A group of telecom associations urged Senate Commerce Committee Chmn. Stevens (R-Alaska) and ranking Democrat Inouye (Hawaii) to “weigh in” against AT&T’s petition to the FCC for exemption from access charges on its prepaid calling card. The group told the FCC (CD Jan 11 p9) that AT&T should be required to pay back access charges and universal service fund fees that the group says they owe. The group, which includes USTA, NTCA, OPASTCO and several other associations, said AT&T has admitted to avoiding $340 million in access charges since the 3rd quarter of 2002 and $160 million in universal service contributions since 1999. AT&T told the FCC the prepaid calling cards aren’t subject to the charges because a recorded message associated with the calls qualifies it as an information service. The groups disagree with AT&T’s assessment and have been urging the FCC to require AT&T to pay back charges. “If a carrier can conveniently and easily add an advertisement to a call to avoid critical public policy obligations and blatantly violate Commission rules, then every carrier would game the system, leading to the collapse of structures supporting the network infrastructure,” the letter said. The letter also criticized AT&T for citing a rise in costs for telephone services for members of the U.S. armed forces. “AT&T’s shameless effort to use the well being of our armed forces and their families to support their disregard for necessary regulations that have been in effect for decades is simply unprincipled,” the letter said: “AT&T’s argument that low-cost alternatives would not be available for our troops if they had to follow the regulations is completely false.” Other groups joining the letter included: Eastern Rural Telecom Assn., Independent Telephone & Telecom Alliance, National Exchange Carrier Assn., National Rural Telecom Assn., Western Telecom Alliance.

CTIA Pres. Steve Largent predicted an active year on Capitol Hill and at the FCC for wireless carriers in 2005. Largent said Tues. that after the battles that ended 2004, including passage of the spectrum transition bill (HR 5419), he sent a warning note to CTIA’s 90 staffers.

Sprint asked the FCC to reconsider a Dec. 9 bureau order revising instructions for Form 499-A, which carriers use to report revenue subject to universal service contributions. The new instructions don’t permit carriers to make any revisions to forms more than 12 months after the forms originally were submitted if the revision would result in a decrease in regulatory fees or universal service contributions. Sprint asked the bureau to instead impose a 3-year limit on revising forms, which it said would “mirror the framework” used by the IRS. Sprint said it “wholeheartedly agrees with the objective of ensuring the stability and sufficiency” of the Universal Service Fund, but doesn’t think 12 months is sufficient for correcting errors that might be discovered in prior reports: “Moreover, it is unfair to adopt a twelve-month cut-off period for correcting errors that work in the contributor’s favor while continuing to place contributors under an obligation of indefinite duration to file revisions that would have the effect of increasing the filing party’s contributions.” Qwest raised that issue in its reconsideration request (CD Jan 11 p9).

The FCC amended its rules to make it easier for carriers to receive universal service funding for network investment after acquiring telephone exchanges from other carriers. Granting a request by NTCA, the FCC said rural carriers can receive “safety valve” support for investments made in the first year of operating acquired exchanges. The FCC said the changes will make sure carriers receive sufficient high-cost support while preserving the rules’ purpose “of discouraging carriers from transferring exchanges merely to increase their share of high-cost universal service support.” In a related action, the agency also granted Valor Telecom a waiver of Sec. 54.205 rules to allow it to receive safety valve support for costs it incurred in its first year of operation. Safety valve support goes to carriers that make substantial investment after acquiring exchanges, but time limits on when the support begins had created problems for some carriers. NTCA had argued carriers had to wait until the end of their first year before receiving the safety valve support, which presented a disincentive for rural carriers to invest in that first year. The FCC also changed the rules to make clear that they don’t apply to transfers of exchanges between non-rural carriers “after the phase-down of interim hold-harmless support.”

