Minn. Dept. of Commerce plans statewide consumer education campaign this spring to inform low-income residents of Lifeline subsidies for monthly bills and Link Up subsidies for service connection costs. Funding for $450,000 program will come from $900,000 fine Qwest paid to state last year in settlement of service quality complaints from 1998 and 1999. Commerce Dept. estimated fewer than 20% of eligible low- income households were enrolled in universal service programs. Outreach program will use print and broadcast ads to reach estimated 100,000 eligible but unenrolled Minn. households to make them aware subsidies are available. Subsidies are funded by federal and state universal service surcharges on phone bills, but don’t cover large-scale outreach efforts such as one Minn. Commerce Dept. is beginning.

State regulators and FCC are too quick to give wireless competitors right to obtain universal service funding, OPASTCO said in White Paper released at its annual convention in Maui. “High-cost universal service support is not a subsidy program” and regulators shouldn’t designate competitors as eligible telecom carriers (ETCs) without being sure it’s in public interest, paper said. Otherwise, universal service fund will be jeopardized because there won’t be enough money to support it, OPASTCO said. High-cost universal service support going to wireless ETCs has grown to projected $100 million in 2003 from less than $500,000 in 1999, paper said: “It is estimated that if all wireless providers nationwide were granted ETC status that the annual funding level of the USF would grow by approximately $2 billion. Clearly, an increase of this magnitude would not be sustainable… Rural ILECs are the only providers of ubiquitous, high-quality, facilities-based service throughout their respective service areas. Thus, if rural ILECs lose the ability or incentive to continue investing in their networks -- or worse yet, if their existence is placed at risk -- then some rural areas may be deprived of basic universal service.” Paper said regulators had been placing competition above public service and “competition is not always in the public interest.” First priority should be to deliver service to high-cost areas, paper said -- www.opastco.org.

MIAMI BEACH -- Don’t expect regional Bells to roll out broadband service any faster or innovate any quicker even if they gain their expected regulatory relief from FCC or Congress this year, one top Washington policy analyst warned this week. Despite persistent lobbying claims of Bells, Legg Mason analyst Blair Levin predicted phone companies would keep lagging behind their cable rivals in wiring U.S. because Bells’ broadband pipes still would cost far too much to lay down.

Senate Communications Subcommittee Chmn. Burns (R-Mont.) unveiled ambitious telecom technology agenda Wed. that included spectrum reform and E-911 as its “centerpiece.” Legislation to control spam would be first priority, but agenda also included several telecom-related measures: (1) Tax incentives for broadband build-out. (2) Wireless privacy. (3) Universal service reform. (4) Development of U.S.-Asia free trade network. “We can pass some of this agenda,” said Burns, who acknowledged passage of all items on the agenda would be difficult: “If we don’t offer something, we'll get none of it through.”

Six communications bills were introduced in House Tues., first day of 108th Congress, with topics ranging from allocation of telephone numbers to use of unexpended universal service funds. Bills included: (1) HR-68, sponsored by Rep. Frelinghuysen (R-N.J.), would ensure “efficient allocation of telephone numbers.” (2) HR-71, also by Frelinghuysen, would require customer consent before provision of wireless call location information. (3) HR-94, by Rep. Green (D-Tex.), would allow use of unexpended universal service funds in low-income schools “and for other purposes.” (4) HR-122 by Rep. Holt (D-N.J.) would amend Sec. 227 of Communications Act to prohibit transmission of unsolicited commercial messages over “text, graphic or image messaging systems of wireless telephone systems.” (5) HR-138 by Rep. McHugh (R-N.Y.) would aim to bridge digital divide in rural areas. It was referred to House Commerce Committee, with secondary referral to House Ways & Means, suggesting tax credits as mechanism. (6) HR-175 by Rep. Royce (R-Cal.) would abolish Advanced Technology Program.

