VoIP is a telecom service “and should be regulated as such,” the National Consumers League (NCL) said in comments on the FCC’s VoIP rulemaking (CD June 2 p4, June 1 p1). But EarthLink said the fundamental premise of the rulemaking is wrong -- “IP by itself is neither a network nor a service; it is merely one of literally dozens of transmission protocols that may be employed to facilitate the transmission of information.” NCL said that since VoIP is a telecom service, it should contribute to the universal service fund, provide full E-911, provide all consumer protections and meet all disability access mandates; states shouldn’t be preempted from VoIP regulation; and VoIP shouldn’t be allowed to unfairly shift the cost of telecom services to non-VoIP customers. EarthLink said the near-ubiquity of VoIP “does nothing to change the fact that the use of IP… has absolutely no bearing on the proper regulatory treatment of such services.” EarthLink also said the FCC shouldn’t confuse 3 separate elements -- the protocol itself, networks that support IP transmissions, and services delivered over those networks. OPASTCO said the use of IP technology doesn’t reduce an ILEC’s cost of providing access to the network, so VoIP services “should provide equitable compensation.” It also said IP services that are functionally equivalent to traditional telephony should provide full E-911 functionality and access for the disabled… Classifying IP-enabled services as information services will provide incentives for electric utilities to use the technology to upgrade their own private networks and provide broadband services to consumers, the United Telecom Council (UTC) and the United Power Line Council (UPLC) said. While applauding the FCC for minimizing regulation of IP- enabled services, they cautioned the agency against assuming that “additional regulation of IP-enabled services is necessary to promote social policy objectives such as universal service and public safety and disability access services.” They opposed any regulations that would apply to private networks of critical infrastructure industries used primarily to support their core electric, gas and water services.

The FCC’s IP rulemaking is so vague that it’s impossible to provide a regulatory analysis of its impact, according to the U.S. Small Business Administration (SBA). The Dept. of Homeland Security, meanwhile, said the FCC may need to become even more active in regulating IP-enabled services, in comments on the FCC rulemaking (CD June 1 p1). Other commenters questioned the FCC’s authority to regulate IP services at all.

NEC America agreed to pay a $20.6 million criminal fine, civil settlement and restitution, after the Justice Dept. (DoJ) charged the company with defrauding the E-rate program. The DoJ said NEC allocated contracts and rigged bids for E- rate projects at 5 separate school districts in Mich., Wis., Ark, and S.C. NEC was also charged with wire fraud for inflating bids and submitting false documents to the E-rate program and San Francisco school district. The DoJ said NEC filed the fraudulent documents in an effort to hide the fact that it planned on installing ineligible items. DoJ said NEC agreed to donate “free” items that it planned to bill the E- rate program and submitted false and fraudulent documents to defeat inquiry into the legitimacy of the funding request. The plea agreement calls for a $4.7 million criminal fine for bid rigging and wire fraud. “This conduct deprived the E- rate program of fair and competitive prices, caused the program to pay for unnecessary and ineligible items, and as a result, prevented the funding of projects at other needy schools,” said DoJ antitrust chief Hewitt Pate. The House Commerce Committee is investigating the E-rate program for fraud. Also, the Atlanta Journal-Constitution reported that $20 million in E-rate funds for the Atlanta school district has been frozen while the Universal Service Administrative Co., which distributes E-rate funds, investigates mishandling of that district’s funds.

An inter-industry group seeking consensus on intercarrier compensation reform is still meeting frequently and plans to make a recommendation to the FCC soon, even though several key members have dropped out (CD May 21 p1). No one involved in the Intercarrier Compensation Forum (ICF) seemed certain about when the recommendation would be made. “A week or 2 maybe,” said one participant. “Weeks not months,” said another.

Supported by at least 2 Bell companies, USTA urged the FCC in comments to leave the IP-enabled services market free of economic regulation. But some consumer groups argued the Commission should subject VoIP to Title II regulation to protect consumers, and use its authority to exempt such services from unnecessary regulations. The Local Govt. Coalition reminded the FCC it had “no power to adopt a comprehensive scheme for regulating information services independent of Title II, Title III or Title VI” of the Communications Act. Meanwhile, states pressed for a technology-neutral functional approach to VoIP oversight. “Regulators should not be choosing technology winners and losers,” NARUC Gen. Counsel Brad Ramsay told us. More comments were expected after our deadline Fri.

