The Senate Commerce Committee Thurs. voted 19-3 to report out a DTV bill that includes $3 billion in converter box subsidies and $1.2 billion for an emergency communications program. The bill, which fulfills the committee’s budgetary responsibility to raise $4.8 billion, goes to the Senate Budget Committee, where it will be included in an overall reconciliation bill scheduled for markup Oct. 26.

A federal court in Neb. stayed Qwest’s appeal of a Neb. PSC order requiring that revenue from VoIP service be counted in calculating Qwest’s universal service fund assessments. The U.S. Dist. Court, Lincoln, granted a PSC request for the stay. The PSC said Qwest also appealed the PSC order to the state courts alleging the PSC overreached its authority, and Qwest’s federal claims would be moot if the state courts ruled the PSC lacks authority to assess IP-enabled services. U.S. Dist. Judge Laurie Camp agreed. The case began early this year when the PSC ruled that Qwest was liable to pay universal service assessments on its VoIP revenue because it was a facilities-based VoIP provider. The PSC said VoIP competitors such as Vonage were exempt from assessments because their services used the public Internet.

The E-rate program needs legislative overhaul to correct waste, fraud and abuse revealed in a year-long inquiry, House Commerce Oversight Subcommittee Chmn. Whitfield (R-Ky.) said Tues. The subcommittee approved a bipartisan staff report on the program’s flaws. The report included 11 recommendations for correcting problems to guide legislators. “Government mismanagement of the E- rate program seems to know few bounds,” House Commerce Committee Chmn. Barton (R-Tex.) Said in a press statement: “Unscrupulous vendors also fleeced the program while underserved communities and telephone customers pay the price.” He said the FCC, merchants and schools share the blame for the “disgrace.”

The Kan. Corporation Commission (KCC) reaffirmed a decision this year that Western Wireless’ designation as an eligible telecom carrier (ETC) for universal service subsidies is restricted to fixed wireless service and doesn’t cover mobile service. The KCC was weighing a reconsideration of a March order and a related July staff complaint alleging Western incorrectly counted mobile customers along with fixed wireless customers in calculating line counts used to set universal service subsidies. The KCC (Case 99-GCCZ-156-ETC) said while all details of Western’s service hadn’t been nailed down when ETC status was granted, the evidence in the case should have made clear the KCC’s intention that universal service support was limited to Western’s fixed wireless offering because its mobile service didn’t provide all the functions required by the universal service entitlement. The KCC didn’t order Western to return funds incorrectly received for mobile customers because its original March order imposing the restriction was suspended pending reconsideration, and because evidence indicated all the universal service subsidies were spent properly to improve wireless service.

