Rural telephone company executives at a convention in Washington applauded loudly Mon. when FCC Comr. Adelstein promised he would fight to defeat a proposal to limit universal service funding to one “primary” line. “I hope it’s dead on arrival at the FCC,” Adelstein said of the proposal by the Federal-State Joint Board on Universal Service. Limits on universal service funding would put consumers in rural areas “at a disadvantage,” he told the National Telecom Co-op Assn. (NTCA). Such limits would “undercut investment in rural America,” he said.

Telecom bills affecting human services were signed in Ind. and Me. Ind. Gov. Joe Kernan (D) signed a bill making “211” the official state human services referral number. Under HB-1344, human service agencies seeking to establish a phone line for information and referrals must consult with the established 211 provider in their region and file a report on the results with the Ind. Utility Regulatory Commission (IURC). The new law, which takes effect July 1, also sets up a 211 service account in the state general fund, administered by the IURC, to help cover costs of statewide 211 implementation. Me. Gov. John Baldacci (D) signed a bill amending the state adaptive telecom equipment program for the deaf and disabled to provide emergency-alert devices for deaf and hearing-impaired persons. The new law (SB-667) allocates $85,000 annually from the state universal service fund to this new program.

Great Plains Communications dropped out of the industry’s Intercarrier Compensation Forum (ICF), saying the group was close to agreement on a plan that would hurt rural telephony. In a March 15 letter to Washington attorney Gary Epstein, Great Plains CEO Michael Jensen said he was leaving the forum because “it has become increasingly clear that the ICF effort will not, in our opinion, allow rural ILECs to maintain appropriate cost recovery that is essential to serve our customers.” The forum, which has been working in private, is trying to agree on a proposal to replace access charges and other processes by which carriers compensate each other. The group reportedly is planning to recommend a bill & keep (BAK) plan that would shift the payment requirements to customers. Jensen said in the letter he had known BAK was the plan all along, but he had hoped the group would consider a version that addressed the needs of both big companies and rural ILECs. He said the plan he expects the group to present to the FCC would: “Ignore the undeniable costs of providing intercarrier services in high-cost areas; create an unsustainable reliance on yet another new universal service-like fund; cause more rate increases for already- burdened small and rural customers; refuse to fairly rebalance rates across the states; reject any consideration of rational policies on VoIP services and universal service; and completely eliminate the role of state commissions in determining intrastate rates.” Great Plains’ departure from ICF is significant because it was one of few rural telcos participating.

The Western Governors’ Assn. (WGA) urged Congress to “overrule” the FCC and fix the Universal Service Fund program for rural areas served by mixed urban and rural carriers. In a letter to Senate Commerce Committee Chmn. McCain (R-Ariz.) and House Commerce Committee Chmn. Barton (R-Tex.), the WGA urged Congress to examine the distribution formula for so- called “non-rural” carriers because 40 states -- most west of the Mississippi -- receive no assistance from the non-rural program. Although there have been minor changes in the program, “many sparsely populated rural states will receive no support,” the governors wrote. Legislation is pending in the House and Senate to change the distribution of universal service funds for non-rural carriers. The Bells are among non-rural carriers whose territories include rural areas, and Qwest has been particularly active in advocating changing fund distribution.

Several telecom carriers urged the FCC to reduce the current discount matrix available to schools and libraries participating in the E-rate subsidy program. In comments to the Commission, they said the current discounts of 20-90% for services should be adjusted. They said participating schools and libraries would still get enough support, and the program would become more economical and effective.

SAN FRANCISCO -- The growing support among regulators and companies, including ILECs, to subject all voice traffic connecting to the PSTN to access charges is misguided and doomed, Cal. PUC Comr. Susan Kennedy said Fri. “This is certainly the simplest path… because it largely maintains the status quo, keeps funding for social programs intact and leaves pure Internet telephony alone.”

The National Telecom Co-op Assn. (NTCA) said a member survey showed moving to bill-&-keep (B&K) would harm rural carriers to the tune of more than $2 billion annually. NTCA said the survey of 370 rural companies, with a response of about 60%, indicated that replacing access charges with what’s known as Central Office B&K or COBAK would eliminate more than $2 billion in annual access charges for rural LECs serving areas with fewer than 100,000 access lines. This is an average of $22 per line per month and the smaller the company the bigger the impact, the association said. NTCA said COBAK’s financial impact could cause “large increases in end user charges; dramatic increases in universal service support, further straining the universal service fund; the creation of arbitrage opportunities; reduced customer long distance choices; and destruction of the interstate pooling process.” NTCA CEO Michael Brunner said “simply put, the study results show that COBAK is not a financially feasible concept for rural ILECs.” The FCC in 2001 proposed replacing current intercarrier compensation regimes with B&K and the inter-industry group that’s meeting to devise a possible recommendation to the FCC on intercarrier compensation also has been considering B&K. NTCA included the survey results in a position paper “Bill and Keep: Is It Right for Rural America.” The paper explains that 2 types of B&K regimes were proposed by the FCC in 2001 but COBAK has drawn the most interest and debate in the industry.