The Alaska Regulatory Commission (ARC) opened a docket for modeling effects of various intercarrier compensation reform options on the state’s carriers and consumers. The ARC noted the FCC is considering fundamental reforms of current inter- and intrastate access charge systems, such as institution of a bill-and- keep system. The ARC said some reform ideas could affect state regulation of local rates and universal service funding and distribution mechanisms. The ARC said it would use rough-cut models to get a quick general estimate of the impacts of how the various options would affect costs, revenue sources, and participating parties. The ARC said its purpose is to “capture in a broad way the most salient features of these proposals,” rather than conduct a detailed analysis.

Rep. Green (D-Tex.) introduced legislation (HR-102) that would let unused Universal Service Fund money go to low-income schools.

Concerns about E-rate funding have “received considerable attention,” FCC Inspector Gen. Walker Feaster told Congress in a report. He said both the Commission and Congress have paid more attention to potential problems in the E-rate grant distribution process, but the IG’s office needs more resources to conduct more comprehensive audits. “Until resources and funding are available to provide adequate independent oversight for the USF program, we are unable to give the Chairman, Congress, and the public an appropriate level of assurance that the program is protected from fraud, waste and abuse,” the report said. There have been 135 E-rate audits, said the report, done by the FCC IG’s office and Universal Service Administrative Co. internal and contract auditors. The audits found that E-rate beneficiaries weren’t compliant in 36% of the cases, leading to recommended fund recoveries of nearly $17 million. The IG reported that in its 5 audits of E-rate recipients, 4 were noncompliant. In one case, the IG said $934,000 could be recovered from the United Talmudical Academy in Brooklyn, N.Y. The school didn’t pay “the entire non-discounted portion of FY 1999 funding on a timely basis,” the IG said. The office also said there was no documentation supporting a competitive bidding process and the school was over-billed for some services. The IG found similar problems with other schools, including the Children’s Storefront School in Harlem, N.Y., where $491,000 in potential recoverable funds were found.

The last 3 towns in La. lacking telephone service of any kind will finally be joining the connected world. The northern La. villages of Mink, Shaw and Black Hawk will finally get dial tone this spring, following more than a year of effort by the La. PSC. The town of Mink will be getting landline service from BellSouth, while Shaw and Black Hawk will be getting cellular service because their geography made landline service impractical. The extension of service will cost about $46,000 per customer, most of which is expected to come from the state universal service fund. PSC Comr. Foster Campbell noted people made do with makeshift radiotelephone relay arrangements that were unreliable and incapable of supporting 911 or modern data communications. The villages somehow fell between the cracks as the phone network expanded. In recent weeks, the plight of these phoneless citizens began attracting regional and national media attention even as the PSC was working with telecom carriers to bring telephone service to them.

A NARUC task force tentatively proposed an intercarrier compensation [ICC] compromise that includes features of several industry plans pending before the FCC. NARUC’s Intercarrier Compensation Task Force, chaired by Ia. Utilities Board Comr. Elliott Smith, told FCC staff in a conference call last week that the plan sought unified rates, reformed universal service fund collection and distribution, compatibility with existing law and “a proper balance between FCC and state roles.” FCC staff members on several occasions have said they were watching with interest the NARUC task force’s efforts to review industry ICC plans in order to devise a proposal of its own.

President Bush signed legislation (HR 5419) on Dec. 23 that created a spectrum relocation trust fund that will guarantee that auction revenue can easily be used to move Dept. of Defense and other govt. users off the 1710-1755 MHz parts of the band. The legislation also provides funding for state and local govts. for wireless E911, and resolves accounting issues that had been causing some problems for the universal service fund (USF). Specifically on the last issue, the act provides a one-year exemption from the application of govt. accounting rules to USF programs, including E-rate. The next step on the spectrum trust fund is the transmittal of a letter from the FCC to NTIA asking it to start the process of clearing the spectrum. After the notification is sent, the govt. has 12 months to calculate costs and set a schedule for relocation and must notify the FCC 6 months before an auction.