The Mich. PSC wrote Senate Communications Subcommittee Chmn. Burns (R-Mont.) to defend itself from what it called “mischaracterizations” presented by Robert Orent of Hiawatha Communications in Mich. at an April 2 hearing on the universal service fund (USF) (CD April 3 p1). The PSC said Orent, who represented rural ILECs, made “vague and unsubstantiated claims” on the role of the agency and other state PUCs in designating eligible telecom carrier (ETC) status for USF. Orent objected to the PSC’s granting ETC status to competitive carriers on the ground that that contravened Congress’s intent in the Telecom Act. “The statutory directives of the [Telecom Act] clearly include both promoting competition and preserving universal service,” the PSC said. “To the extent that competitive carriers help to drive down the costs of deploying telecommunications services that are eligible for support, the burden of the USF can be alleviated.” The agency defended itself for not establishing an intrastate USF, saying it significantly studied the issue and found, through public comment, that there was no need for a statewide USF. It also said Orent’s statement that state PUCs viewed USF as “free money” was “not supported by the facts.” The PSC said Mich. was a “net payer” into the USF, meaning Mich. ratepayers contributed more into USF than Mich. companies received from it. The letter, dated April 22, was signed by all 3 Mich. PSC comrs., including David Svanda, who also is pres. of NARUC, and Robert Nelson, NARUC Telecom Committee chmn.

AT&T Wireless and other mobile operators balked at an AT&T petition for reconsideration on part of a universal service fund order that covered what portion of a wireless bill was considered interstate to recover USF contributions from customers. AT&T said the FCC “blatantly discriminated” against wireline IXCs by allowing CMRS-based interstate long distance providers to charge averaged universal service recovery fees. The FCC decision raised to 28.5% from 15% the safe harbor for wireless carriers that chose not to break out the amount of interstate calling they carried. The FCC said carriers could rely on the 28.5% safe harbor or break out the percentage of revenue based on interstate calling. “In contrast, wireline providers must charge recovery fees based on a specific customer’s interstate usage,” AT&T argued. “It is time for the Commission to end this ’tangled web’ of special relief for CMRS interstate long distance providers.” It urged the FCC to create a methodology for wireless carriers to conduct and update traffic studies used to set a carrier-specific factor for allocating revenue to interstate traffic. AT&T Wireless last week asked the Commission to dismiss AT&T’s petition as untimely. Even on its merits, AT&T Wireless said, the FCC should reject the challenge because the agency’s decision doesn’t discriminate against interstate long distance carriers. Instead, it said, the order “simply takes into account that wireless carriers do not have the ability to determine the proportion of interstate traffic carried on their networks on a customer- specific basis, either for reporting or recovery purposes.” AT&T Wireless said AT&T never had challenged the earlier USF order that set the original 15% safe harbor for wireless carriers, so its attempt to challenge the idea of a safe harbor by seeking reconsideration of this order should be thrown out. Nextel also opposed AT&T’s challenge. Rather than unfairly favoring wireless providers, it said, the order clarifies that those that “have developed the capability of sampling traffic flows are permitted to estimate in good faith the breakdown of their interstate and international telecommunications traffic as a proxy for interstate revenue.” Nextel said carriers that had developed that capability shouldn’t be penalized by being forced to use the nearly doubled safe harbor percentage of 28.5% or investing in new billing and accounting systems to capture traffic and revenue information. CTIA also opposed the AT&T petition, saying: “In setting the revised safe harbor… the Commission was careful to balance the goal of encouraging reporting of actual interstate revenues with the realization that some wireless carriers are unable to report the exact jurisdictional breakdown of traffic.”

Citing a “critical” lack of federal, state and local funding, public broadcasters sought special relief from the FCC to help PTV stations comply with the digital conversion mandate. The Assn. of Public TV Stations (APTS) asked the Commission to modify its financial hardship standard for granting extensions to the construction deadline to “reflect the unique and diverse ways in which PTV stations are funded.” Saying 24% of PTV stations that had sought extension had cited funding difficulties, APTS said the federal govt. had appropriated only 13% of PTV’s total conversion costs of $1.8 billion. It said 40% of the federal funding was contained in the FY 2003 appropriations that wasn’t enacted until Feb., just 3 months before the May 1 deadline for PTV stations and “too late for disbursement in time to help stations meet that deadline.” Many stations also didn’t get the NTIA-administered Public Telecom Facilities (PTFP) grants for FY 2002 because of the high volume of applications and the policy that gives the highest priority in funding to stations that provide either a sole digital service to their market or a statewide digital service, APTS said. Because of the budget crises in many states, funding has been delayed or reduced for many stations, they said, and even after federal and state funds were released to stations, many state and university licensees had to go through a bidding process to award construction contracts, which in some cases took more than a year. “Unlike the technical obstacles to constructing digital facilities that face public and commercial stations alike, these funding issues are unique to public television stations,” APTS said. Therefore, it said, it would be “reasonable and appropriate” for the Commission to consider changing its financial hardship standards for extensions to take into account the funding issues of PTV. Besides reiterating the need for “reasonable and limited” interim cable carriage rules, APTS said the FCC also should ensure that the entire free broadcast signal of a station should be carried for a successful digital transition. Public broadcasters also sought rules to help the operation of digital translators and on-channel repeaters for the transition to be carried out in rural as well as urban areas. With the conversion of its full-power transmitters and more than 700 translators, PTV would be able to provide “powerful and cost-effective nearly universal” last-mile services to meet educational and public safety needs, APTS said. However, translators are threatened because they're considered a secondary service and because the Commission has yet to implement federal law that allows licensees to operate digital translators on their present analog channels, APTS said. Public broadcasters also urged the Commission to: (1) Delete the simulcast requirement on the ground that it didn’t serve its purpose. (2) Base the definition of market-by- market extensions on Nielsen Designated Market Areas (DMAs) while interpreting rules for the return of analog spectrum and extensions. All stations in a DMA must benefit from any extension, it said, and where a station’s signal reaches multiple DMAs, the return of analog spectrum should be only when the last DMA had reached the 85% threshold. (3) Count only those Multichannel Video Programming Distribution (MVPD) providers that carried all local must-carry eligible digital broadcast stations for the 15% MVPD digital subscription test.

