The Senate Appropriations Committee voted Wed. to prevent the FCC from imposing a primary-line restriction on Universal Service Fund (USF) support. With no discussion or objection, the amendment to the Senate Appropriations Commerce Justice State bill will forbid the FCC from expending any funds for a USF system in which funds could be distributed only for “primary lines.” The amendment was pushed by Senate Communications Subcommittee Chmn. Burns (R-Mont.) and supported by Sens. Dorgan (D- N.D.), Stevens (R-Alaska), Hollings (D-S.C.), Gregg (R- N.H.), Brownback (R-Kan.), and Durbin (D-Ill.), sources said. Burns said the joint board proposal would hurt Mont.’s economy, which depends on small business. “In short, if the FCC moves forward with this potentially devastating recommendation, rural America would have a harsh winter of economic isolation,” Burns said.

The FCC’s Office of Engineering & Technology is “working hard” to complete its broadband over power line (BPL) work for consideration at the Oct. Commission meeting, Deputy Chief Bruce Franca said. At the United Power Line Council’s (UPLC) annual meeting in Arlington, Va., Tues, he said “we are real confident that we are going to have an item for October.” State regulators, however, told utility executives they still had “limited” knowledge of the technology, and said it was up to the industry to educate them so they have a better grip on regulatory issues. They said the BPL task force set up by NARUC would issue its findings in Nov.

Senate sources said a potential Senate Commerce Committee markup scheduled for Sept. 22 could include Sen. Smith’s (R-Ore.) universal service fund bill (S-1380). The bill would reallocate funding in the USF’s “non-rural” fund that goes to RBOCs and other large ILECs that serve rural areas. Miss. and W. Va. split the lion’s share of the $230 million yearly fund and advocates in states that receive little or none of the funding raise charges that the fund is unfairly distributed. Under Smith’s bill, which is similar to HR-1582 from Rep. Terry (R-Neb.), funding would be based on regional, not state-wide, averages, which critics say disproportionally benefits some states. Proponents of the current system said BellSouth, which receives most of the funding for Miss. and W. Va., serves more rural customers in those states, which is why the funding is so skewed to those areas. One Senate source said there have been efforts to restructure the bill so Miss. and W. Va. are “held harmless” and wouldn’t receive any loss of funding. There have been negotiations with Sens. Lott (R-Miss.) and Rockefeller (D- W. Va.), both Commerce Committee members, to achieve their support for the bill. A Senate source said the negotiations -- so far -- don’t appear to be successful and many members had questions about how Miss. and W. Va. can be kept at the same funding level while offering great shares of the fund to other states. As budget concerns loom over Congress, it seems unlikely that there will be an effort to find the funding, a Senate source said.

Reauthorization of the Satellite Home View Improvement Act (SHVIA) was described by Hill sources as the only “must pass” legislation as Congress returns from its Aug. recess after Labor Day. But congressional action to raise broadcast indecency fines also seemed likely. SHVIA is winding through the House and Senate, and both bodies have passed indecency fine legislation. Other issues, such as VoIP and spectrum relocation, were considered in flux. The Senate could take up controversial copyright reform legislation. Hill staff and lobbyists caution, however, that a focus on intelligence reform in the wake of the 9/11 Commission could crowd out other legislative initiatives.

The Cal. legislature passed 2 bills related to universal service. The first, SB-1276, extends 4 years the legal life of the state’s high-cost subsidy program. That program was due to sunset at year-end. The measure would require the Cal. PUC during 2005 to review the high- cost program to ensure local telephone rate support structures are “fair and equitable.” The bill also would require that any charges imposed to promote universal service must “reasonably equal the benefits of universal service.” The 2nd bill (AB-2758) would extend 2 years the legal life of a state grant program intended to encourage the extension of telephone service into unserved areas around the state. The program originally was to sunset at the end of 2005 but this measure would extend it through 2007. Funding for the program was eliminated from the state budget for 2001-02 but resumed for fiscal 2003-04. The extension would in essence restore the program to its original funded length. Both bills were sent to Gov. Arnold Schwarzenegger (R).

