The Federal-State Joint Board on Universal Service appears to be “very much divided” in its effort to seek improvements in the Universal Service Fund (USF)and, as a result, probably will present the FCC with some “conflicting views,” Western Wireless CEO John Stanton said Tues. in an interview with Communications Daily. Even in areas where there’s a majority view in the Joint Board’s recommendations, there probably will be an “active minority” view, perhaps leading to divisions at the FCC as well, Stanton predicted.

Congress isn’t expected to pass comprehensive legislation on communications issues this session, many sources said, but that doesn’t mean lawmakers won’t be busy in the communications realm. Most sources provided a laundry list of issues that would get at least some attention from lawmakers who return today (Tues.) for the 2nd session of the 108th Congress. While no large-scale bills are expected, Congress could pass legislation this year to restrict broadcast ownership, fund enhanced 911 (E911) and spectrum relocation, and renew the Satellite Home Viewer Improvement Act (SHVIA). But there’s likely to be a lot of talk on the Hill about communications issues, as VoIP, universal service fund (USF), broadcast decency and cable rates.

The FCC’s order on remand and rulemaking determining what federal universal service support can go to nonrural carriers such as the Bells generated heated comments this week. The FCC released the order last fall (CD Oct 17 p8) in response to a decision of the 10th U.S. Appeals Court, Denver, and the recommendations of the Federal-State Joint Board on Universal Service. The order modified the federal high-cost universal service support mechanism for nonrural carriers and adopted measures to induce states to ensure reasonable comparability of rural and urban rates in areas served by nonrural carriers.

The House Commerce Committee wants to know why the Chicago Public School (CPS) system has warehoused $5 million of computer and telecom equipment bought with E-rate funds. In a Jan. 15 letter to CPS, the House Commerce Oversight Subcommittee asked for documents on THE use of E-rate funds and details on why the CPS bought and stockpiled the gear. It said SBC had bought the equipment for CPS with E-rate money. Subcommittee investigators recently traveled to Chicago and discovered the unused equipment. “It’s troublesome to us that $5 million worth of equipment is sitting unused in a warehouse gathering dust,” House Commerce Committee spokesman Ken Johnson said. “I'm sure the ratepayers would like to have that money back. The goal of our investigation is to determine if incidents like this are isolated or if there are others.” The Committee has been investigating E-rate for several months and has asked the General Accounting Office to gather E-rate data. SBC said it bought the equipment for a CPS local area network (LAN), but wasn’t able to install it by the end of the year in which it was purchased, a violation of e-rate rules. SBC said it was in discussions with the Universal Service Administrative Company (USAC) to determine how to refund the money.

Using a speech at the National Press Club as his latest platform to warn against too much regulation of IP telephony, FCC Chmn. Powell Wed. challenged proregulation forces to prove such action was needed. “The burden should be on the government to show if regulation is needed, not the other way around,” he told journalists and communications industry officials. While the speech didn’t break new ground, it led one audience member to note privately that Powell had repeated this message in several speeches recently, possibly indicating the need to convince industry officials and other regulators, including other members of the Commission, of the wisdom of light-touch regulation.

Neb. no longer may be shut out of the Universal Service Fund’s nonrural support fund, but Rep. Terry (R-Neb.) said he would continue to push for legislation that would change the FCC’s formula for distributing USF money to large ILECs delivering service to rural areas. Late last month, the FCC made slight changes in the distribution formula that resulted in more states’ getting funding (CD Dec 30 p6). The nonrural fund, which distributes $235 million to ILECs serving rural customers, has been criticized on Capitol Hill because only 8 states had been getting funding under the FCC’s statewide formula. The recent changes will increase that number to 10, as Neb. and S.D. will get money. Several of the 8 states get more funding under the new system, with Miss. adding $11 million to total $131.2 million and Ky. rising more than $3 million to $23.9 million. W.Va. lost $6 million and Me. lost $3.5 million under the new formula. Neb. will get about $8 million. “I'm encouraged that the FCC found a way to help Nebraska,” Terry said, but “the system is still horribly broken. This will not deter me from moving forward with my legislation to fix the USF system for other rural states. We've still got a long way to go to fix this problem.” Terry said the system was “ridiculous, arbitrary.” He has introduced a bill (HR-1582) that would change the FCC’s system to one that evaluated costs based on wire centers rather than statewide averages, which Terry said would distribute the funds more evenly. The bill is stalled as House Commerce Committee Chmn. Tauzin (R-La.) has said he prefers a comprehensive solution to fixing USF instead of a piecemeal approach. The bill has 71 co-sponsors. Sen. Smith (R-Ore.) also has introduced a similar bill (S-1380), which has 25 co-sponsors, including Senate Commerce Committee Chmn. McCain (R-Ariz.)

Western Wireless and NTCA officials, on opposite sides of many issues on the Universal Service Fund’s future, said Fri. they shared opposition to recommendation of a primary line restriction by the Federal-State Joint Board on Universal Service. Of the issues before the Joint Board, “the specter of primary line restriction is probably most troubling,” Mark Rubin, Western Wireless dir.-federal govt. affairs, told an FCBA lunch.

Mont. Independent Telecom Systems (MITS), which represents small phone companies in Mont. and some parts of N.D., Nev. and Wyo., said the FCC should develop public interest criteria to be applied to competitive carriers seeking eligible telecom carrier (ETC) designation. ETC status is needed before a carrier can receive universal service funding. In a Jan. 2 ex parte filing with the FCC, MITS said the Telecom Act required state commissions to weigh the public interest before designating an additional ETC in an area served by a rural telephone company, but it didn’t define how the term applies to ETC designation. The group said the Federal-State Joint Board on Universal Service should recommend that the FCC establish minimum guidelines that states could use to weigh ETC applications. In addition, “states should be free to establish public interest criteria beyond the threshold established by the FCC in order to address unique circumstances on a state-by-state basis,” the filing said. There should be 6 basic criteria, MITS said: (1) The economic benefit should “exceed the economic cost.” (2) The entire service area for which designation is sought should be served no later than 2 years after the date of the ETC designation. (3) The carrier should be able to provide service without blocked or dropped calls caused by network congestion. (4) The designation would be subject to withdrawal if the carrier couldn’t meet the network congestion requirement within a year. (5) Competitive carriers should file annual universal service cost reports, modeled after one required of members of the National Exchange Carriers Assn. (6) Competitive carriers should meet service quality standards that states already required of incumbent LECs. “MITS and its member companies are greatly concerned that the wholesale designation of additional ETCs in rural areas may not always be in the public interest,” the organization said.

Rural telecom companies are uniquely positioned to provide wireless services in the vast majority of rural areas, parties said in comments filed with the FCC. They urged the Commission to adopt rules and policies that would provide opportunities for rural telephone companies and eliminate outmoded barriers to deployment of wireless broadband service. The comments came in response to a rulemaking the Commission began in Sept. (CD Sept 11 p6) asking how to promote spectrum-based services in rural areas.

A sampling of prefiled and draft telecom bills for the 2004 state legislatures shows that deregulation, online porn, consumer protection, telemarketing, 911 and universal service issues will face lawmakers when they return to their capitols next month.