The FCC should change the rules under which cable companies are designated as eligible telecommunications carriers (ETC) so they can assist in providing universal service to rural communities, NCTA said in an ex parte filing (CC 96-45). Most states require companies seeking ETC designation to provide service throughout the state, which excludes cable telephony companies that reach only part of a state, the filing said. This makes it “difficult or impossible” for most cable companies to obtain ETC designation and to receive universal service high cost fund support (HCF), it said. NCTA suggested the FCC require an ETC-designated cable telephone company to provide service throughout the area for which its affiliate cable TV company holds a franchise, rather than throughout the area for which designation is received.

Senate Commerce Committee Chmn. Stevens (R-Alaska) had strong words for AT&T, which he said was skirting its universal service fund (USF) obligations by not applying the fee to its prepaid calling cards. AT&T has argued that since the cards also feature an ad, it’s an information service rather than a long-distance service. Stevens’ anger was also directed at AT&T’s efforts to use these calling cards to direct complaints to members of Congress, who he said were inundated with calls from constituents concerned about the issue.

SAN FRANCISCO -- Business witnesses at a Cal. PUC broadband hearing said govt. should get out of their way unless it’s helping industry. Advocacy groups, however, said underserved people needed govt. rules and material help to enter the digital world. They testified at an all-day session (CD Feb 9 p3) intended to move a report on broadband adoption, obstacles and solutions from a draft to a final product that the commission could vote as early as March 17 to send the governor and legislature under a state statutory mandate.

House Commerce Committee Chmn. Barton (R-Tex.) suggested that federal preemption of states and localities is needed when Congress looks to rewrite telecom law this session. But separately Wed., Senate Commerce Committee Chmn. Stevens (R-Alaska) said local govts. should stay involved at least in consumer protection and service quality.

SAN FRANCISCO -- Business witnesses at a Cal. PUC broadband hearing said govt. should get out of their way unless it’s helping industry. Advocacy groups, however, said underserved people needed govt. rules and material help to enter the digital world. They testified at an all-day session intended to move a report on broadband adoption, obstacles and solutions from a draft to a final product that the commission could vote as early as March 17 to send the governor and legislature under a state statutory mandate.

Legg Mason listed intercarrier compensation reform as the lead issue among those facing the FCC in the final days of the Powell chairmanship. “With FCC Chairman Powell expected to leave in March, the agency’s primary focus seems to be on opening a new intercarrier compensation reform initiative and on tying up various related loose ends,” the report said. “We expect the FCC will propose driving down and streamlining the fees to eliminate arbitrage opportunities -- which appear to be increasing due to VoIP -- possibly by moving to a ‘bill and keep’ system under which carriers eventually would no longer charge each other for traffic exchanges,” Legg Mason said. “We expect the FCC will seek comment on a broad range of issues and proposals; the question is how strong its leanings will be. Whatever this FCC says now, the rulemaking will likely take at least a year, and much could happen in the meantime.” Pressure for an intercarrier compensation overhaul is increasing as the FCC is forced to referee numerous disputes,” the report said, and in particular, “a showdown is looming over the Level 3 forbearance petition that asked the FCC not to apply access charges to certain VoIP calls.” Along with an intercarrier compensation proceeding and action on the Level 3 petition, other actions that appear to be on the front burner for action before Powell leaves, according to Legg Mason: (1) DTV must-carry. (2) AT&T’s calling card petition. (3) Other intercarrier compensation issues such as rural carriers’ effort to collect access charges from long-haul carriers that connect “virtual NXX” traffic from ILEC customers to VoIP providers and ISPs. Also on the front burner is a petition from wireless carriers asking the FCC to prevent ILECs from unilaterally imposing high per-minute termination tariffs on some wireless traffic. (4) The UNE remand order, which is scheduled for release today (Feb. 4). (5) An order due Feb. 27 in response to a federal-state joint board recommendation aimed at reducing the growth of universal service funding in rural areas. (6) Review of the International Bureau’s grant of ancillary terrestrial authority to mobile satellite operator Mobile Satellite Ventures. (7) Another spectrum sharing order, probably one permitting the use of white space in the 3650-3700 MHz band. (8) Further action on the July 2006 cable set-top box deadline, which the cable industry and suppliers want to delay.