Echoing concerns expressed by VoIP providers in the U.S., parties told the European Commission (EC) in comments it shouldn’t harm the growth of IP-based communications by imposing unnecessary regulations. The EC -- which has generally kept the Internet free of traditional telecom regulations -- has launched a proceeding to examine issues related to IP-based communications, asking for comments on the appropriate regulatory framework for VoIP services that utilize numbering resources and provide access to or from the PSTN.

New Edge Networks asked for a waiver of the FCC’s universal service contribution rules “to eliminate the effect of the first quarter 2003 projection errors in the annual true-up process.” New Edge said it had underestimated first quarter 2003 revenue and, without a waiver, as a result would pay a higher amount into the Universal Service Fund (USF) than warranted. AT&T, SBC and Verizon faced a similar problem and received a waiver, New Edge said. The problem stemmed from the FCC’s adoption of a new method of calculating service providers’ contributions to the USF. Although there’s a true-up process, “because the change became effective after the first quarter of 2003, carriers that under-projected the first quarter revenues… will pay more than the ‘appropriate amount’ unless the Commission changes the true-up process for the first quarter 2003 or grants a waiver,” New Edge said. CTIA recently made a similar request (CD Aug 20 p8).

ASPEN, Colo. -- VoIP is exposing the flaws of the Universal Service Fund, but lobbyists here from various industries moving into VoIP had different thoughts on what the program should look like. A panel on regulating the physical layer of the Internet at the Progress & Freedom Foundation Aspen Summit agreed only that universal service is broken and needs fixing.

BellSouth said in comments the FCC should clarify that its description of certain products and services related to maintenance and technical support for internal connections ineligible for universal service support isn’t applicable to telecom services. The Commission had released the Funding Year 2005 Eligible Services List (ESL), outlining which specific products or services could receive discounts under the Schools & Libraries Support Mechanism. The list addressed telecom services, Internet access, internal connections and special eligibility conditions. BellSouth said services such as 24-hour network monitoring, network management, help desks and related technical support were “customary and necessary in the provision of certain tariffed telecom services.” It said it was concerned that the distinctions between basic and other types of maintenance service and technical support services adopted to determine internal connections’ discount eligibility had “no similar relevance with respect to telecommunications service discount eligibility.” It said because of the similar descriptions of such services as “ineligible” in both the internal connections and special eligibility conditions sections of the list, and in light of the Cost Allocation Guidelines, it was “concerned that application of the draft list to a specific telecommunications services funding request for discounts for appropriate maintenance and technical support services for telecommunications services may erroneously be denied by USAC [Universal Service Administrative Co.].” In separate comments, Fibertech urged the FCC to “immediately” reinstate dark fiber as a service eligible for funding under the E-rate program. The Commission for the first time excluded dark fiber from the list of eligible services in funding year 2004, saying it had “not resolved whether unlit dark fiber [was] a telecommunications service.” But Fibertech argued that to reinstate dark fiber as an eligible service the Commission didn’t need to determine its regulatory classification. It said the agency had authority under Sec. 254 of the Communications Act to include dark fiber in the E-rate program, just as it previously found Internet access and internal connections eligible for the funding. Fibertech said “a new ‘dark fiber’ services category could be created, using the criteria similar to that used when dark fiber was an eligible service in determining whether a specific dark fiber funding request is eligible for funding.” Funds for Learning, an educational technology consulting firm, urged the FCC Wireline Bureau and the USAC to “solicit input from persons who are knowledgeable about technology solutions to make sure that the Eligible Services List correctly reflects the state of technological development, as well as the realities of the K-12 technology market.”

VoIP providers are forming the Global IP Alliance to demonstrate to state, national and international regulators that the industry is capable of self-governance. The alliance, expected to be formally announced in the next several weeks, will be led by Pulver.com and consist of ILECs, CLECs, IXCs and pure VoIP providers from around the world. “We want to make sure we represent all points of view globally,” said Pulver.com Gen. Counsel Jonathan Askin, who will be exec. dir. of the alliance. He said the group has attracted “a lot of” U.S. VoIP providers and “a couple of” European ones, but he said “we need to get more Asian” companies. The initial members will include SBC, Global Crossing, Skype, KMC, Volo and Pulver.com.