The FCC’s Wireline Bureau told the Commission at its agenda meeting Wed. that broadband subscribership was growing in rural as well as urban areas, but Comrs. Copps and Adelstein questioned the timing of the report and the quality of the data. The bureau submitted a report showing the percent of occupied housing units with high-speed lines in service grew nationwide to 16% in Dec. 2002, from 2% in Dec. 1999. On a state-by-state basis, rural areas also were gaining more broadband subscribers, for example growing in S.D. to 6% of housing units in Dec. 2002 from less than 0.5% in Dec. 1999, in Ark. to 9% from 1%. Among more urban states, the N.Y. percent of high speed lines increased to 25% from 2% and Mass. to 24% from 4%. The bureau said the percentages were estimates. Other data it reported: (1) The number of high-speed lines connecting homes and businesses to the Internet at the end of 2002 was nearly 20 million, vs. 2.8 million at the end of 1999. (2) In Dec. 1999, 60% of the nation’s zip codes had at least one service provider with at least one subscriber to its high-speed service, 10% had at least 4 providers and only 1% had 7 providers. By the end of 2002, the comparable figures were 88%, 39% and 17%. The report defined high-speed lines as those that provided services at speeds exceeding 200 kbps in at least one direction. Copps said the report “seems like good news” because progress was being made in the number of people with high-speed access. However, he questioned the survey’s methodology in 2 areas: (1) The use of “skeletal zip code data” to measure use of high-speed services because “finding one high-speed subscriber in a zip code and counting it as service available throughout is not a credible way to proceed.” (2) “Basing our measurements and our objectives on a broadband revolution at 200 kilobits may be just a little passe.” He said it might be time to use “a more rigorous bandwidth standard.” Copps said the Commission wasn’t conducting the congressionally mandated Sec. 706 broadband surveys frequently enough: “When the Commission undertook its first Sec. 706 inquiry, it stated that the agency would inquire annually into the deployment of broadband. Yet it has been a full 2 years since the Commission released its last notice of inquiry.” Adelstein said the report was “a good effort but we must do more.” It has been 2 years since the Commission began its last inquiry and 19 months since it issued its last report, he said. A bureau spokesman said the Commission planned to release a notice of inquiry this fall. -- EH
The Maine PUC approved rate increases for 2 small incumbent telcos as part of its continuing implementation of state law requirements that intrastate switched access charges shouldn’t exceed interstate rates. The PUC approved rate increases for Mid-Maine Telecom and Unitel that will being their retail rates up to about Verizon’s level while reducing their access charges. Depending on exchange and calling plan, Mid-Maine customers will see rate increases of $2-$5 monthly and Unitel customers $2-$7 monthly. Coincident with the new rates, the telcos also must redraw their local calling areas to reduce differences in calling area size. If the rate increases aren’t enough to compensate for the loss of access revenue, the telcos will be allowed to make up the difference from the state universal service fund.
The FCC shouldn’t act on pending petitions for eligible telecom carrier (ETC) status until it addresses the growth in ETC petitions and the resulting threat to the CALLS plan in nonrural areas, Verizon recommended last week. In an Aug. 1 ex parte presentation to members of the Federal-State Joint Board on Universal Service, Verizon said the growth in ETC petitions in nonrural areas “threatens to unravel the CALLS plan and thus increase charges for all wireline customers.” To prevent that, the Joint Board should recommend “that high- cost support be made ‘portable’ only if the competitive ETC wins the ILEC’s customer… rather than just some of the customer’s lines,” Verizon said: “Although the threat to CALLS-related support is unique, there is one change in the portability rules that can both help preserve CALLS support and control growth of the high-cost fund. This can be done through amending the portability rules so that a customer is not receiving high-cost-supported services from more than one carrier… The Joint Board should recommend that the Commission clarify that competitive ETCs will receive high- cost support, including CALLS-related support, only for customers that are new or have been captured from the ILEC.” The CALLS order reformed the access charge system in nonrural areas. Because CALLS support is capped, “allowing new ETC designations and portability rules to dilute CALLS-based interstate access support provided to ILECs will make this support insufficient to compensate interstate loop costs,” the filing said: “Until a solution to these problems is reached, the Joint Board should recommend the Commission refrain from acting on pending petitions for ETC status.”
