If there’s to be a universal service fund (USF) summit, then industry groups should be included, several rural telephone associations said in a letter to Senate Communications Subcommittee Chmn. Burns (R-Mont.) In an April 2 hearing on USF, Burns suggested a summit involving the FCC, Congress and the Federal-State Joint Board on Universal Service (CD April 3 p1). In the letter, dated April 15, the groups said industry also should be part of any meeting. The letter was signed by the Independent Telephone & Telecom Alliance, National Rural Telecom Assn., NTCA, OPASTCO and Western Alliance. “We believe it would be important to have industry representation at such a summit, which would speed the effort of identifying the best possible solution for ensuring the future of the program,” the letter said. In the hearing, Burns had expressed concerns about the length of time needed for the FCC to review USF. He suggested a summit as a method in which vested parties could discuss the issue and determine where potential legislation might be needed.

Comments to the FCC on the “definition” of universal service, one of the several universal service proceedings now under way, turned into a debate on whether wireless rural competitors should be required to offer equal access in order to get universal service support. “The debate is not really about equal access,” Western Wireless said in its comments: “The real debate here is about whether universal service support can coexist with intermodal competition.” Equal access was a 1980s requirement that local telephone companies had to provide connections to any long distance companies -- in other words, giving customers the ability to preselect long distance companies to handle their calls automatically.

USTA made another plea at the FCC for “nondominant” regulatory treatment of wireline-based Internet access services, arguing in an April 10 ex parte letter that there were plenty of competing broadband service platforms, and cable companies were the dominant providers. The association also urged the FCC to require all providers of broadband services to contribute to the universal service fund. USTA said ILECs needed flexibility to structure their offerings to the needs of their customers: “ILECs wishing to offer broadband transport via private carriage or as a telecommunications component of a single integrated Internet access service should be permitted to do so.” At the same time, ILECs should have the option of continuing to provide DSL as common carriage, the letter said. If that option is denied, “the levels of broadband deployment in rural America will recede” because rural ILECs won’t have “the flexibility to select the regulatory framework” that best suits them, USTA said. USTA also urged the Commission to “reaffirm” its jurisdiction over DSL service used for Internet access: “It is imperative that there be one national broadband policy and not multiple, and possibly inconsistent, state broadband policies.”

State legislatures this year have taken up many bills that will affect state commission operations, administration and jurisdiction, ranging from agency restructuring and public campaign financing to universal service and consumer advocacy, including proposals to turn the Cal. PUC and Utah PSC from appointed to elected bodies, restructure the Ark. PSC and reform the commissioner selection process in S.C.

The European Commission (EC) said France Telecom (FT) would have to return 11-50 million euros to competitors to reimburse the excess amount they had paid for public service. The Commission said FT must fully comply with a 2001 judgment by the Court of Justice of the European Communities on France’s financing of universal service in telecom. “The way costs were counted wasn’t in compliance” with the court’s decision, an EC spokesman said: “France overestimated the public service burden and overcharged the competitors.” FT didn’t return a call for comment. In Dec. 2001, the court said the lack of transparency in certain aspects of the French arrangements and the methods used to calculate some cost components of universal service were incompatible with the directive on full competition in telecom markets and the directive on interconnection. The EC spokesman said that following the court’s decision, the French govt. had recalculated the net cost of universal service in 1997-2000 that led to a significant reduction in the financial cost of universal service, which was reduced by 4 over that period. However, he said “the recalculation isn’t complete.” The EC said the French authorities had failed to comply with the court’s judgment: (1) France hadn’t published the total respective contributions by the different service providers to financing universal service in 1997-2001. (2) The method used to calculate some net cost components of universal service in 1998-1999 still wasn’t transparent. (3) The arrangements for settlement of overpayments by alternative service providers to FT or to the universal service fund weren’t appropriate. The Commission said the govt. had failed to address “one of the main objectives of the procedure” -- to ensure that service providers that had contributed to the universal service fund could in practice rapidly recover the overpayments. The EC gave France one month to reply to the enforcement proceeding. The spokesman said the Commission would send French authorities a reasoned opinion and, if appropriate, ask the court to impose a fine should France fail to comply with the Court of Justice decision. George Metaxas-Maranghidis, an attorney with Weil, Gotshal & Manges in Brussels, said the reimbursement order wasn’t likely to hurt the company financially: “It’s not a huge deal for them… It depends on how [the EC] is going to structure their payments.” He said financing of the universal fund had “always been complicated. Some [European] countries simply gave up. They have laws, but they don’t implement them. In many cases, the financing doesn’t seem to be operational, except for some countries.” He said universal service financing issue was “a much bigger issue in Eastern Europe because the level of fixed-line penetration and quality of service there isn’t as advanced as in Western Europe.” The EC said France and Italy were the only member states in which responsibility for providing universal service effectively resulted in compensation being paid to the former telecom incumbent. Metaxas-Maranghidis said the reimbursement was “a positive contribution to rivals,” but wouldn’t affect them significantly either.

