Powell will be remembered as a promoter of VoIP growth, industry officials said. The Commission last year freed Internet voice from old regulations and preempted states from regulating VoIP in its decisions on Pulver.com and Vonage petitions.

The estimated cost of seeking recovery of improperly disbursed universal service funds is $300 per occurrence, Universal Service Administrative Co. (USAC) said in a filing with the FCC that it sought confidential treatment for. The “de minimis analysis” came in response to the FCC request to provide the Wireline Bureau and the Office of Managing Dir. “sufficient information regarding the administrative costs of seeking recovery of improperly disbursed funds so that a de minimis amount can be determined.” In its Fifth Report & Order, the Commission concluded that “it does not serve the public interest to seek to recover funds associated with statutory or rule violations when the administrative costs of seeking recovery outweigh the dollars subject to recovery.” The Commission told the USAC not to seek recovery of “de minimis” amounts and asked it for analysis. USAC submitted its response to that request Jan. 13, asking for a confidential treatment of the entire document. But the filing slipped onto the FCC website. USAC said in the analysis that the estimated cost of $300 consisted of 2 components: (1) Schools & Libraries Div. (SLD) processing. USAC said the estimated cost for SLD processing was $260 per occurrence. It said SLD processing included issuing commitment adjustment letters or recovery of improperly disbursed funds letters; issuing demand payment letters; preparing referral packages for the Office of Managing Dir.; labor costs related to processing returned funds; general labor costs and appeal processing costs. USAC said the average work time required to complete those activities was 168 min. and the hourly rate for performing those tasks $94.42. The cost per recovery is estimated at $258.78. (2) USAC Financial Operations processing. USAC said the estimated cost for such processing was $40 per occurrence. It said the Financial Operations processing included processing returned funds; accounting activities; Debt Collection Act referral activities and other administrative labor costs. USAC said the average cost for Financial Operations to process one recovery was estimated at $40.42, with the per unit mailing costs being estimated at $1.58 and the per unit general labor costs at $38.84 per occurrence. USAC also proposed that once the de minimis standard is set it should be carried out this way: (1) “The de minimis will be applied at the billed entity level per occurrence.” (2) “If the amount of the Commitment Adjustment or Recovery is equal to or less than the de minimis standard, then USAC will not pursue the Commitment Adjustment or Recovery.” (3) “If the Commitment Adjustment or Recovery is greater than the de minimis standard, then USAC will process the Commitment Adjustment or Recovery.” (4) “USAC will not seek recovery of funds already disbursed if the amount to be recovered is equal or less than $300.” USAC also noted that, based on informal guidance from the FCC, it currently didn’t seek recoveries of less than $100 per billed entity per occurrence, which represented less than 1% of recoveries to date. It said about 7% of recoveries currently sought were $100-$500. USAC said it was important that the FCC keep the filing confidential because “the Commission will likely use this information to determine USAC’s internal triggers for seeking recovery of funds.” It said public release of that information would “disclose these anticipated internal triggers which would compromise USAC’s ability to protect the Universal Service Fund from waste, fraud and abuse.” USAC said the document also included “some minimal vendor pricing information.” USAC noted that the information provided in the filing wasn’t available to the public at the time.

Classifying cable modem service as a telecom service would “drastically change the regulatory environment for cable modem service,” Acting Solicitor Gen. Paul Clement said in a brief on the FCC’s behalf to the U.S. Supreme Court in the Brand X case (CD Jan 19 p13). Cable modem providers would be subject to common carrier pricing and filing requirements, and face new financial obligations such as contributions to universal service funds, which “could lead them to raise prices or forego new investment, particularly in rural or underserved areas,” the brief said. It also argued that the 9th U.S. Appeals Court, San Francisco, erred in refusing to review the FCC’s classification of cable modem service under the Chevron framework. The brief urged the Supreme Court to address the issue, noting that there’s “significant conflict in the circuits concerning the interaction of the Chevron doctrine… The court should reject the Ninth Circuit’s mistaken view that its own precedent predating the agency decision under review automatically precludes adherence to Chevron.”

The FCC said it suspended Inter-Tel Technologies from participating in the school and libraries universal service support mechanism for at least 3 years. It said it could extend the debarment period “if necessary to protect the public interest.” The Commission action comes after Inter-Tel pled guilty to mail fraud and other criminal offenses for activities related to its participation in the E-rate program with the San Francisco Unified School Dist. (SFUSD). According to the FCC, the company admitted that among other violations, it: (1) “Assisted consultants in falsely describing equipment to be supplied to SFUSD by hiding equipment not eligible for funding under the E-rate program in order to have the program pay for it.” (2) Learned that consultants had submitted bills to the Universal Service Administrative Co. (USAC) with the prices inflated by about $26 million above the amounts originally bid for the project, and did nothing to inform USAC and the SFUSD about that. (3) Participated in a conspiracy with one or more equipment and service vendors to eliminate competition for E-rate projects. (4) Submitted fraudulent and non-competitive bids to frustrate the competitive process in the E-rate projects. The FCC said the suspension would become effective upon the earlier of Inter-Tel’s receipt of the Commission suspension letter or publication of notice in the Federal Register. “Suspension is immediate pending the [Enforcement] Bureau’s final debarment determination,” the Commission said. Inter-Tel has 30 days to oppose the action.