Telecom reform’s timing and format remain murky, but Congress will participate actively, the Congressional Research Service said. In a new report, CRS said it’s hard to say whether Congress will deliver a comprehensive bill or keep introducing “incremental” measures eventually incorporated into a single bill, the report said. Neither is it clear whether consensus can be reached on the need to revise the ‘96 Telecom Act, the report said. Major issues expected to be addressed include: (1) Broadband Internet regulation. Two matters are at stake: The “digital divide” and regulatory treatment of broadband. Digital divide activists want the U.S. to underwrite broadband deployment in underserved rural areas, but opponents question the efficacy of intervening in the marketplace. Debate on regulating broadband technologies focuses on whether to apply legacy rules to new entrants. (2) Broadcast indecency. Pending bills would hike fines levied on violative broadcasters, apply them to performers as well as broadcast licensees and extend indecency rules to cable TV. Some say fining performers could violate the First Amendment and want pay TV exempt from indecency regulations. (3) DTV. Key issues include subsidy of converter boxes for analog TVs left dark by the digital transition, requiring cable to carry broadcasters’ multicast programming streams and letting cable downconvert digital signals for analog households. (4) FCC restructuring. Proposals fall into 2 categories: procedural changes affecting day-to-day operations and Congressionally mandate policy changes affecting agency oversight of services and industry. Some on the Hill favor changing Sunshine Act laws that keep to 2 the number of commissioners who can confer outside an official meeting to discuss FCC policy. But even with strong interest in FCC reform, “substantive changes which some believe are needed to enable the FCC to effectively regulate the converged telecom industry may remain difficult to achieve.” (5) Intercarrier compensation. Reform, while needed, is unlikely due to concern that change would hurt some carriers and consumers by shifting costs from carriers to consumers, unfairly burdening low- income consumers and putting pressure on the already troubled Universal Service Fund. It’s also hard to pursue reform without state input, since rate setting comes under state regulatory commissions. (6) Media ownership rules. Congress may provide guidance as the FCC revises its regulations to fit a 3rd U.S. Appeals Court, Philadelphia, decision overturning FCC rules relaxing multi-ownership restrictions. What’s at stake is whether the rules block mergers that could be beneficial in promoting more in- depth local news coverage versus creating behemoths that reduce the number of independent voices in the market. (7) Municipal deployment of broadband. Fierce debate over public-sector provision of what some deem a private-sector service will continue, with Congress pressed by both sides to act on the issue. (8) Public safety communications. The public safety community wants Congress to assure release of spectrum at 700 MHz for public safety. Other issues include pressure for laws that require the FCC to support 911 call centers, expand emergency alert networks and assuring access to wireline and wireless lifeline telecom services. (9) The “Savings Clause” and Monopoly Issues. The ‘96 Telecom Act’s antitrust “savings clause” figured prominently in a 2004 Supreme Court decision that the act doesn’t create new claims that go beyond existing antitrust standards. The case stirred controversy because it involved a CLEC’s access to Verizon’s network, with the House Judiciary Committee chmn. and ranking member opposing the opinion while the House Commerce Committee chmn. supported it. Congress has 4 options: leave it alone, clarify the savings phrase, amend the enforcement provisions or characterize a violation of a competitive obligation as evidence of an antimonopoly violation. (10) Universal Service Fund reform. The Senate and House Commerce Committees want to figure out how to ensure proper management of the fund and overcome fraud, waste and abuse.

The Tex. PUC set a Nov. 10 workshop to review the state universal service fund, and a comment deadline of Oct. 31. A 2005 state law requires the PUC to evaluate state universal service funding mechanisms and recommend changes to the 2007 legislature. The PUC (Case 31863) asked parties to identify major issues and what information would be needed to address those issues.

SAN MATEO, Cal. -- A red flag on city use of Wi-Fi has been raised by an FCC official. “You have to be very careful,” Alan Scrime warned city officials, vendors and others at the World Internet Institute’s Digital Cities Convention here late Tues. Because Wi-Fi is unlicensed, “it’s not a guaranteed service,” said Scrime, chief of the Policy & Rules Div., FCC Office of Engineering & Technology.

Wireless coverage in most areas hit by Hurricanes Katrina and Rita has been restored and the industry is working around the clock to finish the job, carriers told the FCC Wed. For example, T-Mobile reported it didn’t interrupt service until Sept. 30 for affected customers who didn’t pay bills, and beyond that date for those not getting their mail. T-Mobile also is providing free replacement handsets lost by customers in the Rita disaster areas. The industry “appreciates the Commission’s quick and decisive action before, during and after the hurricanes,” CIA said: “CIA wholeheartedly supports FCC Chairman Martin’s proposals to establish a new Public Safety/Homeland Security Bureau and provide additional universal service funding.”

SAN MATEO, Cal. -- A red flag on city use of Wi-Fi has been raised by an FCC official. “You have to be very careful,” Alan Scrime warned city officials, vendors and others at the World Internet Institute’s Digital Cities Convention here late Tues. Because Wi-Fi is unlicensed, “it’s not a guaranteed service,” said Scrime, chief of the Policy & Rules Div., FCC Office of Engineering & Technology.

TracFone Wireless asked the FCC for “slight” changes in conditions set in a recent order (CD Sept 7 p2) letting the carrier receive Universal Service Fund support. “Strict compliance” with the conditions would be “burdensome” and wouldn’t provide “any greater assurances of emergency service availability than would the approach” it wants, TracFone said. TracFone needs FCC approval for its proposal to move forward with ETC designation petitions in 8 states. The FCC has said it would consider the proposal in the context of TracFone’s ETC designation proceedings.