Cal. PUC is seeking bidders to conduct 2 separate universal service funding audits. One proposal seeks bids for audits of state universal service fund collections and remittances by AT&T, Pacific Bell, Sprint PCS. Bids are due May 30. Other proposal seeks bids for audit of state’s 2 high-cost funds and teleconnect hookup subsidy fund, with bids due May 31. PUC said each project would take 3-4 months to complete.

Rural Task Force (RTF) proposal to reform universal service is expected to be on FCC agenda at open meeting May 10, USTA officials and other sources said Wed. USTA Interim Pres. Gary Lytle said association is pleased with what it thinks FCC plans to do: (1) Approve RTF proposal with little change, meaning it will continue to base universal service support on embedded costs rather than Total Element Long-Run Incremental Cost (TELRIC). (2) Not combine RTF plan with one proposed by Multi-Assn. Group (MAG) that targets both universal service and access charges for reform. MAG group has urged FCC not to consider access charge reform as part of RTF. USTA is part of MAG group, which also includes National Telephone Co-op Assn, National Rural Telecom Assn., OPASTCO. In wide-ranging news briefing, Lytle said FCC was expected to approve “largely what the [Federal-State] Joint Board [on Universal Service] recommended.” Both plans are aimed at rural telephony. RTF proposal would increase size of universal service system for rural carriers and make funding portable.

Municipal govt. deployment of communications networks is catching attention of “high-ranking members” of Congress and USTA Interim Pres. Gary Lytle said he was “hopeful and confident” that legislation addressing govt. competition would be introduced in near future. More than 200 municipalities are competitive service providers, some of which have applied for universal service funding, he said Wed. in news briefing at USTA hq in Washington. Congressional leaders, whom he declined to identify, are interested in possible legislative remedy to unfair advantage some govt. providers may have over USTA members, Lytle said. Meanwhile, he expressed concern with move by House Judiciary Committee Chmn. Sensenbrenner (R-Wis.) to get shot at review of broadband deregulatory bill recently introduced by House Commerce Committee Chmn. Tauzin (R-La.) and ranking Democrat Dingell (Mich.). Sensenbrenner urged House Speaker Hastert (R-Ill.) Tues. to give Judiciary Committee partial jurisdiction over bill, since it could provide competitive advantage to Bell companies and therefore fell within committee oversight of antitrust issues. Lytle reiterated USTA’s support of Tauzin-Dingell bill and said group was “hopeful it will not be referred to the Judiciary Committee.” On other issues, Lytle said: (1) USTA “search committee” is close to decision on new pres. to replace Roy Neel. Lytle, head of Ameritech’s Washington office before its merger with SBC, said he was candidate but he had “no idea” who else was being interviewed or when decision would be made. (2) He expected Bells to gain Sec. 271 authority in 10-15 more states this year. (3) Assn. will play “active role” in FCC proceeding to standardize intercarrier compensation. “This is as big as it gets for our members.”

Federal appeals court upheld district court decision striking down Wis. state e-rate program as violating constitutional separation of church and state. Three-judge panel of 7th U.S. Appeals Court, Chicago, said Wis. program for supplementing federal e-rate program was unlawful because it gave money directly to religious schools without any restrictions to ensure they didn’t use funds for religious support. Court in case brought by Freedom from Religion Foundation (Case 99-2850) said both programs taxed telecom service providers. But federal program, court said, compensated carriers from federal universal service fund for e- rate discounts to schools, so schools never actually received federal funds. Court also faulted state program for lacking any rules to ensure that state e-rate subsidies given to parochial and other religiously affiliated schools weren’t used to benefit campus religious facilities such as chapels or religious classrooms.

Correction: Universal service programs, including e-rate funds, have been included in FCC budget proposals for years (CD April 11 p1).

S.C. PSC ordered removal of implicit universal service subsidies from intrastate access charges in favor of explicit state universal service fund. Currently, BellSouth charges interexchange carriers about 6 cents per min., among highest rates in BellSouth’s 9-state territory. PSC said new $40 million fund would allow 50% access charge reduction, to 3 cents per min., in same range as most other states in region. Fund will be supported by 1.4% surcharge on intrastate services. PSC said it expected fund would be revenue neutral for incumbent telcos, with support from new fund about equal to revenue losses from reduced access charges.

FCC would be required to conduct new e-rate rulemaking, altering program in ways that one supporter suspected could destroy it, under proposals tucked into President Bush’s budget proposal (CD April 10 p1). General provision in proposed Commerce Dept. budget would have Congress direct Commission to finish rulemaking by Sept. 30, 2002. However, e-rate foe thought program got boost when $2.25 billion in e-rate funds and similar amount for high-cost universal service money for first time were included as $4.5-billion line item (rising to $5.6 billion in FYs 2001 and 2002) in FCC budget.

Idaho PUC decided on disposition of $4.94 million in proceeds from last year’s Qwest sale to Citizens Telecom of 8 exchanges in northern Idaho that was earmarked for benefit of affected ratepayers. PUC directed money be spent on installation of high- speed fiber interoffice transmission system between communities of Riggins and Grangeville. Agency dismissed alternative proposal that money be deposited in Idaho high-cost fund for universal service support. PUC said new fiber route would allow direct connections among sold exchanges, improve service between central and northern areas of state and “close the longest and costliest gap in a future continuous fiber route” that eventually will connect northern and southern Idaho.

Bush Administration’s fiscal year 2002 budget proposal would increase funds for FCC, but White House’s long term strategy is to level off agency’s spending over the next 4 years. According to govt. budget details released Mon., Bush would increase FCC’s FY 2002 budget to $248.5 million from current $230 million. Total proposed outlays, or “amount the [FCC] actually spends in a given fiscal year,” would increase to $320 million from $301 million. Spending in FY 2003 and 2004 would drop to $302 million, then increase by $1 million in FY 2005 and FY 2006, respectively, under plan.

Total local exchange revenues for incumbent LECs for 1999 were $71.3 billion compared with $6.5 billion in same year by CLECs, FCC said in report, “State-by-State Telephone Revenues and Universal Service Data,” released Fri. Report presents estimates of state telecommunications revenue and data on Universal Service Fund. Data were obtained from information filed with FCC by NECA and USAC and report gives summary data by state, by type of carrier and by service. Highlights include: (1) Total high-cost programs for 2000 amounted to $2.28 billion. (2) Total low-income support payments for Link Up and Lifeline Assistance programs for qualifying consumers in same year were $522 million. (3) Total communications revenues for mobile wireless carriers for 1999 totaled $6.5 billion. Report is available at FCC Reference Information Center, from International Transcription Services (202-857-3800) or at www.fcc.gov/ccb/stats (file name STATREV.ZIP or STATREV.PDF).