In-game ad network developer Massive said it received $10 million in a Series C financing round led by NeoCarta Ventures. But the round also included funding from 5 investors that already provided Massive with financing: DFJ Gotham, DFJ New England, RRE Ventures, Tobat Capital and Newlight Assoc. In conjunction with the announcement, Massive announced that NeoCarta Managing Dir. Thomas Naughton joined its board. After launching its in-game ad network in Oct., Massive announced in Dec. that it teamed up with Nielsen Interactive Entertainment, which will provide 3rd-party accountability and measurement for ads on the network. Massive CEO Mitch Davis said the recent funding “will help us continue to expand our network, develop new and innovative advertising opportunities…, and bring Massive to a global audience.” He said Massive planned to open a European office and “significantly” increase its ad sales team “to help service our rapidly growing client base.” The company said its network included more than 40 titles from 8 game publishers, including Legacy Interactive, Ubisoft and Vivendi Universal Games. Massive claimed that by the end of 2005, its network “will deliver advertising reach of over 4 million 18-24-year-old men, as large as TV affiliate reach numbers today.” Naughton said the in-game ad market had “the potential to grow to over $2 billion by 2008.”

Universal service fund (USF) programs that target low-income households are more effective in addressing USF goals than overly broad subsidies, said a report released Tues. from the Progress & Freedom Foundation (PFF). The report said more residents in so-called “high cost” areas are adopting alternatives to subsidized landline phone service, although USF high-cost spending continues to increase. Through its report, “The Myths and Realities of Universal Service: Revising the Justification for the Current Subsidy Structure,” PFF said it was offering data to lawmakers without offering specific recommendations for USF reform. The report found that rural and urban households had remarkably similar phone use patterns. Nationwide, 51.7% of homes have both wireless and wireline service, while only 6% use just wireless. The report said 45.2% of rural households use both wireline and wireless phones and 5.3% of rural households are strictly wireless. The report said households with annual incomes of only $25,000 have 94% wireline use rate, but 40% of those homes also have a wireless service and 57% have cable TV. The report also found that more service providers are receiving subsidies, including many competitors in the same markets. The high-cost USF program to ensure service in rural areas is growing at an accelerating rate, the report said. From $2.6 billion in 2001, the fund was expected to grow to $3.6 billion in 2004 and surpass $3.9 billion this year. USF charges on telephone bills surpassed 10% for the first time this year, the report said. USF also suffers from inconsistencies from state to state, said Richard Levine, report co-author and researcher for the Law and Economics Consulting Group (LECG). Cal. has self-certification for its distributions of the “lifeline” program for low-income users, he said. Accordingly, Cal. has 3.2 million lifeline subscribers of the 6.6 million nationwide that receive the funding. Levine said Cal. has far more lifeline recipients than Miss., a much poorer state. While the report doesn’t give specific recommendation, co-author Randolph May said USF is “fixable.” Reform can be undertaken without jeopardizing universal service goals, including rural area’s access to reasonably priced telephone service,” said May, PFF senior fellow and dir.-communications policy studies. May said PFF would eventually make specific recommendations to Congress and regulators on USF reform. Another study co-author, Joseph Kramer of LECG, said there was no incentive in the USF program to hold costs down. “The higher the costs, the more money you get,” Kramer said -- www.pff.org/issues-pubs/books/050118usfreport.html.

UNIVERSAL CITY, Cal. -- The lack of concrete FCC content rules continues to create an air of unease for PBS’s local stations, PBS CEO Pat Mitchell told TV critics here Sat. When the pubcaster sends out programs to its 170 licensees, she said, “we are sending out the version that we think complies with the guidelines as best we understand them. And the chilling effect that we're all worried about is exactly that; when they're not hard and fast and totally clear-cut, you do find yourself making decisions, second-guessing. And we do worry about that, along with our producers.”

Rep. Dingell (D-Mich.) urged the FCC to make a decision “expeditiously” on whether AT&T’s enhanced prepaid calling card is subject to intrastate access charges and universal service fund (USF) contributions. Dingell, ranking Democrat of the House Commerce Committee, said if the FCC finds AT&T violated Commission rules by withholding these payments it should require AT&T to make retroactive as well as future payments -- and the retroactive payments should carry interest “to compensate the USF and affected local exchange carriers for the loss of funds that resulted from AT&T’s withholding of payments.” Dingell criticized AT&T for lobbying for a decision against payment by raising concerns about the cost of providing cards to military users: “AT&T’s campaign… seeks to generate opposition to any effort by the FCC to require AT&T to comply with the Commission’s regulations based on concerns that doing so would increase costs to U.S. military personnel… I do not favor increasing the cost of making telephone calls for U.S. forces stationed overseas. [However], if it truly wishes to help the troops, AT&T can offer military personnel pre- paid calling cards at discounted rates or it could offer calling card services to such personnel for free… AT&T’s cynical campaign should in no way cause the FCC to turn a blind eye to AT&T’s unilateral decision to exempt itself from the FCC’s regulations and shortchange universal service.”

With Congress set to return this week, govt. and industry sources are pondering its direction on communications issues. The topics Congress will address this session are generally agreed on, but a key question is when members will begin to tackle telecom and media issues. They may not be an early priority, with Social Security and tax reform getting most attention from the national media.

The Okla. Corp. Commission amended its telecom rules to permit consumers greater choice and allow providers more freedom to tailor their service packages. The new rules (Case RM 200400014), which must be approved by the state legislature and governor’s office before taking effect, streamline tariff revisions. They also allow service providers to file promotions via a Web-based form, and classify all telecom service bundles as flexibly- priced competitive services. But the rules also require that the components of service packages continue to be offered as individual services. The rules also establish a process for incumbent telcos to opt out of alternative regulation and go back to rate-of-return. And the rules also require wireless phone companies that receive federal universal service funds to offer low-income residents who are enrolled in the Lifeline program unlimited local wireless calls. Chmn. Bob Anthony said the decision was an interim step in an evolution of policy to foster telecom competition. He said the rule changes are intended to provide regulatory parity for all local providers, which will foster further competitive growth and more consumer choice.