The satellite industry Tues. urged the FCC to reform the Universal Service Fund to promote broadband deployment in rural America, citing the President’s 2007 broadband goal and satellite broadband as an option. Chiming in on USF remedies in ex parte meetings at the Commission, Satellite Industry Assn. (SIA) officials called for a “technologically neutral” fix to the USF, which they called “complicated to administer” and “ill-suited to a world of convergence.”

The FCC should make TracFone Wireless amend its plan for complying with FCC conditions for getting Universal Service Fund support, USTelecom said. Earlier this year the FCC exempted TracFone from a ban on Lifeline program participation aimed at carriers that don’t own facilities. In doing so, the FCC imposed certain E-911 conditions and required TracFone to show how it plans to implement them (CD Sept 7 p2). In its response, TracFone asked the FCC to ease the E-911 conditions, calling strict compliance “burdensome” and no guarantee of “any greater assurance of emerging service availability than would the approach” it proposed (CD Oct 12 p5). USTelecom said TracFone’s compliance plan should specify how the firm will report customers to the Universal Service Administrative Co. and distribute monthly Lifeline benefits to customers, if given ETC status. “If TracFone does obtain ETC status for any state, the Commission should give USAC clear direction on how to distribute Lifeline support for prepaid services,” said USTelecom.

The FCC changed the list of services eligible for E- rate discounts (CD Aug 31 p7), for example adding a new category, “terminal servers.” Other alterations: (1) Virtual private network components will be eligible for discounts if they provide “basic and reasonable security protections” to prevent unauthorized access to information, software or systems. (2) On-premises wireless WAN components can be requested as internal connections or as part of “priority 1” service. (3) Voice mail was added as an internal connections service, if it is centralized and not an end-user product like an answering machine. (4) Wireless Internet access for portable devices is eligible if there’s an “auditable system to allocate between eligible and ineligible uses.” The FCC also authorized the Universal Service Administrative Co. (USAC) to open a filing window on Dec. 1 for funding year 2006. Normally, USAC has to wait 60 days after release of the eligible services list.

Possible items for the Dec. 9 FCC agenda meeting: (1) Implementation of a new junk fax law. (2) The annual video competition report. (3) A notice of proposed rulemaking that reacts to a 10th U.S. Appeals Court, Denver, remand of FCC rules for nonrural, high-cost universal service support. The court said in Feb. the FCC improperly crafted the funding mechanism and didn’t adequately show its plan meets statutory terms “reasonably comparable” and “sufficient.” It was the court’s 2nd remand of the nonrural universal service rules. And since it’s Comr. Abernathy’s last meeting, colleagues are expected to send her off with speeches. “It might be a fairly low-key meeting,” an inside source said.

The Senate Commerce Committee will hold 15 hearings over the next 2 months on a range of communications issues, including FCC nominations, Internet pornography, decency, video content, video franchising, competition and convergence, broadcast and audio flag, net neutrality, state and local issues and municipal networks, universal service fund distributions and contributions, wireless issues and spectrum reform, rural telecom, and Wall Street’s perspective on telecom, according to the committee’s updated schedule through March 14. The committee also announced that its Nov. 29 open forum on decency, to be 9:30 a.m. to 5 p.m., will include representatives from a wide variety of cable, broadcasting, satellite and religious groups in addition to the FCC, MPAA and CTIA.

