High-tech industry was active on 8th floor of FCC last week, with 2 high-level ex parte meetings with commissioners and numerous filings, all on broadband deployment. Commission is seeing schism in high-tech, however, with one group pushing for Bells to be free of unbundling obligations on new fiber deployments while faulting cable modem providers, and others warning that ISPs could be put out of business by FCC actions sought by Bells. “You can imagine the complexity that the commissioners have to deal with,” said TIA Vp-Govt. Relations Grant Seiffert, who participated in meeting Wed. with FCC Chmn. Powell and is seeking to have new Bell build-outs be exempt from unbundling. But for ISPs and groups representing them, issue isn’t complex. ISPs, with their quality of service and focus on local customers, “drove the dial-up market,” said Information Technology Assn. of America (ITAA) Counsel-Internet Div. Mark Uncapher, but FCC now is threatening to make that sector extinct.

As Washington awoke Wed. to realization that major long distance provider, Internet backbone operator, Web hoster and wireless operator faced possibility of bankruptcy for questionable accounting practices (see separate story, this issue), it also was not lost on many that WorldCom was active player in Washington lobbying scene. WorldCom spent just under $4 million in lobbying alone in 2001, and was 5th- largest campaign donator of all telecom companies. Its political action committee as of May 31 had nearly $2 million on hand for more donations. But on smaller scale, WorldCom also is major backer of various grass-roots lobbying efforts fighting for competitive local exchange carriers (CLECs) and ISPs on Capitol Hill and at FCC, including Voices for Choices, U.S. ISP Assn. and group born only last week, BroadNet. Executives of all 3 of those groups expressed confidence they would be able to continue if WorldCom funding were to dry up.

Breaux-Nickles broadband bill would be good for broadband equipment providers and related industries, Sen. Breaux (D-La.) told CCIA of his legislation co-sponsored with Senate Minority Whip Nickles (R-Okla.). Breaux reiterated his argument that his bill -- that would require FCC to create “level playing field” of regulation for broadband providers without mandating any new regulations on any industries -- took decision out of “politics” of Congress. He said move would mean that process “cannot be accused of being political,” but he didn’t address fact that it would permit FCC only one course of action -- namely, deregulation of Bell companies. House Judiciary Courts, Internet & Intellectual Property Subcommittee ranking Democrat Berman (Cal.) put CCIA members on spot on broadband issue. When pressed for his reaction to call by Senate Governmental Affairs Committee Chmn. Lieberman (D-Conn.) for long-term broadband policy comparable to landing men on moon, Berman said he wasn’t good at big-picture thinking. He asked CCIA members why, exactly, broadband should be equated with moon shot, or even with universal health care or housing. Only response he received was that there was overabundance of broadband fiber that needed to be used, and that service providers lacked incentives to connect that fiber to homes. Berman smiled and said he didn’t see how that should be of concern to consumers.

There appeared to be little agreement among regulators or witnesses Fri. at FCC en banc hearing on how to fix current universal service system, whether it needed major overhaul or tweaking and, for that matter, whether it needed fixing at all. FCC scheduled hearing and invited state members of Federal-State Joint Board on Universal Service as best way “to gain input in the shortest time on various views and proposals for reform,” FCC Comr. Abernathy said as she opened hearing. Asked by Comr. Copps if there really was sense of urgency, consultant Kathleen Wallman said that was one of “the first assessments” Joint Board would have to make. “I don’t know if there is a sense of urgency on the part of all parties,” she said. “Some participants may disagree.” Wash. State U. Prof. William Gillis said he didn’t think there was consensus on urgency of reforming universal service because some parties would benefit more from change than others.

Rural senators expressed variety of concerns about Universal Service Fund (USF) and way FCC is administering it in Senate Commerce Communications hearing on issue Wed. Sen. Rockefeller (D-W. Va.) criticized FCC Chmn. Powell, saying Powell wasn’t committed to USF despite “swearing” not to undermine fund during his Senate confirmation hearing. Rockefeller said FCC was using uncommitted e-rate funds to keep USF contributions stable. “I'm not sure of his commitment to e-rate. I'm not sure of his commitment to universal service,” Rockefeller said, adding that he was “very unhappy” with Powell’s treatment of those issues. FCC needs to be “much more aggressive and timely” in redefining USF contribution system and should have it “worked out” by April, Rockefeller said. Sen. Dorgan (D-N.D.) also was critical of Powell, saying FCC had “chopped away at” USF and fund was in great jeopardy if FCC didn’t take aggressive action. He also said Powell should be called before Senate Commerce Committee to testify about USF.