The Ark. PSC agreed to allow incumbent telcos to amend an optional rural calling plan they were required to offer their rural customers as part of the state’s universal service program. SBC and more than a dozen other incumbents had asked that the Rural Saver Optional Calling Plan’s block of time toll allotment be doubled to 2 hours from 1 for the same price, that eligibility be expanded by offering it in larger rural exchanges of up to 3,000 lines, and that the reporting requirements for the program be expanded to include data on take rates and usage by participants. The telcos said the plan suffered from low take rates that thwarted the PSC’s purpose in requiring the program. The PSC also agreed to allow the telcos to recover their costs of implementing the revisions from the special state fund that supports the program.
AT&T told the FCC that BellSouth’s proposals to exempt ILECs’ broadband service from cost allocation rules and mandatory universal fund (USF) contributions were “frivolous” and should be “summarily rejected.” In a July 31 ex parte letter, AT&T told the Commission that cost allocation rules were “vital accounting safeguards and eliminating them or creating an arbitrary exemption for broadband services would only enhance the Bells’ already significant opportunities to harm consumers and competition through discrimination and cross-subsidization.” AT&T also argued that BellSouth basically was seeking deregulated status for broadband service except for cost allocation rules where it “paradoxically claims that such services should, for those purposes only, still be considered ‘regulated.'” AT&T said it didn’t support the idea of deregulating broadband services, but “if broadband services are to be deregulated, then the only nonarbitrary conclusion would be that broadband services must also be deemed ‘nonregulated’ under the Commission’s cost allocation rules.” AT&T said that under FCC rules, classifying a service as nonregulated triggered the cost allocation rules, which require ILECs to separate the costs of nonregulated services from regulated services. “Making this distinction between regulated and nonregulated services is the critical first step in the Commission’s accounting safeguards,” AT&T said. It also disagreed with BellSouth’s proposal to remove wireline DSL revenues from the USF contribution base to gain parity with cable broadband providers, which don’t contribute. Said AT&T: “BellSouth is simply mistaken in contending that it cannot be required to contribute to universal service based upon the interstate revenues from its wholesale transport offerings unless cable broadband providers also contribute to universal service.”
The Senate Commerce Committee approved a permanent Internet tax moratorium Thurs., although a few senators expressed concern that the definition of Internet access needed to be more precise. The Committee passed on voice vote a substitute bill (S-150) that was supported by Sens. Allen (R-Va.), Wyden (D-Ore.), Stevens (R-Alaska), Sununu (R- N.H.), Brownback (R-Kan.) and Dorgan (D-N.D.). But Dorgan also emphasized that language in the bill needed to be tweaked so it couldn’t be interpreted to apply to telecom services as well as Internet access. And the bill included provisions supported by rural telecoms that would protect the universal service fund (USF.)
DENVER -- Rural telcos couldn’t provide high-quality service to all customers without universal service subsidies, Gene Johnson, speaking for OPASTCO’s constituency of small rural incumbents, said Thurs. at a special en banc hearing here of the Federal-State Joint Board on Universal Service. He said large carriers subsidized their rural service from their urban revenue streams, but small carriers couldn’t do that.
“Regulators must resist the urge to regulate [voice- over-Internet-protocol -- VoIP] unless and until there are compelling reasons to do so,” Richard Whitt, WorldCom dir.- federal law & public policy, said at an FCBA lunch Wed. in Washington. He said telecom service regulatory policies, in particular the current intercarrier compensation regime, were “bloated, untenable and inequitable and harm the public interest in numerous ways… The worst thing to do is to extend this bloated mess to nascent, innovative IP-based technologies such as VoIP.”
DENVER -- FCC Comr. Martin told state regulators here that the underlying premise of the soon-to-be-released Triennial UNE Review order would be that competition came first, then deregulation. Speaking at the NARUC summer meeting, he didn’t provide any details of the order but said it would try to strike a balance between encouraging investment and promoting local competition. He acknowledged the order had taken longer than expected to produce, but said the Commission was working diligently to ensure it had specific guidance and criteria for the states. He said the federal-state partnership on the Triennial Review would be critical to its success.
Several telecom companies and associations wrote to House and Senate Commerce Committee members urging a comprehensive approach to universal service fund (USF) reform. The letter specifically targeted USF legislation that would alter distribution of a narrow slice of USF distributions. The letter said the bills (HR-1582 by Rep. Terry (R-Neb.) and S-1380 by Sen. Smith (R-Ore.)) were “too divisive and narrow in their scope.” The legislation would change the distribution equation for a $234 million fund that goes to RBOCs and midsized carriers that serve rural and poor areas. Under the current distribution, Miss. gets more than half of the funds and only 7 other states receive any. The bill is supported by Qwest, which would receive increased funding under the proposed distribution method, and opposed by BellSouth, which probably would lose funding. The letter was signed by USTA, BellSouth and several smaller telecom firms.