Having gained approval from Congress and National Treasury Employees Union Local 209, FCC will begin operating with reorganized bureaus starting March 25, agency announced Fri. Affected bureaus are: (1) Media Bureau, combination of former Cable Services and Mass Media Bureaus; (2) Wireline Competition Bureau, former Common Carrier Bureau; (3) Consumer and Governmental Affairs Bureau, ex-Consumer Information Bureau; (4) Office of Legislative Affairs, ex- Office of Legislative and Intergovernmental Affairs. Also undergoing some reorganization, though not renamed: International, Enforcement and Wireless Telecommunications Bureaus. Commission also announced new Web site concentrating on FCC reform: http://www.fcc.gov/fcc_reform/.

Utah Supreme Court case decided earlier this week on terms of eligible telecom carrier (ETC) status of Western Wireless has potential to become “test case,” NARUC Gen. Counsel Brad Ramsay said Thurs. at OPASTCO legislative and regulatory conference in Washington. State Supreme Court Tues. backed earlier decision by Utah PSC. PSC had designated Western Wireless as ETC in nonrural areas served by U S West, with eligibility to receive state universal service support contingent on Western Wireless’s charging no more than affordable base rates. Court ruling said PSC decided it wouldn’t be in public interest to designate Western Wireless as additional ETC in rural areas served by incumbent carriers, concluding that that designation would increase demands on state universal service fund without offsetting benefits. Of interest is that court based its findings on consideration of Western Wireless as commercial mobile radio service, rather than fixed wireless service, as has been case in ETC proceedings in other states, Ramsay said. “This has the potential of being a test case because there the carrier classified as mobile,” Ramsay said in panel discussion. At issue was PSC requirement that in non- ruralareas where Western Wireless was given ETC status, it should price its universal service offering at “affordable base rates” to receive state universal service funds. Ruling said Western Wireless had sought reversal of that price cap requirement because Utah law was preempted by federal statute that directed that no state or local govt. regulate CMRS rates. Ruling said state statute on universal service fund requirements “does not unilaterally restrict or control the rates a commercial mobile service can charge for its services -- the very essence of rate regulation.” Noting that Utah Supreme Court found that wasn’t rate regulation, Ramsay said question “would have come up if they were a fixed wireless carrier.” Several panelists said such questions raised larger issue of whether it was in public interest to have multiple funded carriers that had ETC status in rural areas because of pressure that exerted on overall universal service funding. “That’s a very fundamental point,” said Michael Fox, vp-CCG Consulting. If state PUCs took position that multiple competitors with ETC status were good in rural areas, “to me, that opens up potentially a dangerous avenue,” he said. Asked about Commission proposal that sought comment on intercarrier compensation regime that included bill-and- keep system, under which each carrier would recover access costs from own users, panelists representing rural telcos agreed that would put more pressure on existing funds such as universal service. “There is no one answer to intercarrier compensation -- their can’t be,” said Rex Mitchell, vp-BB&T Capital Markets. “Quite frankly, the cost of delivering the call isn’t the same for one carrier versus another. Until we recognize that, we're not going to get the right answer.”

Executives of several telecom companies took turns Tues. trying to convince attendees at Credit Suisse First Boston (CSFB) conference in Orlando that their businesses were good investments despite tough economic times, but some appeared to have easier job than others. BellSouth CEO Duane Ackerman’s took podium after CSFB analyst Dan Reingold described him as operating “tightly run phone system that makes strategic moves that are value added and if [there’s not value] doesn’t do it.” Qwest COO Afshin Mohebbi had tougher time as he described why company was well-positioned for future but fielded questions about its recent cash crisis.

Correction: Universal Service Administrative Co. (USAC) didn’t request additional e-rate funding from FCC (CD March 4 p6). Instead, USAC filed report with Commission that showed estimated demand for e-rate discounts had increased. E-rate funding is capped at $2.25 billion and can’t be raised without major FCC proceeding, so higher demand results not in additional funding but in some applicants’ not receiving money.

Universal Service Administrative Co. (USAC) asked FCC for increase in funding for e-rate program for year starting July 1. USAC’s Schools & Libraries Div. told FCC that program needed $5.74 billion, increase of nearly $550 million from current year. Funds, offered through universal service fund, are used to provide discounts to schools and libraries for Internet access and telecom services used to hook up computers. USAC said that even at that level of funding it wouldn’t be able to meet all requests from schools and libraries.