The organization that administers the universal service program reportedly is planning an audit of the prepaid calling card business to see if providers are contributing enough to the universal service fund (USF). A spokesman for the Universal Service Administrative Co. (USAC) said he can’t comment on whether audits are being conducted, but sources close to the process said the board recently approved funding to conduct such an audit.

TV broadcasters in many countries outside the European Union (EU) may have to cut back coverage of the Athens 2004 Olympics if the Greek govt. doesn’t provide refunds of Value Added Tax (VAT). In previous years, host countries have refunded VAT paid on services and facilities connected with the production of Olympic coverage, on grounds the broadcast signals were being exported, said Patrick Cozier, secy. gen. of the Carribean Bcstg. Union (CBU). Despite the enormous promotional benefits that Greece will receive, the govt. hasn’t confirmed it will refund VAT paid on transmission charges, and has so far refused to consider refunds on services such as hotel charges for broadcasters’ staff, according the World Bcstg. Unions. VAT refunds are guaranteed only to broadcasters that have an EU-registered corporate. Govt. officials couldn’t be reached for comment. “We are going to have to either reduce our coverage or find additional funding,’ Cozier told us, because its members don’t have a corporate entity in the EU. The VAT rule greatly affects the Asia Pacific Bcstg. Union (ABU), which represents more than 100 national broadcasters in 52 countries, with combined viewership of 3.7 billion, said David Astley, ABU secy. gen. The N. American Bcstrs. Assn. (NABA) wouldn’t be affected because its members have corporate entities in Europe, said Michael McEwen, NABA secy. gen. NBC Universal, which will broadcast the Games, couldn’t be reached for comment.

SBC has joined Qwest’s court case against the FCC’s rules for determining the distribution of the “nonrural” universal service fund (USF), distributed to larger ILECs that serve rural areas, an industry source said. The 2 RBOCs have filed a petition with the 10th U.S. Appeals Court, Denver, to throw out the rules for the $260-million fund. Qwest has argued that the rules aren’t fair, since most funding goes to a few states, notably Miss. and Ala. The FCC determines funding levels on a statewide basis. Advocates for the Qwest approach have said that’s unfair to Western states, which have large land areas and sparse populations. Sen. Smith (R-Ore.)(S-1380) and Rep. Terry (R-Neb.) (HR-1582) have introduced legislation to change the system. The 2 bills have 110 co-sponsors, and nearly 75 independent groups have also signed onto the approach. However, an industry source said that while SBC is supporting Qwest on the court petition to abandon the old rules, SBC still isn’t actively supporting the bills.

VoIP could speed the day when universal service is used to fund broadband services in rural communities, FCC Comr. Adelstein said Thurs. at a media breakfast. Asked if he supported the use of universal service for broadband deployment, Adelstein said the Telecom Act clearly says that “advanced services” such as broadband are “covered” by universal service funding but the “time has to be right” for such a decision by the FCC. VoIP could make that happen, he said: “If VoIP becomes the industry standard for telephone service and the person who has VoIP is able to get e-mail, conferencing, call forwarding… and if people in rural areas can’t have that because they don’t have broadband, then they're not getting comparable service” as required by the Telecom Act: “Then there would be no choice but to add broadband.” Asked about the commercial negotiations the FCC has asked industry to undertake to set UNE-P prices and terms, Adelstein said “there hasn’t been as much progress as we hoped… but on the optimistic side, these things sometimes come to a head in the last weeks, so maybe there will be a flurry of activity.” Asked if he thought the FCC should eventually seek U.S. Supreme Court review of the U.S. Appeals Court, D.C., ruling that overturned the FCC’s UNE-P rules, Adelstein said “it depends on the nature of the agreements” reached by companies. He said he still believed the D.C. Circuit “erred” in overturning the FCC’s UNE-P decision but “we need to see the nature of the agreements -- if they are comprehensive.”

Sen. Sununu (R-N.H.) and Rep. Pickering (R-Miss.) are hoping their VoIP bills will move this year, their aides said Wed. at a VoIP workshop sponsored by CompTel/Ascent in Washington. “We are pushing for passage [of HR-4129] this year,” said Mike Hurst of Pickering’s office. But he said that could be delayed because of the presidential elections. “Our intent [is] if not passage this year, [then] at least laying the ground[work]” he said, saying in that case he expected the bill to be passed “when Congress returns.” Mike O'Reilly of Sununu’s office said he was “very optimistic we are going to [move] the bill [S-2281] this year. We anticipate a hearing at some point soon.” No hearings have been scheduled on either bill.