The FCC adopted several additions to its e-rate rules Wed. to guard against improper use of funds as well as to clarify eligibility and simplify the application and billing process. The changes came as criticism of the e-rate program had increased because of charges of wasteful practices at the local level. However, the FCC emphasized that the new rule changes were first contemplated more than a year ago and weren’t directly attributable to recent problems. The e-rate program offers schools and libraries discounts on the cost of connecting their classrooms to the Internet.

Proposed changes in the universal service fund (USF) contribution process (CD April 22 p1) would “unfairly impact low-use, low income consumers,” the Telecom Research & Action Center (TRAC) told the FCC. It strongly criticized the proposed connection-based methodology, saying it was “just plain wrong, and the FCC should abandon any further consideration of this unfair methodology.” TRAC urged the Commission to “carefully measure the adverse impact” on residential consumers of the proposal to alter how it assessed contributions to the USF. TRAC said the proposed change to a connection-based methodology from the current revenue-based one would shift much of the responsibility for USF funding to residential users from business ones and would increase USF rates for many average-use and low-use residential customers. It said the connection-based methodology, which would shift the assessment from the carriers to end users, would violate the Telecom Act by excluding some parties from contributing to the USF. TRAC Pres. Samuel Simon said under the connection-based system, high-volume residential or volume consumers and low-volume residential consumers would be charged the same flat fee: “This is hardly equitable or nondiscriminatory, given that business consumers, who typically make many interstate calls, would be assessed the same as residential consumers.” TRAC said low-income and low-volume users of prepaid wireless services also would be disadvantaged by the connection-based methodology because they were ineligible to receive the FCC’s “Lifeline” exemption from USF contributions and would be charged a flat connection fee regardless of the number of calls they made. In a separate comment, the National Grange, a rural advocacy organization, said a modified revenue-based methodology was the “most reasonable alternative for funding the USF because it [would] result in the fewest disruptions in the longstanding relationships among various companies and their consumers.” The Grange agreed with TRAC that connection-based methodologies would negatively affect low- volume long distance callers, residential customers and customers on fixed incomes that were “disproportionately represented in rural communities.” It said since one of the major purposes of the USF was to provide or enhance telephone services in high-cost rural residential areas, there was no “logic in any methodology that would effectively increase USF contributions from consumers who already reside in high cost rural areas.”

NextWave lauded the FCC’s grant of its construction notification filings Tues. as complying with its PCS build- out rules. The FCC changed the status of NextWave’s licenses in its universal licensing system without fanfare Mon. The Commission approval removes a significant hurdle to NextWave moving ahead with plans for its PCS licenses, which many analysts expect to be sold in whole or in part, although the timing of such a deal remains unclear.

While telecom carriers continued their battle over the 3 alternative universal service contribution methodologies proposed by the FCC in Dec. (CD Dec 16 p1), consumer advocates said each of the proposed mechanisms would unreasonably burden residential and small business consumers. NASUCA urged the Commission to retain the current revenue- based mechanism, which it said an FCC Wireline Bureau study (CD Feb 28 p7) had shown to be “sustainable for at least the next 4 years.”

Broadcaster “mismanagement” is the main cause of the slow DTV transition, the Consumer Federation of America (CFA) said, and the “support and connivance” of the FCC helped “botch the transition to digital DTV.” Broadcasters and others were expected to file comments in the FCC rulemaking (9MB 03-15) at our deadline.

Broadcaster “mismanagement” has been main culprit for slow DTV transition, Consumer Federation of America (CFA) told FCC in comments filed in rulemaking (MB 03-15). Moreover, CFA said, broadcast industry has “botched” transition to DTV “with the support and connivance” of FCC. Broadcasters and others were expected to file comments at our deadline.

All 3 alternative universal service contribution systems proposed by the FCC in Dec. (CD Dec 16 p1) would disadvantage consumers, the Institute for Public Representation (IPR) said in comments. It said the Commission should retain the present revenue-based system, which the FCC Wireline Bureau’s study (CD Feb 28 p7) showed to be “sustainable for the foreseeable future.” IPR said the study underestimated the total costs of the proposals “by failing to consider their respective administrative costs.” It said low-volume consumers who were “least able” to afford increases in their phone rates would pay “substantially” more under all 3 proposals: “This result cannot be reconciled with the Commission’s statutory mandate to ensure that consumers receive ‘quality service… at just, reasonable and affordable rates.'” The IPR said concerns over bundling and IP telephony were “not significant enough” to justify replacing the current assessment system, “especially since these problems can be addressed by directly assessing IP telephony and modifying the bundling safe harbor.” It said when and if the present system no longer were sustainable, the Commission would have authority to implement an all- revenue assessment system that “would greatly expand the pool of carriers obligated to contribute to the USF [universal service fund], and would ensure that carrier and consumer USF obligations remained equitably based upon their actual usage of telecommunications services.” In a separate comment, Beacon Telecom Advisors urged the Commission to consider the current revenue-based approach as the “most viable alternative in maintaining and supporting the universal service support funding mechanism in the future.” It criticized a connection-based approach, saying that “while connections may not be relevant to certain interstate services, revenues are relevant to all interstate services and will” better meet the requirements of Sec. 254 that all providers of interstate telecom services contribute on a nondiscriminatory basis.