Amazon.com told FCC that it should impose open access requirements on cable modem service. Amazon.com said it was concerned that some media companies might limit consumer access to certain Internet sites and push other, favored sites to them. “The agency should consider rules that would bar parties (either cable operators or broadband ISPs using cable modem facilities) from impeding consumer access to information, products and services,” Amazon.com said. More than 80 companies, associations, and others commented in FCC proceeding on regulatory treatment of broadband delivered over cable. Comments were due Mon., replies July 16. ACLU said cable companies providing cable modem service should be viewed as “classic common carriers” with all attendant open access obligations. “Consumers -- they are really speakers and listeners -- should have an option to choose an ISP that will allow them to access and engage in free speech in a manner consistent with their own choices,” ACLU said. American Cable Assn.(ACA), which represents small and rural cable operators, told FCC that mandated multiple ISP access would “chill investment” and stall broadband deployment in smaller markets. If Commission does mandate any form of multiple ISP access, it should adopt exemption for small cable operators, ACA said. “In smaller markets, mandated multiple ISP access is a costly solution in search of a nonexistent problem,” ACA said. Also, Commission needs to protect smaller cable operators from “unreasonable and unnecessary” local regulations and fees, ACA said. ACA agreed with FCC’s conclusion that cable modem service is interstate in nature and that there should be restrictions on franchise fees and other regulations. Comcast, which has application pending before Commission to merge with AT&T Broadband, said in its comments that multiple ISP requirement isn’t needed to advance “any statutory requirement and would in fact contravene explicit legislative guidance.” Comcast said cable operators are already moving forward with multiple ISP arrangements, Comcast among them. Company also said consumers have unrestricted access to Internet and cable companies are doing nothing to hamper that. “Click-through access ensures that cable Internet customers can experience the full abundance and diversity of the entire Web,” Comcast said. Comcast said there’s no need to obtain local franchises to offer service and that customer service and consumer privacy are safeguarded “by the imperatives of a competitive market.” Charter told FCC it should provide “a regulatory incubator” for service, allowing market to regulate it. Charter said first ISPs it used, Excite@Home and High Speed Access Corp., both collapsed, so predictions of permanent “dominance” should be looked upon “warily.” Charter said provision of cable modem service imposes no additional burden on local rights-of-way except if you count “additional photons and electrons flowing through already- authorized cable system fiber, trunk, feeder and drop cables.” AOL Time Warner offers multiple ISPs as result of consent decree with FTC that allowed AOL to merge with Time Warner. Company told FCC it knows firsthand benefits of that business model, but said it would be “premature” to impose such requirement and would violate First and Fifth Amendments. AOL Time Warner also said no additional franchise should be required to offer cable modem service. USTA said FCC should ensure that small and rural telephone companies remain eligible to participate in pools associated with National Exchange Carrier Assn. (NECA) to offer broadband efficiently and cost effectively and be allowed to elect Title II regulation for their broadband services. National Telecom Coop Assn. said Commission should require all cable, satellite and wireless broadband Internet access providers to contribute to universal service fund. Assn. said not doing so would place existing wireline ILECs at competitive disadvantage. Motorola, which makes cable modems and broadband network routing equipment, said Commission’s policy of “vigilant restraint” should guide it as it considers proper regulatory treatment for all broadband- related services and equipment. Telecommunications For the Deaf (TDI) said Commission should ensure regulatory protections currently afforded to people with disabilities and that FCC should proscribe open access. “If a third party provider offers services, features or capabilities of special use to individuals with speech or hearing disabilities, it is critical that such persons have immediate access to those services at moderate cost without having to pay duplicative costs,” TDI wrote.

Senate Communications Subcommittee announced witness list for June 19 hearing on universal service fund: Dorothy Attwood, chief, FCC Wireline Bureau; Nan Thompson, chmn., Alaska PUC; William Gregg, dir., W.Va. Consumer Advocate Div.; Lila Jaber, comr., Fla. PSC; Don Bond, pres., Public Service Telephone Co., Reynolds, Ga.; Margaret Greene, pres., regulatory & external affairs, BellSouth, Atlanta; Victoria Harke, CFO, MCI; Michael Altschul, senior vp-policy & administration, CTIA. Hearing, titled “The Future of Universal Service: Ensuring the Sufficiency and Stability of the Fund,” is scheduled for 10 a.m., Rm. 253, Russell Bldg.

Clarification: FCC said it acted on unused e-rate funds (CD June 14 p3) as result of notice of proposed rulemaking issued in Jan., not in response to AT&T requests that it take such action (CD June 13 p6). AT&T praised action, saying it now could reduce to 11% from 11.5% universal service line item that appeared on its customers’ bills. AT&T said FCC’s action “does not address all of the competitive concerns we highlighted to the FCC, [but] it represents an improvement and prevents a bad situation from becoming worse.” Agency in separate action Thurs. turned down related AT&T request for waiver to base its contribution percentage on estimated future revenue rather than past revenue.

Responding to request by AT&T (CD June 13 p6), FCC voted Thurs. to apply unused e-rate funds to reduce size of contributions carriers made to Universal Service Fund (USF). Agency emphasized that action ensured that USF line item on customers’ bills would remain “stable for the immediate future.” Increases in carrier contributions translate to increases in line items on customer bills because carriers pass those costs on to users. USF item originally was on agenda for open meeting Thurs. but FCC voted on it ahead of time. Decision appeared to be somewhat controversial, with Chmn. Powell concurring in part and Comr. Martin dissenting in part. E-rate program helps schools and libraries finance infrastructure for computers.

In letter to FCC Comr. Abernathy, chmn. of Federal-State Joint Board on Universal Service, National Telecom Co-op Assn. (NTCA) urged board to add equal access to definition of services that are supported by universal service funds. Equal access is widely deployed and represents public interest because it enables consumers to choose their own long distance providers, NTCA said in June 10 letter. Organization said it was concerned that any Joint Board plan to add equal access could be undermined by unrelated proceeding in which FCC is considering eliminating equal access requirements for ILECs. NTCA said FCC ought to let Joint Board make recommendation on universal service support for equal access before it acted on that separate proceeding involving ILEC equal access requirements.