The FCC is using a “hoax” argument that the Universal Service Fund (USF) contribution process is broken to justify fee hikes, a citizen group charged Fri. The USF contribution formula “requires at most minor adjustments that can be accomplished without hefty increases in federal phone fees,” the Keep USF Fair Coalition said. The group opposes FCC Chmn. Martin’s proposal to move from a long distance revenue- based system to one based on how many telephone numbers a carrier serves, claiming it would penalize low-volume long distance callers. At a news event set for today (Mon.), the group will discuss “the phony USF funding crisis.” A Tues. Senate hearing will address USF contribution methodology. Progress & Freedom Foundation Pres. Ray Gifford said the coalition’s view “is contrary to established fact.” The long distance industry, which is the basis for the current contributions system, “is in decline and it makes no sense as a funding vehicle for universal service in the age of VoIP technology.” A PFF working group has endorsed per-line fees.

The Senate Commerce Committee on Thurs. listed witnesses for a universal service fund (USF) hearing Feb. 28: Glenn Post, Century/Tel CEO; Tom Simmons, vp-public policy, Midcontinent Communications; Trent Boaldin, pres.-Epic Touch; Bonnie Cramer, AARP member; and Paul Garnett, asst. vp-regulatory affairs, CTIA. The witnesses are to testify at the first hearing, on USF contributions. The 2nd hearing, on USF distribution methodology, will hear from Jeff Mao, Me. Dept. of Education; Shirley Bloomfield, vp-govt. affairs, NTCA; Carson Hughes, Cellular South; Tony Clark, pres.-N.D. Public Service Commission; and Free Press Policy Dir. Ben Scott.

Social obligations imposed on VoIP won’t go away but will only pile up, Microsoft Compliance Mgr. Scott Forbes said. A “perfect storm” of circumstances favors regulation, Forbes said last week at the RSA Conference in San Jose: (1) VoIP’s rising popularity. (2) A growing focus on social obligations rather than regulation for competition in telecom. (3) High visibility, notably in coverage of fatalities from failed bids to use VoIP for 911 calls. (4) Financials like Public Safety Answering Points’ money needs and incumbent providers’ scant VoIP revenue. “In 2 years, we've had more regulation on VoIP than we had in telephony in 100 years,” Forbes said. Federal policy-making aims to “create a playing field where everyone looks the same” among wireline voice service providers, he said. Rather than stick VoIP in a standard regulatory silo by Telecom Act title, the FCC is using “piecemeal, incremental regulation,” Forbes said. The FCC has focused on a subset of Internet voice it defines as “interconnected VoIP,” but DoJ’s stance on CALEA compliance and draft federal bills on customer proprietary network information seek more general regulation of VoIP, Forbes said. Today’s noisiest issues are the least important, he said, referring to data protection, disability access and competition. “The big 3” are law enforcement and emergency services access and universal service, which Forbes defines as relating mainly to “enormously expensive” network build-outs in the Midwest’s low-density “square states,” he said. “The FCC is very much engaged” in such matters, and on CALEA and other issues, DoJ and the rest of the Administration mainly get what they want from the Commission, Forbes said. The crucial definition of “call identifying information” for purposes of VoIP CALEA compliance awaits a 2nd FCC order on the topic, probably in 3-6 months, he said. That order likely will put off the compliance deadline, Forbes said. When the order is challenged in court, Congress probably will respond by rolling VoIP obligations into a broader law applying CALEA to all electronic communications, he predicted. And VoIP will be subject to universal service fund contributions, Forbes said. Beyond these matters, policy-makers have yet to settle crucial questions on VoIP, he said: Municipal Wi-Fi, ad-supported VoIP businesses, call encryption, replacing phone numbers in caller identification, trusted 3rd parties and hybrid networks that include conferencing, wired-wireless convergence and so-called leaky PBXs.

SAN JOSE -- The author of a Cal. data-breach notification law that sent ripples from state capitols to Capitol Hill said he'll introduce a follow-up bill in 2007 if the U.S. doesn’t pass a law at least as strong as his in 2006. “Lead, follow or get out of the way,” was the blunt message to Congress Cal. Sen. Joseph Simitian (D-Palo Alto) gave last week at the RSA Conference here. He’s prepared to offer legislation to “tidy up any issues of concern to business” or to tighten the law on the books, he said.

A House universal service bill revealed in draft form in Nov. may see formal introduction by the end of Feb., sponsors said Wed. at a Congressional Rural Caucus forum. The timing may depend on negotiations with rural telcos on capping the Universal Service Fund’s size, Reps. Terry (R-Neb.) and Boucher (D-Va.) told rural House members at the forum.

Rep. Boucher (D-Va.) asked NARUC to take a position on broadband network neutrality and universal service reform. In a Tues. talk at the NARUC winter meeting in Washington, D.C., Boucher urged NARUC to “get involved. You have a special understanding of the situation and we want your advice and guidance.” NARUC also heard from industry panelists and Sen. Wyden (D-Ore.) on network neutrality.

Rep. Boucher (D-Va.) asked NARUC to take a position on broadband network neutrality and universal service reform. In a Tues. talk at the NARUC winter meeting in Washington, D.C., Boucher urged NARUC to “get involved. You have a special understanding of the situation and we want your advice and guidance.” NARUC also heard from industry panelists and Sen. Wyden (D-Ore.) on network neutrality.

An attorney representing AT&T unexpectedly announced at a Mon. oral argument that the company was withdrawing part of an appeal of an FCC order the court had expected to hear discussed at the session. The company decided to “narrow the issues” in its challenge to a 2005 FCC decision (CD Feb 24/05 p1), David Carpenter, outside counsel for AT&T, told a 3- judge panel of the U.S. Appeals Court, D.C. That decision demanded AT&T make universal service contributions and pay intrastate access charges on some of the revenues from its enhanced prepaid calling card (EPCC) service. “This is an interesting turn of events,” said FCC Assoc. Gen. Counsel Richard Welch, who argued the case for the Commission.

NARUC’s Intercarrier Compensation Task Force couldn’t present a compensation reform plan for the winter meeting, as the group had hoped. Ore. Comr. Roy Baum said the task force next week will work with 11 major players on an outline for reform, and it hopes to have a detailed reform plan for states’ review by March 15. He said the issue is complex, and parties have a lot at stake.

Sen. Burns (R-Mont.) introduced a universal service bill Wed. that he said, among other things, would “strengthen the FCC’s management and oversight” of the E-rate program. In a floor statement, he said the bill would “impose sanctions on applicants or vendors who repeatedly and knowingly violate [E-rate] program rules.” Organizations representing rural telephone companies appeared particularly supportive of the 29-page bill, which was specific enough to include provisions on phantom traffic and use of universal service funding for broadband service. David Zesiger, exec. dir. of the Independent Telephone & Telecom Alliance, said the measure appeared to be “the most comprehensive universal service bill to date.”