Nextel Partners petitioned the FCC for status as an eligible telecom carrier (ETC) in N.Y., contending it provided wireless service throughout certain designated areas, each of which was served by a rural telco. ETC status qualifies a carrier to gain universal service funding in high-cost areas. Arguing that it met all the requirements for ETC designation for parts of the state, Nextel Partners told the FCC it had “sufficient wireless network infrastructure facilities and capacity to provide support services” throughout the designated areas at issue. It also said it was offering, or would offer, all services required of ETC status, including voice grade access to the public switched telephone network, local usage, dual tone multifrequency signaling, single party access and E911 or 911 access. Nextel Partners said as of Feb. 1, it had launched Phase 1 of E911 in 4 N.Y. counties and Phase 2 in 2. Although a carrier seeking ETC designation typically must seek approval from a state PUC, Nextel Partners said the N.Y. Dept. of Public Service didn’t regulate commercial mobile radio service carriers for the purpose of making such status determinations. The company said its designation as an ETC in rural, and in some cases remote, parts of N.Y. that largely weren’t served by competitive wireline carriers “could provide an alternative to the incumbent LEC.” The April 3 filing said: “Designation of Nextel Partners as an ETC will provide a valuable alternative to the existing telecommunications regime in these areas, including a larger local calling area, the benefits of mobile telephony service and, where requested by the PSAP [public service answering points] GPS location assistance for customers calling 911.” Nextel Partners said a favorable ETC decision also would give ILECs in the designated areas incentive to upgrade their networks to remain competitive. The carrier said it would provide all the supported services required by the FCC, participate in the LifeLine and Link-Up programs and “otherwise comply with all FCC rules governing universal service.” It said that allowing it access to universal service subsidies would “allow Nextel Partners to continue to enhance and expand its network infrastructure to better serve consumers in underserved, high-cost areas of the state of New York and to compete with other carriers on a level regulatory playing field.”

Correction: It was Robert Orent, pres. of Hiawatha Communications in Mich., who told a Senate universal service fund hearing that state PUCs were viewing eligible telecom carrier (ETC) status as welfare, weren’t taking into account the public needs of USF and didn’t fully understand the USF system (CD April 2 p1).

Legislation introduced Thurs. by Rep. Terry (R-Neb.) would distribute more universal service support to states west of the Mississippi River by changing the distribution formula for a portion of the universal service fund (USF). The bill, which is co-sponsored by Rep. Stupak (D-Mich.), would change the distribution formula for the so-called “nonrural” USF so that more states would get funding from it.

SAN JOSE -- It will be harder to let voice-over-Internet protocol (VOIP) companies off the regulatory hook on social policy obligations than conventional rate and service issues, Robert Pepper, the FCC’s chief of policy development, told a VON [voice on the net] conference here late Tues. The tougher issues “don’t go to monopoly power questions,” he said: “They don’t go to traditional regulatory issues. They go to things we as a society think are important.” He listed Universal Service Fund contributions, 911, the Communications Assistance to Law Enforcement Act (CALEA) and disabled access.

The American Assn. of Paging Carriers (AAPC) said the FCC shouldn’t adopt proposals on alternative universal service contribution methodologies (CD Feb 28 p7). It said neither of the proposals had been “shown to be an improvement over the existing system for the paging industry.” AAPC said an FCC study, which attempted to project the financial impact of the 3 contribution methodologies over the next several years, demonstrated “the hazards involved in changing the current system in the absence of a clear understanding of what the impact will be on different industry segments.” For example, AAPC said, the paging contribution under the first connection-based and 3rd number-based proposals was projected to decline compared with the current system. However, it said, “it is not possible to determine whether the projections represent real declines in the contribution levels, or whether they are artificial ones that are the product of flawed assumptions underlying the projections of current levels.” In a separate comment, the Mo. PSC suggested the FCC revise its current philosophy “to mandate that all contributors treat the recovery of the USF [universal service fund] assessment in a consistent manner, whether it is through implicit innovative pricing options or through an explicit surcharge on end-users.” The PSC expressed concern that the current mechanism was confusing for consumers. Since contributors are allowed to choose whether to recover the assessment through a line-item assessment, include the recovery in rates and bundles or use a blended recovery approach, “it becomes difficult for the consumer to effectively compare pricing among competitors,” it said.