Telecom companies should not get tax breaks to build out broadband networks, consumer groups said Thursday. While more broadband is a priority, “we are adamantly opposed to just doling out taxpayers’ money to telecom companies, given their record of hitting consumers with inflated prices and slower Internet speeds compared to other industrialized countries,” said Consumers Union Vice President Gene Kimmelman. Money should go to state and local governments to provide broadband service to underserved areas, Kimmelman said. Expanding financial support for municipal-sponsored Internet services would be a better help to consumers, he said. “Our analysis shows that low income consumers account for three-quarters of all households that do not have broadband,” said Mark Cooper, CFA director of research. “We need to use universal service funds to support broadband to increase the adoption among these households.” Telecom firms received “billions of dollars in tax subsidies in the 1990s on the promise that they would fully upgrade their networks for Internet services,” Cooper said. “But they failed to deliver.”

The FCC will vote Dec. 18 on an order to establish a free wireless Internet service using AWS-3 spectrum, Chairman Kevin Martin said in a press briefing Wednesday. The plan’s technical specifics are similar to the plan the agency considered in May, but includes revisions desired by another commissioner, Martin said. Martin has gotten positive feedback from some commissioner offices and is “hopeful” he'll get three votes, he said.

The Arizona Corporation Commission wants more time to file reply comments on the FCC’s pending overhaul for the Universal Service Fund and intercarrier compensation, the ACC said Monday. The Arizona commission backed a motion filed by the National Association of State Utility Advocates (CD Dec 1 p2), asking to extend the reply deadline three weeks to Christmas Eve. “The Arizona Commission is a relatively small agency and was unable to file initial comments because of the abbreviated comment cycle established by the FCC and the Thanksgiving holiday.” If the FCC thinks a three-week extension is too long, the agency should extend the deadline two weeks to Dec. 17, the state commission said. Replies are currently due Wednesday, an already problematically tight deadline because it’s less than three weeks before the FCC’s Dec. 18 meeting. A Dec. 17 or Dec. 24 reply deadline would effectively prevent the FCC from tackling USF or intercarrier compensation at its meeting.

Effectively killing chances of revamping the Universal Service Fund and intercarrier compensation at its Dec. 18 meeting, the FCC late Tuesday extended the reply comments deadline on its three overhaul proposals to Dec. 22. The FCC can’t vote on the overhaul until all replies are in.

Three automobile makers urged the FCC to reject a numbers-based system for Universal Service Fund contributions. In comments last week on three FCC proposals to revamp the fund (CD Dec 1 p2), Volvo, Toyota and General Motors subsidiary OnStar said separately that the FCC’s plan could hurt vehicle telematics companies and by extension public safety. Earlier last week, APCO and the National Emergency Number Association also warned the FCC about the issue (CD Nov 28 p1). The FCC proposals “ignore the special circumstances of telematics companies, assess contributions far greater than the telecommunications revenues associated with the service, and mistakenly treat telematics companies as telecommunications providers rather than end users,” OnStar said. Toyota agreed, “The drastic cost increases that would flow from the proposals … would threaten the very existence of life-saving telematics services.” OnStar suggested that the FCC instead “assess USF contributions on services that wireless carriers provide to telematics companies either on a per-minute of use basis, as the draft orders appropriately propose for prepaid wireless services, or based on a percentage of revenues.”

Citing network infrastructure damage in the Virgin Islands inflicted by Hurricane Omar, the FCC directed the Universal Service Administrative Co. put on hold until Feb. 28 any adjustments in Universal Service Fund high-cost loop support for Virgin Islands Telephone. The company filed an emergency petition for relief last month (Nov 21 p9).

“Closer scrutiny” of the Universal Service Fund is needed, the FCC’s Office of Inspector General said in a report to Congress released Monday. An audit of the high- cost fund released last week concluded that the program is “at risk” because of an error rate of 23.3 percent in payments (CD Nov 28 p7), well above the 2.5 percent considered the most acceptable. The Inspector General’s Office said the commission’s Wireline Bureau needs to work more closely with the Universal Service Administrative Co., which oversees the funds, to reduce payment errors.

Universal Service Fund subsidies should be automatically available to rural carriers using satellite broadband, Hughes, Inmarsat and the National Rural Telecommunications Cooperative said. In comments on the FCC’s three plans to revamp USF (see separate report in this issue), the groups condemned a proposed rule that would require a commission waiver for USF recipients before they could use satellite broadband to fulfill new deployment requirements. “The economic challenges of deploying terrestrial-based communications infrastructure will mean that it could take many years for customers in hard-to-serve areas to have access to terrestrially provided broadband services, and in some cases terrestrially provided services will never be available,” Hughes and Inmarsat said in joint comments. “These customers deserve the option of being able to choose satellite-delivered broadband, even if it is available at slower speeds than the speeds that may be available using terrestrial-based services.” The satellite companies supported the FCC’s proposed USF contribution proposal, which would base payments to USF on the carrier’s quantity of residential phone numbers. However, the companies “are very concerned that the proposed contribution rate of $35 per assessable business connection over 64 kbps would have a punitive effect on satellite broadband providers who have lower user to connection ratios than terrestrial broadband providers,” they said.

FCC candidates can expect questions from Congress on broadband and universal service policies, said a recent Government Accountability Office report. How to remedy the U.S. slide in international broadband rankings should lead the list of inquiries during confirmation hearings, GAO said. Scrutiny of the FCC’s role in running the universal service program also should be high on the list for nominees, although FCC confirmation hearings aren’t likely for several months, the report said.

Largely reiterating past arguments, telecom interests fought over when and how to revamp the Universal Service Fund and intercarrier compensation. In comments last week, carriers, states and others dissected three FCC overhaul plans, known as Appendices A, B and C. Appendix A is FCC Chairman Kevin Martin’s Oct. 14 revamp plan, B is a proposal addressing USF only, and C a revised Martin plan incorporating changes sought by the Organization for the Promotion and Advancement of Small Telecommunications Companies and other groups. Earlier this month, Martin said a revamp this year is unlikely (CD Nov 19 p2). But other commissioners have said they want to vote on an order at the December meeting. (See separate story on the FCC agenda in this issue.)