SBC took center stage Mon. before a Tex. Senate committee to oppose a proposed bill (SB-21) that would phase out retail telephone rate regulation and establish statewide video franchising. In hearings before the Senate Business & Commerce Committee Mon., SBC said the bill would burden SBC with more regulation. The bill would phase out retail rate regulation over 2 years, but SBC wasn’t happy about provisions that would require uniform pricing marketwide and require it to cut intrastate access charges to interstate levels as a condition of rate deregulation. On the video side, the bill also would require SBC, as a condition for a statewide video franchise, to match in-kind compensation cable companies give to cities under their local franchises. An SBC spokesman told the panel deregulation is supposed to increase flexibility, “but this proposal goes in the opposite direction.” The bill directs the PUC to reform the state universal service fund, but SBC objected to giving the whole job of reform to the PUC, suggesting the industry and perhaps other branches of govt. participate. The debate may be academic, however, since telecom legislation can’t advance to the floors of either chamber during this special session unless Gov. Rick Perry (R) allows it. And Perry said he won’t until the legislature solves a state school financing crisis that led him to call the special session. The special session is to run until July 21.

Companies would have to make data security breaches public, and those failing to tell consumers when they may be at risk of ID theft could face criminal prosecution, under a bill expected this week from Senate Judiciary Committee Chmn. Specter (Pa.) and Ranking Democrat Leahy (Vt.). The measure comes less than a week after MasterCard said a breach might have exposed 40 million credit cards to fraud. After a string of high-profile breaches involving ChoicePoint, Lexis Nexis and others, Congress and state legislatures have been inundated with proposals to clamp down on ID theft and tighten controls on entities that collect and distribute data.

Colleges are partnering with digital content providers to offer students legal music downloads, but barriers remain. Platform incompatibility and non- portability top the list of complaints to school information technology experts, some of whom fear students will return to illegitimate peer-to-peer (P2P) networks for their music fixes, administrators said Fri. at a university symposium on intellectual property.

Colleges are partnering with digital content providers to offer students legal music downloads, but barriers remain. Platform incompatibility and non- portability top the list of complaints to school information technology experts, some of whom fear students will return to unauthorized peer-to-peer (P2P) file sharing for their music fixes, administrators said Fri. at a university symposium on intellectual property.

Congress should earmark $16-20 million to finish developing and testing uniform communication standards and a national directory of emergency contacts, said the National Emergency & Alerting Response Systems (NEARS). All emergency organizations could use those contacts to share data over the Internet and wireless, landline and broadcast networks, said NEARS, a private partnership of emergency service and telecom and IT organizations. To date, the technology has been developed by nonprofit industry groups.

FCC Comr. Copps expressed concern about one part of the Commission’s proposal to improve management of the universal service fund (CD June 15 p8): possible elimination of the application process for the E-rate program. The FCC asked for comment on distributing the funds directly to schools and libraries based on their size, instead of requiring applications, Copps said. In a separate statement, Copps said such a change could make it harder to identify fraud, because it would let funds be used for unspecified services and equipment, rather than requiring applications that specify where the money would go. Eliminating the application process presents other potential problems, he said: “Distributing funds directly to schools could conceivably exclude Catholic and other private and parochial schools from the E-rate program. Tying funds to school size could conceivably result in our rural and insular schools being denied the funds they need for the extraordinary cost of services in these areas, just because they have fewer students.” Copps said he supports many aspects of the proposal to improve USF programs, which the FCC revealed Tues. in a notice of proposed rulemaking. The E-rate program’s importance “means it needs regular review and care,” he said. Copps said he’s particularly supportive of a proposal to strengthen debarment rules and take new steps to identify and punish “predatory contractors.” Comr. Adelstein said he, too, backs better debarment rules and is glad the NPRM seeks comment on broadening the debarment rule “to encompass entities that have been found guilty of civil and criminal violations beyond those associated with our universal service programs or entities that are shown to have engaged in clear patterns of abuse of our rules.” Adelstein said he’s less supportive of proposals “to adopt overly formulaic approaches,” for example “allocating support based on formulas, like school size, may ignore critical differences in the cost to obtain services in rural parts of the country and may work against smaller or private schools that cannot achieve economies of scale.”

The FCC Tues. launched an inquiry into management and oversight of the universal service fund (USF) and will seek comments on how to improve the program. Among topics under scrutiny: (1) How to simplify and streamline the program’s management. The agency tentatively concluded a multi-year application process for telecom services in the E-rate and rural healthcare programs would simplify matters. The FCC also asked for comment on shortening or consolidating application forms and adopting deadlines to provide certainty to program applicants. (2) The effectiveness of efforts to protect the fund against misuse. The Commission tentatively concluded “more aggressive debarment procedures are necessary” and asked for comments on ways to improve the debarment rules, according to an FCC news release. The FCC also sought comment on establishing independent audits of some USF beneficiaries and contributors, and on rules to ensure those audits are effective and fair. It asked for suggestions on rules for recovering USF money not used in accordance with the rules. (3) The effectiveness of the administrative structure. (4) The need for performance measures to assess the program’s effectiveness. FCC Chmn. Martin said the notice of proposed rulemaking (NPRM) “provides an opportunity fo the Commission to explore the lessons learned through the operations of the High Cost and Low Income programs” and possibly apply them to other USF programs. Martin said the programs use strict formulas to distribute universal service support. “This type of formulaic approach may hold promise for improving the administration of the E-rate and Rural Healthcare programs,” he said.

Less than a decade after Congress passed a landmark law expanding the types of companies supporting the federal Universal Service Fund (USF), the fund faces a new financial crisis. The main problem, though, isn’t that the fund will run out of money any time soon. Due to fees the FCC assesses on local, long distance, wireless, paging, pay phone and international carriers alike, the USF now takes in about $6.5 billion a year. That money subsidizes rural and low-income residential phone service and communications links to rural schools, libraries, hospitals and other vital services. If the fund needs more cash, the fees automatically are adjusted upward.

CHICAGO - Federal and state regulators said Wed. they sympathize with concerns about local franchising requirements impeding video competition but doubt the FCC has authority to preempt them. On a panel at the Supercomm show here, FCC Comrs. Abernathy and Adelstein and Cal. PUC regulator Susan Kennedy, considered a maverick who favors federal preemption on some issues, said Congress or state legislatures are better positioned to take such action.

Despite pressures at multiple levels, the universal service fund (USF) may finish 2005 without a legislative overhaul. Senate Commerce Chmn. Stevens (R-Alaska) and ranking member Inouye (D-Hawaii) and House Commerce Committee Chmn. Barton (R-Tex.) want USF reform, as do others. Industry wants USF reform. And the FCC is pursuing reform (see accompanying article).