Financial disclosure statement filed by FCC Comr. Adelstein with federal govt. before his joining Commission outlined stock holdings that included AT&T, BellSouth, Verizon. He was sworn in as commissioner in early Dec. but said he was temporarily recused from votes on certain issues, including proposal to change way carriers made contributions to Universal Service Fund. He said at Dec. 11 FCC meeting that he expected recusal issues would be cleared up by end of that week. While Adelstein didn’t vote on Sec. 271 long distance bids of BellSouth, Qwest and SBC last month, he cast first major vote in late Dec., dissenting on order that allowed sunsetting of Sec. 272 separate long distance affiliate requirements of Verizon in N.Y. (CD Dec 26 p5). He said last month that FCC Office of Gen. Counsel had advised him he should be recused from universal service issue because of “family financial situation,” which he said involved his wife’s family holdings. Financial disclosure report, filed by Adelstein in March with Office of Govt. Ethics (OGE), is required of certain senior officers and Executive Branch staff, typically those requiring Senate confirmation. Form lists assets such as real estate, stocks, bonds and securities of employees, their spouses and children. On Dec. 9, OGE issued certificate of divestiture that listed divestiture of 18% investment held by Adelstein’s wife, Karen Brenner Adelstein, in Brenner Investment L.P. as “reasonably necessary” to comply with federal conflict of interest requirements. Such certificates are issued under Sec. 1043 of Internal Revenue Code, which allows for deferral of capital gains taxes on assets that must be sold to comply with ethics program requirements. Assets listed under Brenner Investment partnership, valued at $500,001 to $1 million on disclosure form, included shares of Motorola and Riverstone Networks, several money market accounts and govt. bonds. Of other assets reported for Adelstein or his family, stock in AT&T, BellSouth, Verizon and Motorola were each listed in range of $1,001 to $15,000. Nontelecom assets he listed included investment in privately held Northwestern Engineering Co. (NWE), which owns residential and commercial real estate and vacant land in S.D., Wyo. and Cal., according to disclosure form. NWE common stock reported by Adelstein on OGE form was valued at $1 million-$5 million. White House had announced in Feb. it intended to nominate Adelstein to vacant Democratic slot on FCC and he was confirmed by Senate in mid-Nov. His office couldn’t be reached for immediate comment.

FCC Wireless Bureau approved National Exchange Carrier Assn. (NECA) plan to increase amount of universal service funding given to rural, high-cost telephone companies to cover their local switching costs. NECA’s plan is expected to increase local switching support 9.7% to $76.4 million annually. However, bureau denied another NECA request to give supplemental payments to telcos that otherwise would receive less high-cost support on monthly basis than they received in Dec. 2001, last month before bureau adopted different formula for determining such support. Bureau said that because it had concluded that current formula produced appropriate support for those small “average schedule carriers” it didn’t see need for supplemental payments. Its order questioned whether supplemental payment plan stemmed from NECA’s preference for different formula for determining high-cost universal service support: “NECA apparently believes that any reduction in support resulting from the adoption of NECA’s preferred EAPL [Expense Adjustment Per Loop] formula is warranted, while any reduction resulting from the CPL [Cost Per Loop] formula is not.” FCC favors CPL formula.

While economic improvement will be major theme pushed by most ILEC and Bell company lobbyists on Capitol Hill in new session beginning in Jan., ILECs also plan to address other issues, from tax reform to content management. Bell and ILEC lobbyists have said regulatory change that could help spur investment is primary goal, but many are vague on specifics and cite pending FCC action as precursor to Hill lobbying strategy.

N.M. Public Regulation Commission (PRC) may not pay any subsidies from state universal service fund for high-cost rural exchanges in 2003, saying it appeared no incumbent telco serving rural areas satisfied requirements for continued state support. PRC ruled Qwest didn’t qualify because it didn’t fulfill requirement to develop plan for reducing implicit subsidies. Qwest advised PRC that it didn’t intend to file subsidy reduction plan because potential $4 million in state high-cost subsidies were outweighed by “controversy, divisiveness and protracted proceedings such a plan would engender.” PRC said state’s 2nd largest telco, Valor Telecom, and small rural incumbent telcos also failed to qualify for payments because they either didn’t demonstrate that they wouldn’t receive double recovery of same costs from state and federal programs or failed to show how they would use their state support for reduction of implicit subsidies. In light of unusual situation, PRC adopted proposal by Valor Telecom for workshop to develop state universal service fund reforms to present to 2003 state legislature. PRC said that when qualification rules for state fund were made, it appeared FCC was going to disallow embedded costs and thereby reduce or eliminate federal high-cost support to many incumbents serving rural areas, but that scenario never came to pass.

Telecom markets in European Union (EU) candidate countries (CC) differ significantly from one other and from those in EU member states, European Commission (EC) said in report. Report, 2nd of 4 semiannual documents, is under project funded by EC Directorate Gen. Information Society to help monitor progress of each CC toward compliance with EU standards for telecom services.