Prospects for moving remaining telecom measures through Congress look bleak as lawmakers plan to return this week to finish remaining business, namely the stalled intelligence reform bill. Several Senate and industry sources have said Senate Commerce Committee Chmn. McCain (R-Ariz.) isn’t going to back down from demands that the House pass his boxing reform legislation as part of the telecom package (HR-5419), which includes the spectrum relocation trust fund, E-911 funding and reform of the universal service fund accounting procedures. Industry and Senate sources said many members of Congress didn’t plan to travel to Washington unless key negotiators reached agreement on the intelligence bill over the weekend. The Senate could pass the bill next week under “unanimous consent” despite the absence of many members. But that couldn’t happen unless McCain and House Commerce Committee leadership reached an agreement on the boxing bill, something sources said Fri. was unlikely. “We may have to rehash that all over again next year,” Sen. Allen (R-Va.) said of the telecom bill. Allen also said he supported McCain’s boxing bill. A broad coalition of groups and companies sent a letter to Senate leadership urging passage of the bill. Signers included USTA, NTCA, OPASTCO, the Bells, CTIA, TIA, several wireless carriers and the Western Telecom Alliance.

A senior House Commerce Committee aide said Fri. that high-cost support of the Universal Service Fund (USF) was growing too large, and when reforming USF next year, members would look for more efficient ways to disburse the fund, perhaps even favoring wireless technologies over wireline. House Commerce Committee senior counsel Howard Waltzman told a Progress & Freedom Foundation (PFF) forum on USF that if the goal of the high-cost program is to ensure affordable voice telephony, more-efficient wireless technology might be preferred to costly wireline service. Waltzman said “appropriators didn’t consult us” before inserting a provision in the 2005 omnibus appropriations bill that would prevent the FCC from imposing a “primary- line restriction” on USF high-cost support. Waltzman intimated that House Commerce Committee leadership would be interested in considering some forms of line restrictions when USF came up in the House. “There’s no reason to increase the size of the fund,” Waltzman said of the high-cost fund.

House Telecom Subcommittee ranking Democrat Markey (Mass.) said FCC Chmn. Powell and the Office of Management & Budget gave “insufficient analysis to the repercussions” to the Universal Service Fund of the FCC’s application of the Anti-Deficiency Act (ADA). Powell responded to several questions Markey asked Powell about ADA application to USF, to which Markey said it was clear that Congress needed to act “quickly to minimize the damage” the policy change would create. Powell told Markey that the Commission didn’t believe there was or would be any risk that USF programs -- including E-rate -- wouldn’t meet their funding requirements. Powell told Markey that he didn’t expect any short- or long-term effects from the accounting change.

Universal service reform is one issue Congress should address when rewriting the Telecom Act next year, a cross- industry panel agreed Thurs. at a forum sponsored by the National Journal. But speakers couldn’t agree on exactly what the reform should be. They also disagreed on which other issues should go to Congress and which ones left to the FCC.

CTIA asked the FCC to change a requirement in a 2002 order revising Universal Service Fund contribution rules that force carriers that decide to pay USF fees based on the 28.5% wireless safe harbor to nonetheless calculate some of revenue streams and submit the numbers to the FCC. The safe harbor is the assumed amount of wireless calls that are interstate and thus subject to USF fees. A carrier source said Thurs. that when the FCC modified its rules most didn’t notice at first that in addition to raising the safe harbor from 15% to 28.5% the FCC also imposed a reporting requirement for some classes of revenue, specifically for minutes beyond the customer’s monthly basket and for international calls. The source said taking this step negates some of the safe harbor’s benefit. “It’s not that easy for wireless carriers to do this for any category of revenues,” the source said. “For those who avail themselves of the safe harbor it doesn’t make sense to do it for some [revenue sources] but not for everything.” About half of the carriers use safe harbor calculation in assessing USF contributions. The larger carriers in particular find the calculations difficult. CTIA said the reporting requirements “improperly limit the scope of the wireless safe harbor and will result in recovery practices that are unreasonably expensive, administratively burdensome for carriers, extremely confusing for consumers, and inconsistent with direction provided in Commission orders.” - HB

A review of the 1996 Telecom Act might not be the only reform coming from Congress next year, staffers said Wed. Lisa Sutherland, telecom aide to Sen. Stevens (R- Alaska), told the ALTS Business & Policy Conference that Stevens would consider reforming the FCC’s decision-making process. Sutherland, who will become the Senate Commerce Committee staff dir. next year when Stevens becomes chmn., didn’t offer any ideas on how the process should be fixed, but told us the telecom industry always seems to be in a state of uncertainty because FCC rulemakings take too long and are held up in lengthy court challenges.

