Reports of fraud in the E-rate program may be “just the tip of the iceberg,” said House Commerce Committee Chmn. Tauzin (R-La.), who’s pushing the panel’s investigation of the program. As part of the Universal Service Fund (USF), the E-Rate program funds telecom services to schools and public libraries. In letters to the FCC and the Universal Service Administrative Co. (USAC), which administers USF under the FCC’s direction, Tauzin cited the potential of more than $200 million in fraud and raised questions about the effectiveness of federal oversight of the program, which never has been fully audited. Oversight & Investigations Subcommittee Chmn. Greenwood (R-Pa.) also signed the letter.

NTCA CEO Michael Brunner wrote members of the House and Senate Agriculture committees asking them to commit to preserving the Universal Service Fund (USF). The letter, dated March 6, emphasized that the USF worked “in tandem” with the Rural Utilities Service telecom loan program, but said FCC action could harm USF. “Actions by the FCC are threatening the viability of the program by failing to recognize the impact that a reduction, or loss, of universal service support may have on rural carriers,” the letter said. “The impact of these actions could result in rising costs of service for rural carriers and higher rates for rural consumers.”

The FCC Wireline Bureau proposed a universal service contribution factor for the 2nd quarter that it expected to result in lower line charges on long distance customers’ bills, although wireless subscribers weren’t likely to see similar short-term relief. The 2nd-quarter contribution factor for the first time reflects a system based on providers’ projections of collected end-user revenue instead of on historical billing data. The proposed contribution factor would be 9.0044%, which an industry source said was the highest to date and resulted from a series of interim changes adopted by the FCC while it studied broader modifications.

The S.C. legislature proved to be unfazed by the FCC’s Triennial Review order as it passed a broadband deregulation bill for that state. But the FCC order led to withdrawal of a broadband deregulation bill in Conn. The S.C. bill (HB- 3344) sent to Gov. Mark Sanford (R) would prohibit the S.C. PSC from imposing any regulation on broadband services or providers. It would allow the PSC to continue oversight of mixed facilities that were used both for narrowband and broadband services and would require that revenue from broadband services continue to count when calculating a telecom provider’s universal service fund contributions. Supporters said the bill would give all broadband providers a level playing field and would encourage broadband service investment. The Conn. bill was withdrawn from the state Senate’s agenda at SBC’s request after the telco told its supporters that it wanted to wait and see what the full ramifications would be from the FCC’s Triennial Review order. The bill (SB-826) would have excluded broadband from the legal definition of telecom services subject to the jurisdiction of the Conn. Dept. of Public Utility Control (DPUC). The effect would have been to deny DPUC any power over broadband services of SBC/Southern New England Telephone (SNET). SBC said it needed to see exactly how FCC and state broadband policy would interact before proceeding with any Conn. legislation, but must wait for release of the full FCC order. Meanwhile, broadband deregulation opponents hailed the demise of the Conn. bill as a boon for consumers and competition.

Speaking at an OPASTCO conference in Washington Wed., FCC Comr. Adelstein cautioned state regulators to take “great care” in how they determined whether a competitor was eligible for universal service support. In fact, he said, PUCs ought to take “greater care than some have done in the recent past” because universal service funds were becoming scarce.

Verizon agreed to pay $5.7 million to U.S. Treasury to settle FCC investigation into violations of Telecom Act ban on Bell companies’ providing long distance service before receiving authority from FCC. Commission announced it had entered into consent decree with Verizon in which company admitted it had marketed long distance in its local service region on 5 occasions in Jan.-July 2002 through cable TV ads, bill inserts and direct mail solicitations. FCC Chmn. Powell said action demonstrated agency’s “commitment to deterring companies from entering the market prematurely.”

OPASTCO said Tues. it was upset with way many state PUCs were allowing competitive carriers to receive Universal Service Fund (USF). Group said it would start pushing message to Congress that states were straying from congressional intent of Telecom Act of 1996 and that FCC needed more oversight of PUCs. With OPASTCO members in Washington for annual legislative and regulatory conference, many were planning to meet with members of Congress this week in attempt to put more focus on USF issues, particularly designations of eligible telecom carrier (ETC) by state PUCs.

LOS ANGELES -- While there might not be universal agreement whether DTV is truly TV’s 2nd coming or simply more efficient delivery system, both passionate proponents and those less bullish about new technology seem to agree on one thing: Children shall lead.

There’s no reason FCC has to limit itself to same universal service contribution system for all types of telecom carriers, American Assn. of Paging Carriers (AAPC) told Commission in comments Fri. AAPC told agency that all 3 proposals to change contribution methodology to one based on connections would hurt paging companies and suggested agency use different systems for different carriers

Three new alternative universal service contribution systems proposed by FCC in Dec. (CD Dec 16 p1) would benefit long distance carriers significantly while increasing or leaving same rates for LECs and mobile carriers, according to new study released by FCC’s Wireline Bureau. No new parties would be added to contribution system under any of proposed plans. Commission expressed concerns on current revenue- based contribution system, saying it was increasingly difficult for contributors to identify interstate telecom revenue because of bundling and migration.