If telcos don’t like FCC’s proposed “connection-based” method of collecting contributions to universal service fund (USF), they could help FCC by suggesting alternative, FCC Comr. Abernathy told USTA members Thurs. Speaking at group’s Washington Leadership Conference, she said she was convinced current contribution system “isn’t sustainable” so something would have to replace it. Abernathy told group it probably would take “a good 2 years” for FCC to replace current collection system and agency would welcome ideas from carriers. Explaining recently opened wireline Internet access proceeding, she said FCC’s proposed definition of Internet access as information service could mean that “most provisions of Title 2 [of Telecom Act] would not apply to Internet access.” She said there also was universal service angle to that proceeding because USF contributions were assessed only on telecom services. Under assumption that DSL was telecom service, USF contributions now are assessed on DSL provision. Proposed new definition for wireline Internet access services as information service could be interpreted as excluding DSL from universal service base because it’s no longer telecom service, she said. And that could have “significant impact” on money available for universal service support for high-cost carriers, she said. Asked about time frame for broadband proceedings, she said desire was by end of year but that would be “rocket speed.” She said she thought some parts would be completed, perhaps with further notice of proposed rulemaking on remaining issues.

Several industry experts and consumer group representatives told FCC Thurs. they would like to see Commission gather more “granular” data on status of wireless competition. Several speakers at FCC forum on data-gathering on commercial mobile radio services (CMRS) stressed that such information was particularly important as Commission altered how it reviewed wireless mergers once spectrum cap was phased out in Jan. 2003. Forum placed emphasis on how to analyze data on wireless competition in rural and other historically underserved areas. Much of information that FCC now has when it compiles annual report on CMRS competition is either focused on national statistics or, in some cases, more urban markets, said Deputy Wireless Bureau Chief James Schlichting. “In the rural areas, we are very interested in finding out how we can measure how markets are performing, the number of competitors, the prices that are available for consumers, the service quality, the coverage, the features and options that are available to consumers and the level of subscribership,” he said.

National Telecom Coop Assn. (NTCA) took on would-be competitors in filing with FCC Mon. about universal service portability, saying universal service never was meant to “artificially induce competition.” At issue is NTCA’s petition for reconsideration of FCC’s rural access charge reform order -- and opposition to it by Rural Consumer Choice Coalition (RCCC) and Competitive Universal Service Coalition (CUSC). “NTCA is not opposed to competition per se and objects to CUSC and RCCC’s characterization of NTCA’s petition as anticompetitive,” rural telco group said. “The Commission is not required to adopt universal service rules to create competition in areas where a competitive marketplace would not otherwise exist,” filing said. NTCA argued that giving carriers identical support could create “windfall” for some competitors because carriers’ needs weren’t identical. Competitors object to NTCA’s request that FCC reconsider decision to make portable universal service program known as Interstate Common Line Support (ICLS) fund. ICLS fund was created in access charge reform order, also known as MAG order (CC 00-256), as was requirement that it be portable, meaning it would be available to competitors. Such action would violate Telecom Act’s requirement that universal service be used only for “intended purposes” and that it be limited to “sufficient, not excessive, levels,” NTCA said. NTCA was among several groups of rural ILECs seeking reconsideration of MAG order.

Court decision Tues. overturning FCC’s cable-TV station cross-ownership ban (CD Feb 20 p1) could have significant effect on how biennial review process is conducted, FCC Chmn. Powell said Wed. In somewhat unusual action, U.S. Appeals Court, D.C., acted not on any new FCC order but on agency’s decision to retain existing rule, in decision made during biennial review. Telecom Act requires FCC to review existing regulations every 2 years to determine whether they remain necessary.

National class action lawsuit alleges AT&T is charging long distance customers surcharge “significantly in excess” of what it contributes to Universal Service Fund (USF). Suit, filed Wed. in U.S. Dist. Court, L.A., said AT&T was billing customers fee equal to 11.5% of long distance charges, while FCC currently required carrier to contribute 6.808% of long distance revenue to USF. Lawsuit calls fee “huge secret profit center” and said it gave AT&T unfair advantage in highly competitive long distance market: “By hiding revenue in the Universal Connectivity Charge, AT&T is able to advertise lower per-minute rates than it is effectively charging,” suit said. Class plaintiff Roger Gerdes is represented by Stanley, Mandel & Iola, LLP, Law Office of Andrew Kierstead, Matthew Rossman P.C. and Keller Rohrback LLP. Counsel estimates class exceeds 60 million people. Lawsuit follows call last month by House Commerce Committee ranking Democrat Dingell (Mich.) for FCC to investigate AT&T’s increase in USF fee (CD Jan 9 p1). Dingell urged FCC Chmn. Powell to “open the books and records” of AT&T while raising questions whether long distance companies in general were using fee to “gouge” customers. AT&T said it raised USF fee to 11.5% from 9.9%, saying FCC methodology to determine how much company should contribute to fund “was flawed.” Commission makes its determination based on company revenue from 6 months ago. AT&T said “lag” problem, “combined with diminished interstate and international telecom revenue,” necessitated increase.