Several telecom groups urged the Senate Commerce Committee leadership to protest Level 3’s petition to the FCC requesting its VoIP service be subject to reciprocal compensation charges instead of switched access charges. The groups said such a ruling by the FCC would “encourage other interexchange carriers to claim that their long distance traffic is IP in order to take advantage of the lower costs Level 3 is seeking.” The groups said the problems Level 3 raised in its petition need to be solved with comprehensive intercarrier compensation reform, which is expected as part of Congress’s review of telecom laws and the universal service fund. “The Level 3 petition purports to exclude rural telephone companies from its application, but it proposed to exclude only some rural carriers, not all rural carriers,” the letter said. “If this exclusion does not survive judicial scrutiny, the effect on rural companies would be especially severe.” Letter signers included the Eastern Rural Telecom Assn., the Independent Telephone & Telecom Alliance, the NTCA, OPASTCO, USTA and the Western Telecom Alliance.

Sen. Smith (R-Ore.) was expected at our deadline to again introduce legislation designed to distribute a portion of the universal service fund to more states. The bill will likely be similar to his legislation introduced last year, S-1380, which would change the distribution formula for the USF’s so-called nonrural fund, used to fund larger carriers’ networks in rural areas. Industry sources said the bill would have 19 co-sponsors. Rep. Terry (R-Neb.) introduced similar legislation last year (HR-1582). The bill is supported by Qwest, which serves many rural states that don’t receive funding. “Under the FCC’s latest estimates, a single state will receive more than half of this fund, and 40 states -- including many of the most rural and remote parts of the country -- will not receive a dime. This is clearly unfair and unacceptable, and we support Senator Smith’s efforts to fix it,” said Gary Lytle, Qwest senior vp-federal relations. The CLEAR Coalition, which also supports the Smith bill, released data Thurs. that said Miss. -- served by BellSouth -- received more than half the $290 million fund. The study said 3 states in 2005 would receive about 75% of the fund. Only 10 states receive funding, the report said. Since 2000, Miss. has received about $726 million from this one USF account, the report said.

House members representing rural districts need to be ready to fight for rural communication concerns when the House considers telecom reform, said Rep. Gutknecht (R- Minn.), chmn. of the Congressional Rural Caucus Telecom Task Force (TTF). The TTF held a forum Wed. that reviewed rural telecom issues and included large and small carriers’ representatives. “It is clear that rural concerns, especially reforms related to the USF, must be addressed when we rewrite the telecom bill,” Gutknecht said. “It is my hope that we can create a House ‘farm team’ that will advocate these concerns as we update this policy.” USTA Chmn. Gene South told lawmakers that landline service providers are hampered by “extensive day- to-day government micromanagement of our business.” He said cable and wireless providers don’t face the same kind of regulations, and some services, including cable and satellite services, aren’t paying into the universal service fund (USF). South said regulations are keeping smaller wireline companies from offering video service to compete with cable. CTIA Pres. Steve Largent said wireless services, and the broadband services they can now provide, could help bridge the digital divide. But Largent also said myriad state regulations threatened the industry. He also said IRS rules on equipment depreciation were increasing the cost of deployment in rural areas. On USF, Largent said wireless carriers should be allowed to compete for funds. He said wireless service is more expensive to provide to rural areas, but “the wireless industry nonetheless believes that wireless carriers can be a cost effective solution for consumers in these areas.” Lawrence Sarjeant, Qwest vp-federal legislative & regulatory affairs, said USF needed a fairer distribution system. Sarjeant said the Bell serves vast rural areas but receives little help from USF fund because it’s defined as a “non-rural” company. Qwest has supported legislation introduced last session by Rep. Terry (R-Neb.) and Sen. Smith (R-Ore.) to rectify the situation by changing the funding formats. Smith was expected to reintroduce the legislation Thurs. (see separate item, this issue).

OPASTCO urged the FCC to adopt “a strong set of standardized minimum criteria” for use by state commissions and the FCC in determining whether rural competitors are qualified for designation as eligible telecom carriers (ETCs). ETC status enables a carrier to receive high-cost universal service funding. OPASTCO in a Feb. 1 ex parte letter also urged the agency to make sure its bureaus “consistently and rigorously” apply whatever guidelines are adopted. The association reminded the FCC that in the Va. Cellular decision it said a more stringent public interest analysis was needed for ETC designations. In that decision, the FCC adopted an interim public interest analysis framework pending further action, OPASTCO said. However, OPASTCO complained, the Wireline Bureau didn’t “carefully apply” that interim framework when it designated Nextel Partners as an ETC in 7 states in August: “A series of ex parte communications from TDS Telecom indicate that Nextel Partners’ own coverage maps do not demonstrate any significant level of service in most of the TDS Telecom service areas in which Nextel Partners was designated as an ETC… If the FCC’s own bureaus cannot adhere to an adopted framework for conducting public interest analyses, how can it reasonably expect state commissions to follow any federal guidelines on minimum ETC eligibility criteria that are adopted?”