The National Exchange Carrier Assn. (NECA) filed an ex parte letter with the FCC March 8 out of concern that a dispute in Alaska could unintentionally require small telecom carriers to change their banking practices. The case involves a complaint -- Ketchikan Internet Services [KIS] v. City of Ketchikan. KIS has accused a telecom carrier, Ketchikan Public Utilities, of violating the Telecom Act by improperly subsidizing competitive Internet services with universal service funds. Of concern to NECA is KIS’s citing a KPU practice of depositing regulated and nonregulated revenue, including universal service fund accounts, into a unified fund. NECA said if the Commission decided this practice was unlawful, many other carriers would be forced to change their banking practices. NECA said was not aware of anything in the law or FCC rules that would forbid carriers from using a single bank account combining regulated and nonregulated revenues.

Despite the recent court ruling, FCC Comr. Martin urged state regulators to continue their Triennial Review Order (TRO) dockets to compile a record of facts for making final decisions about the competitive need for network unbundling. No matter who decides the issues or what standards they apply, Martin said, “the local information you gather will still be instrumental to making the decisions.” He also told the NARUC winter meeting in D.C. that the FCC “will defend our order” on appeal.

Newly anointed House Commerce Committee Chmn. Barton (R- Tex.) reiterated his support for the “Tauzin-Dingell” method of telecom deregulation, noting that he was a co-sponsor of the bill in the 107th Congress. Asked if Tauzin-Dingell was essentially dead since the FCC has enacted some of the bill’s provisions, Barton said the philosophy behind Tauzin-Dingell hasn’t died. Barton has said the Telecom Act of 1996 will need to be reformed in the upcoming 109th Congress, as has Senate Appropriations Chmn. Stevens (R-Alaska), who will likely become Senate Commerce Committee Chmn. next year. Barton said the U.S. was falling behind other countries -- Korea, Japan, Western Europe -- in broadband deployment, and the govt. should look for ways to accelerate the rollout of high-speed Internet access. However, Barton has named Rep. Pickering (R-Miss.), an opponent of the Tauzin-Dingell approach, to be the Committee vice-chmn. Pickering said when evaluating the Telecom Act, the Committee will take into account many factors, including VoIP, the universal service fund (USF) and spectrum reform. Pickering said the Committee should look to “maintain competition and choices” when reforming telecom law. Barton was careful not to commit to any changes in telecom policy, noting that the Committee hadn’t yet been through the hearing process that he said is needed to educate members on the state of the industry. Barton said the Committee will have hearings this year on the federal budget and will likely hear testimony from relevant Administration officials, including those from the Commerce Dept. Barton said the Committee will look for ways to streamline the budget of agencies over which the Committee has jurisdiction. The Committee will also continue its investigation into the E-Rate USF fund that provides funds to schools and libraries for telecom services, Investigations Subcommittee Chmn. Greenwood (R-Pa.) said. Barton didn’t say whether he would support the E-rate program, only saying it remains a “controversial” spending mechanism. House Telecom Subcommittee Chmn. Upton (R-Mich.) will remain in his post, and he said Thurs. that the Subcommittee would begin to “lay the framework” for telecom reform this year. He said the Subcommittee will hold a hearing on the Satellite Home Viewer Improvement Act (SHVIA) next week. There were few changes to the Committee structure from that of former Chmn. Tauzin (R- La.). Rep. Hall (R-Tex.), who switched from the Democratic party, will take Barton’s position as chmn. of the Energy Subcommittee. Rep. Shadegg (R-Ariz.) will be the Committee Whip and Rep. Shimkus (R-Ill.) will become the Committee Coalition Dir. Barton said most of the staff would remain in place, save the few who follow Tauzin when he leaves Congress. Barton announced C.H. “Bud” Albright would be the Committee Staff Dir. Albright comes to the Committee from Reliant Resources -- an energy company -- and once was the Committee’s Chief Oversight Counsel. Lawrence Neal will become Deputy Staff Dir. for Communications. Neal spent 20 years in the press office of former Sen. Phil Gramm (R-Tex.) and comes to the Committee from the Census Bureau. Andy Black will be the Deputy Staff Dir. for Policy. Black was on Barton’s Energy Subcommittee and also in the private sector for The Advocacy Group.