Were the FCC to base the universal service contribution system on telephone numbers, elderly and low- income people would suffer financially, a coalition of public interest groups said Thurs. Emphasizing FCC Chmn. Martin’s support for a numbers-based plan, members of the Keep Universal Service Fund Fair Coalition said at a news conference the plan would hike phone charges paid by “the most vulnerable of Americans.” The current revenue-based collection plan only charges when long distance calls are made, but the numbers-based plan would charge a fixed $1 or $2 a month, said Linda Sherry, Consumer Action dir.- national priorities: “One of the most alarming aspects of the numbers-based proposal is that no one has yet produced an estimate of the effect of the change on low-income consumers… It does not make sense for the FCC or Congress to change the collection of USF funding without first taking a long, hard look at who would pay the piper for the so-called ’simplicity’ of a numbers-based plan.” The coalition released a report it said offers “the first public estimate of the number of vulnerable consumers… and the extra dollars they would be forced to pay” whether directly through higher USF costs or indirectly through higher phone rates. According to the report, about 16 million households, mostly low-income or elderly individuals, that generally make no long distance calls, would pay up to $383 million more “under the Martin scheme.” Another group of 27 million low-volume users would pay up to $324 million more, the report said. The FCC is considering several ways to reform the contributions system, which now collects from carriers about 10% of revenue that long distance calls generate. Carriers pass the costs on to consumers. The coalition offered a “compromise” plan in which the current revenue- based system would continue but with VoIP revenue added. The plan would cap contributions at 12-15% of interstate revenue. If that didn’t collect enough money to support the USF program, a small numbers-based contribution -- “cents rather than dollars” -- would take effect as a “fall back,” Sherry said. The FCC now uses a “pay as you use it” system and shouldn’t move to a numbers-based “pay as you don’t use it” plan, Sherry said. FCC officials didn’t comment on the groups’ analysis because a contributions reform plan hasn’t been proposed yet.

Universal service fund (USF) support would be used for broadband deployment, under a discussion draft released Thurs. of a bill by Reps. Terry (R-Neb.) and Boucher (D-Va.). The bill would expand the USF base by requiring payments into the fund by service providers that use telephone numbers or IP addresses or sell network connections. “To change USF, I believe that all who play must pay,” said Terry. He called the draft a vehicle for reform that would remedy “inequities that exist today.” Boucher said he’s seeking comments on the draft by Dec. 23 and plans to introduce a bill next year.

The Senate Wed. passed 94-5 the Science, Transportation, State & Commerce appropriations bill conference report, which contains $289.7 million for the FCC. The bill, which now heads to the President for signature, also extends the exemption from Anti-Deficiency Act rules for universal service fund (USF) programs. Rural groups welcomed passage of the bill, particularly a provision that prohibits the FCC from limiting USF support to only a primary line. The bill will give consumers access to telecommunications services at affordable rates, said OPASTCO Pres. John Rose.

NARUC Notes: Shifting universal service assessments to a number-based system from a revenue basis is a big first move in universal service reform, but policymakers shouldn’t stop there, said universal service panelists at the NARUC annual meeting. “We have to move from a revenue base to a number or connection-based contribution system to eliminate arbitrage and stabilize the support base,” said Ore. PUC Comr. Ray Blum, “but must recognize this is a stopgap solution.” Cox regulatory affairs VP Doug Garrett said number-based contributions are “the least imperfect solution where all solutions are imperfect.” On the distribution side, speakers said support should continue to be based on embedded costs, at least for the most rural of small carriers, but support for larger carriers should be based more on their forward-looking costs. Paul Garnett of CTIA said high-cost support is poorly targeted because most rural users are served by non-rural carriers. The universal service fund should encourage efficient investment, he said. Kathleen Grillo, Verizon federal regulatory vp, said, long term, “we need to simplify how and where we target support.” Consultant Glenn Brown of McLean & Brown in Ariz. said the universal service fund’s purpose should be to propel service into unserved areas, using the most cost-effective technology. He said costs vary not by rural or urban but by population density. Speakers also said universal service reform is tied closely to access and intercarrier compensation reform, since reform in those areas could ease pressure on the universal service fund. Some speakers said policymakers should consider how to bring broadband service into the universal service support structure. “We should be supporting universal broadband, but the question is how to transition it into the current system,” said Blum. Cox’s Garrett said any broadband support “should go to truly unserved areas where market forces haven’t found a way.”

PALM SPRINGS, Cal. -- Broadband consumer protection and disaster recovery issues dominated telecom discussions at the NARUC meeting here. But NARUC panels on broadband- related policy resolutions either tabled or refocused resolutions when states sparred on how or whether to voice broadband concerns.