Another obstacle has emerged for the beleaguered spectrum trust fund legislation. Senate and industry sources told us that Senate Appropriations Committee ranking Democrat Byrd (D-W.Va.) has placed a hold on the bill, which has now been paired with E-911 and universal service fund (USF) legislation (HR-5419). Sources said Byrd’s hold is due to the same concerns that appropriators always had over the bill: The usurping of Appropriations Committee jurisdiction. The bill, which seeks to reimburse Defense Dept. and other govt. users for portions of the 3G spectrum they now occupy, would essentially appropriate money from spectrum auctions in advance. House appropriators had similar concerns over HR-1320, the original spectrum trust fund bill, that were eventually resolved before the House passed the bill in 2003. That bill is now part of HR-5419, a catch-all bill passed by the House 2 weeks ago, and includes state funding for E- 911 deployment and an exemption from Anti-Deficiency Act requirements on USF. The Senate Commerce Committee has passed spectrum trust fund legislation, but it never moved to the Senate floor. During deliberations on the bill, Senate Appropriations Chmn. Stevens (R-Alaska) said he had concerns that the bill would usurp appropriators authority. But sources said Byrd’s hold wasn’t the main obstacle for HR-5419. Senate Commerce Committee Chmn. McCain (R-Ariz.) is also holding up the legislation because House leadership won’t take up his measure to establish a national boxing commission. One industry source said differences with Byrd, which were based on substance, are likely to be easier to resolve than the differences between McCain and House leadership, which sources said appear to be political.

As Infinium Labs readied its Phantom Game Service for a 2005 launch after delays, the company and CEO Timothy Roberts were hit with a lawsuit by investment banking firm SBI-USA. The suit -- announced Tues. but filed Nov. 24 in U.S. Dist. Court, Santa Ana, Cal. -- charged Infinium and Roberts with breach of contract and fraud, claiming they defaulted under a March investment banker/adviser agreement with SBI-USA. SBI sought general damages of more than $75,000, along with special and punitive damages and attorneys and other legal fees.

Public TV stations are mostly ambivalent about PBS’s decision to lend its name to a commercial children’s channel being launched in partnership with Comcast, HIT Entertainment and Sesame Workshop. Comcast and HIT would invest $75 million in the channel, set for launch in fall 2005. PBS and Sesame Workshop will put up no cash but will get 15% equity each for the PBS brand, broadcast cross-promotion and goodwill.

Responding to a petition by the American Public Communications Council (APCC), the FCC clarified part of its universal service rules as they apply to payphone providers. The FCC denied an APCC request to reconsider requiring independent payphone providers to contribute to the Universal Service Fund (USF). However, it agreed to clarify that if an independent payphone provider purchased telecommunications for resale and contributed directly to the Universal Service Fund (USF), it shouldn’t be subject to the “pass-through” of universal service contributions by interexchange carriers and LECs. “Allowing such a practice results in a double burden for payphone providers that use resold telecommunications services,” the FCC said. The action came as the FCC considered numerous petitions for reconsideration of 2 universal service orders. In an order issued Nov. 29, the FCC denied most of the petitions either because the FCC said they raised no new facts or were moot. However, the FCC also clarified, in response to a request by the Wireless Cable Assn., that MDS licensees aren’t required to contribute to the USF on the basis of revenue derived from broadcasting services. The FCC also clarified that MDS licensees that provide interstate telecom services to others for a fee on a non-common carrier basis aren’t exempt from contribution requirements. The FCC clarified for CTIA that mobile carriers are required to report as end-user revenues the proceeds they gain from providing telecommunications to entities qualifying for the so-called “de minimis exemption.” However, they don’t have to identify individually the resale customers qualifying for the exemption. The exemption applies to carriers whose telecom activities are so small their contributions would be “de minimis.” Among those denied was a petition by Mobile Satellite Ventures for reconsideration of a decision that all ‘pure’ resellers were ineligible for universal service support. MSV had argued that resellers should be eligible for support when they resell the services of a facilities-based carrier that isn’t a recipient of universal service subsidies.