.Y., O., Pa., Tex. and Va. In all of those states except Tex. and Minn. “consumers already pay more in federal USF taxes than their states get back for schools, hospitals and rural connectivity and that disparity would grow even wider” under the plan supported by FCC Chmn. Martin, the group said. Tex. and Minn. would move from being USF “winners,” taking in more USF funding than paying out, to being USF “losers,” the coalition said.

The FCC shouldn’t apply new universal service definitions to rural telcos’ operations as a result of a proceeding involving the Bells and other “non-rural” telcos, rural telcos said. The issue came up in response to an FCC request for comments on how to respond to a remand by the 10th U.S. Appeals Court, Denver, in Qwest v. FCC. The court had questioned definitions the FCC planned to use to decide if the larger firms qualified for high-cost universal service support in some areas. The debate centers on how the FCC defines Telecom Act requirements that universal service support be “sufficient” and “reasonably comparable.”

Giving odds of 2 to 1, House Commerce Committee Chmn. Barton (R-Tex.) said he expects a slightly modified version of the House telecom bill to reach the President this year. In a conference call with reporters, Barton said the bill will gain strong bipartisan support thanks to support from Rep. Rush (D-Ill.). Rush signed on Mon. as co-sponsor when talks broke down between Barton and Ranking Member Dingell (D-Mich.) and Subcommittee Chmn. Markey (D-Mass.)

The Universal Service Fund hearing set for today (Tues.) on distribution methodologies has been moved to Thurs. at 10 a.m., the Senate Commerce Committee said Mon. The date moved to permit a hearing on port security. The USF witness list will be the same (CD Feb 24 p8). A hearing on VoIP originally set for 10 a.m. Thurs. will be rescheduled, the panel said.

FCC Chmn. Martin and others are using a “phony crisis” to justify a proposal to change how Universal Service Fund (USF) contributions are collected, the Keep USF Fair Coalition told reporters Mon. The group, which opposes Martin’s proposal of a flat collection method based on telephone numbers, said the current revenue-based method isn’t broken. Coalition Exec. Dir. Maureen Thompson released a report she said “debunks the hoax” that USF collection reform is needed. The report shows the long distance revenue base for USF contributions isn’t dwindling, as opponents argue, Thompson said. According to the report, long distance revenue base, $76.6 billion in 2003, is projected to be $78.9 billion in 2006. Projected revenues drop slightly in 2007 to $76.8 billion -- still slightly over the 2003 level, Thompson said in an audio news conference. If needed, the current revenue base easily could be expanded by making it more “technology neutral,” meaning revenue could be added from VoIP and other advanced technologies not directly contributing to the fund now. If that were done, the expanded revenue base for USF would be $104.5 billion in 2006 and $105.9 billion in 2007, Thompson said, calling that a more “common-sense” approach to enlarging the fund. The coalition opposes a numbers-based system because it might lead to higher fees for low-volume users of long distance service. Although contributions to the fund come from companies that offer long distance service through a percentage of revenue, the firms pass the fees onto users. The coalition’s announcement came on the eve of a Senate Commerce Committee hearing on USF contributions today (Tues.). The Pacific Research Institute (PRI) took advantage of today’s scheduled hearing to issue a call for more sweeping USF change. The think tank said the USF has “spiraled out of control,” giving “wasteful subsidies [to] entrenched local carriers.” Rather than expand USF to include contributions from high-tech services such as VoIP, Congress should target needy consumers with vouchers and add rules that “ensure public accountability and safeguard cutting-edge innovations,” PRI said.

Sen. Rockefeller (D-W.Va.) plans to urge the Senate to take up his indecency bill (S-616) that would subject cable and satellite operators to indecency standards broadcasters face, an aide said Mon. at an NAB Legislative Conference. Rockefeller will push to include his bill in markup of telecom legislation in whole or “section-by-section,” Rockefeller aide James Reid said. He predicted the panel would vote this year on bringing cable and satellite “into the FCC’s regime.”