Without regulatory reform, historic revenue sources won’t match the expenses of rural incumbent local exchange carriers, said Organization for the Promotion and Advancement of Small Telecommunications Companies. OPASTCO filed the report to refresh the record in Universal Service Fund and intercarrier compensation proceedings at the FCC. If regulators keep the status quo, small rural incumbents’ 2008 revenue shortfalls will be 5 percent, rising to 9 percent in 2009 and 13 percent in 2010, OPASTCO said. “Companies more reliant on local service revenues and intrastate access will fare worst, while those more reliant on USF and interstate access will experience more modest impacts,” it said. Wireless, VoIP and CLECs will “continue to erode” line counts and use minutes, it said. Broadband and special access will keep growing but more slowly than they have, it said. “Beyond 3 years, there is no assurance that USF will be sufficient, or that it will even keep pace with inflation,” OPASTCO said. Regulators should replace declining revenue streams with contributions from unregulated services, it said.

The California Senate passed a bill to set up a new state Advanced Services Fund to support broadband deployment into unserved areas. SB-1193’s a $100 million two-year program would supplement current universal service programs and be paid for with a temporary increase in phone bill surcharges for state universal service. The fund would provide up to 40 percent of the cost of qualifying projects. The Public Utilities Commission would screen applicants and make payouts. The bill goes to the Assembly.

The California Senate passed a bill to set up a new state Advanced Services Fund to support broadband deployment into unserved areas. SB-1193’s a $100 million two-year program would supplement current universal service programs and be paid for with a temporary increase in phone bill surcharges for state universal service. The fund would provide up to 40 percent of the cost of qualifying projects. The Public Utilities Commission would screen applicants and make payouts. The bill goes to the Assembly.

The Alaska Regulatory Commission (ARC) called for comment by June 19 on a proposal to cap certain access charge rate elements, and by July 3 on a companion plan to establish a new universal service program targeted specifically at isolated rural exchanges. The proposal calls for setting a $6 cap on the carrier common line access rate element, raising the network access fee to $4 from $3 and then capping the NAF at that level. Local exchange carriers charging a common line fee of less than $6 would have to cost-justify an increase to the cap level. Carriers who can prove their costs exceed $6 would recover the balance from the state universal service fund. The ARC (Case R-08-4) also proposed to set up a $5 million universal service program targeted to provide high-cost support for isolated rural exchanges with under 250 lines. If the need for support exceeds $5 million, the subsidy per line will be adjusted downward until the program covered all qualifying exchanges. The ARC said the proposals would help reduce cost differentials between rural and urban areas and help ensure reasonable local and long distance rates for all citizens.

Make the Universal Service Fund cap permanent, three anti-tax groups urged the FCC in a joint written statement Thursday. The National Taxpayers Union, Americans for Tax Reform and Americans for Prosperity also supported imposing reverse auctions, killing the identical support rule that bases subsidies on the incumbent’s cost and “wiping out fraud, waste and abuse of USF tax dollars,” they said. “Phone taxes are out of control in America,” the groups said. “Wireless customers pay a crippling $21 billion per year in taxes and fees. American consumers deserve less taxation and more common sense from their government.” The Seniors Coalition and the Maryland Taxpayers Association also signed on.

The FCC fined Local Phone Services almost $437,000 for failing to file four telecommunications reporting worksheets and failing to make 10 monthly contributions to the Universal Service Fund. “The Commission cannot and will not tolerate any entity’s failure to contribute to the USF as required by our rules, and we will use our forfeiture authority to penalize and deter violations,” the FCC said in a forfeiture order. Local Phone has 30 days to pay.

The FCC should take a closer look at how using reverse auctions to distribute Universal Service Fund support would affect small carriers financially, said the Office of Advocacy for the U.S. Small Business Administration. The FCC proposed the use of reverse auctions in one of three continuing proceedings on revamping USF. In reply comments, the office said new USF rules “could impose an economic burden” on small incumbent and wireless carriers. The FCC should study how reverse auctions have worked in other industries and use a test market to see how they would work in telecom industry, it said. And the FCC should study how numbers-based USF contributions “may reduce some of the administrative burdens associated with USF reporting for small carriers,” the office said. USF contributions are now based on interstate revenue.

The FCC wants comments on two petitions seeking waivers of Universal Service Fund filing deadlines. IBroadband Networks and HTC Services filed the petitions. Comments are due June 16. Replies are due July 1.

The FCC banned two people from participating in the Universal Service Fund E-Rate program for schools and libraries, it said in two notices of debarment. Keith Madeiros and Thomas Kennedy, both of Connecticut, are banned for three years, the FCC said. Neither opposed the bans, the FCC said. Meanwhile, the FCC began five E-Rate inquiries, suspending the parties involved. The FCC sent notices of suspension and initiation of debarment proceedings to William Holman, Allan Green, Judy Green, George Marchelos and Earl Nelson, all of California.

AT&T urged the FCC to impose the interim cap on Universal Service Fund high-cost support “as quickly as possible,” to “minimize the uncertainty now faced by” competitive eligible telecommunications carriers. “Many states require CETCs to make build-out commitments and USF certifications beginning in June and it is difficult for CETCs to respond to these requests before the state cap amounts are determined,” AT&T said in a meeting with the Wireline Bureau, according to an ex parte filing. AT&T also suggested that the FCC publish statewide cap amounts and quarterly reduction factors by state “to help CETCs manage in the new capped environment.”