Universal Service Administrative Co. audits impose an “unnecessary burden” on small rural telecom companies, said the Gardonville Cooperative Telephone Association. In a letter to FCC Chairman Kevin Martin, the group said the Office of Inspector General should set audit procedures for USF oversight. “Such standardized procedures would go a long way toward mitigating concerns about the inconsistency of the current process,” it said. The association said auditors contracted by the Universal Service Fund high-cost program “are often entirely inexperienced, with little or no knowledge of the telecommunications industry and FCC cost accounting rules.” Auditors are “extremely inflexible” on audit dates and document deadlines, it said. The group worries about the reporting of audit findings, it said. “In the most recent round of audits, the amount of funds estimated to be potential improper payments far exceeded the actual amounts found in the audits,” it said. And rural telecom providers fear USF audits may lead to accusations of Customer Proprietary Network Information violations, the group said. For example, auditors have demanded copies of customer billing records, it said: “These requests naturally place company management in an awkward position of determining whether to comply with auditors’ demands, or violate the law.” The FCC should clarify whether and to what extent auditors may access CPNI, it said.

An AT&T proposal to lower intrastate access rates to interstate terminating access rate levels is “deficient,” said the National Telecommunications Cooperative Association. Commenting on an AT&T request for interim declaratory ruling and limited waivers related to intercarrier compensation and Universal Service Fund reform, NTCA urged the FCC to accept AT&T’s proposal only if it also adopts an NTCA plan filed last month (CD July 14 p9). NTCA agreed with AT&T that the FCC should move intrastate costs to interstate cost recovery rates including subscriber line charges or originating interstate access charges, and that the FCC should declare that Internet traffic must pay access charges. But NTCA said AT&T’s bid to lower intrastate access rates is “specifically tailored for price-cap carriers, and provides no relief to rural consumers served by [rate-of-return] carriers.” NTCA wants interstate access rates capped at current levels until a permanent access replacement mechanism is set. Access costs not recovered from capped rates would come from USF Interstate Common Line Support (ICLS), it said. NTCA filed comments two days ahead of a Thursday deadline. An AT&T spokesman said “comprehensive reform would fix the vast majority of the problems that these various petitions seek to resolve.”

Don’t stay the Universal Service Fund high-cost interim cap, said USTelecom and Verizon. They separately opposed a petition (CD Aug 6 p10) by the Rural Cellular Association and a group of small wireless competitive eligible telecom carriers. The interim cap “is a fair and balanced response to the growth of the high cost fund, a very real problem that threatened the sustainability of the universal service system and resulted in rapidly growing costs to consumers who pay for the fund,” Verizon said. The RCA and the carriers seeking a stay have “a vested financial interest in maintaining a system under which competitive ETCs can obtain high cost subsidies without limit,” USTelecom said. “But while such a system may be good for their businesses, it is bad for nearly everyone else.” The RCA and allies raised no new questions of fact or law, it said. Instead, their argument “primarily observe[s] that the rate of growth of support to competitive [ETCs] declined in recent years and predict[s] that the cap will not be effective,” Verizon said. That evidence is no good, said USTelecom. “While Joint Petitioners may take issue with the data relied upon by the Commission, their doing so cannot obscure the fact that competitive ETC support has grown significantly.” Nor did the petitioners show irreparable harm, USTelecom and Verizon said. The RCA and allies make “bold claims about alleged harms resulting from the interim cap,” but don’t “offer any proof that such harms have occurred or are certain to occur in the future,” USTelecom said. If a competitive ETC is harmed by a cap, it added, it can “avoid the cap altogether by filing cost data with the Commission.”

Commissioners strongly prefer voting ahead of time on two circulating wireline items set for the Aug. 22 FCC meeting, a commission official said Tuesday. One such item is a rulemaking asking how to implement the New and Emerging Technologies 911 Improvement Act of 2008, signed last month by President Bush. The other item seeks comment on ways to improve management and administration of the Universal Service Fund. The USF item responds to a GAO audit citing concerns about waste, fraud and abuse, FCC Chairman Kevin Martin told reporters earlier this month (CD Aug 5 p1).

The FCC should use phone numbers for Universal Service Fund contribution, said the USF by the Numbers Coalition. Members from AT&T, Verizon, CTIA, USTelecom and IDT met last week with Amy Bender, aide to Chairman Kevin Martin. Group members not represented at the meeting are NCTA, GCI, Megapath and the VON Coalition. The FCC assesses USF contributions based on a carrier’s interstate revenue. The coalition wants contributions based on how many phone numbers a carrier owns. That would be easier, provide certainty to consumers and stabilize USF funding, said the coalition.

SES Americom seems ready to give OnSat another reprieve from a threatened Monday noon shut off, we've learned. While OnSat works to resolve the situation, possibly by moving to another provider, SES appears willing to serve OnSat until at least Aug. 15, officials said. The service would keep only public-safety networks running, the officials said.

The FCC banned four Californians from the Universal Service Fund E-Rate program. George Marchelos, William Holman, Allan Green and Earl Nelson, all of San Francisco, are banned for three years, the agency said. The FCC granted a request by Holman responding to a May suspension notice. Not disputing his guilty plea he asked that the record reflect the factual circumstances, the FCC said. Holman contested an accusation that he submitted noncompetitive bids and took steps to ensure his company won the E-Rate award, the FCC said. Also, Holman said, he believed at first that he was entering a lawful agreement but later became aware of problems and raised concerns with colleagues.

The FCC banned four Californians from the Universal Service Fund E-Rate program. George Marchelos, William Holman, Allan Green and Earl Nelson, all of San Francisco, are banned for three years, the agency said. The FCC granted a request by Holman responding to a May suspension notice. Not disputing his guilty plea he asked that the record reflect the factual circumstances, the FCC said. Holman contested an accusation that he submitted noncompetitive bids and took steps to ensure his company won the E-Rate award, the FCC said. Also, Holman said, he believed at first that he was entering a lawful agreement but later became aware of problems and raised concerns with colleagues.

The FCC will reform intercarrier compensation and the Universal Service Fund together, perhaps this year, Tom Tauke, Verizon executive vice president, told reporters Thursday. “If [reform is] going to happen, it’s going to happen in a package,” Tauke said. Two months ago, he doubted intercarrier reform could happen this year, he said. Taking compensation together with USF distribution and contribution is “a lot to swallow,” but court pressure and growing industry consensus makes him optimistic, Tauke said. Now is the “last best chance” for the telecom and technology sector to ally and reform an “unsustainable” system, he said.

An FCC order preempting states from imposing traditional phone regulation on Vonage VoIP services didn’t keep Nebraska from assessing state universal service fees on Vonage’s interconnected VoIP, the FCC told a federal appeals court. In a late-filed friend-of-the-court brief to the 8th U.S. Court of Appeals in St. Louis, the FCC said Tuesday that a federal trial court wrongly concluded that the FCC barred Nebraska from enforcing state universal service requirements on Vonage.