Agencies wary of admitting data security incidents should consider how their secrecy will play in the media, which is bound to learn of even low-risk leaks, agency privacy chiefs said Tuesday. In remarks to the American Society of Access Professionals conference in Washington, they urged involvement by public affairs officials in any response, as a way to set the narrative on an incident. And don’t fear to learn from hackers, a cyber security academic said.

Telecom carriers will contribute slightly less to the Universal Service Fund as a percentage of revenue in the fourth quarter, the FCC said. The “contribution factor,” or percent of interstate and international revenue that carriers donate to the fund, will drop to 11 percent in the fourth quarter, starting in October, from 11.3 percent. After rising significantly in the second quarter, to 11.7 percent from 9.7 percent, that percentage has been dropping slightly. The percentage reflects the sum spent on USF subsidies and the amount of industry revenue available to draw from. The fourth-quarter figure is designed to collect $1.9 billion, more than half going to the “high-cost” fund to support rural telephony. The rest goes to the E-rate, Lifeline low-income support and rural health care services.

The FCC should immediately end the “identical support rule,” now that the Joint Board on Universal Service has said it shouldn’t be continued, the National Telecommunications Cooperative Association said in a letter to the FCC. The rule gives a competitive telecom company, usually a wireless provider, the same level of universal service subsidies as the incumbent local wireline carrier in an area. “Given the endorsement from the Joint Board to eliminate equal support, there is no reason why the FCC should not move forward immediately with an order,” NTCA CEO Michael Brunner said in the Sept. 13 letter. As a step toward ending the equal treatment, the FCC could stop giving “access replacement support” to wireless competitors, which would reduce outlays from the Universal Service Fund nearly $520 million a year, the letter said. This form of support is tied to access services, which wireless carriers don’t even provide, Brunner said. “High-cost universal service funding designed to replace legitimate access cost recovery should not be available to wireless CETCs that do not impose access charges,” he said. This would be “a reasonable interim step while the Commission collects the detailed cost information from wireless carriers necessary to establish support for each carrier in each area served,” the letter said. CETC stands for competitive eligible telecommunications carrier, a term for competitors eligible for universal service subsidies.

2007 already has seen the most acquisitions of incumbent local carriers since 2000, the biggest bubble year, said a financial analyst. Seven carriers with more than 10,000 lines have been bought this year, up from four in 2006, said John Hendon II, vice president in Stifel Nicolaus’ telecom and media group. The total value of acquisitions has dropped, though, to $1.84 billion this year from $2.36 billion in 2006, and both years are overshadowed by 2005, when Alltel’s wireline spinoff was one of the few sales, he said Wednesday at USTelecom’s Executive Business Forum in San Jose. Buyers need growth, “and organic growth is just more difficult to achieve in this environment,” Hendon said. Sellers face cable competition, the cost of investing in new technologies and regulatory uncertainty on access charges, the Universal Service Fund and access to video programming for pay-TV plays. And the sum of a takeover can be greater than the parts, he said. Windstream, spawn of the Alltel spinoff and a merger with Valor Communications, said it bought CT Communications in a $585 million deal that closed late last month partly because it expects to boost their combined EBITDA to $88 million from $58 million. Debt markets remain receptive to deals, Hendon said. Volatility from the mortgage mess is hurting “more on the LBO side,” he said. And “the equity markets have been very receptive,” instead of driving down purchasers’ share prices, as often happens, Hendon said. “The stocks of buyers are going up. They're being rewarded for buying and consolidating. Six sellers the past few years have been public companies, and on the buyers’ side, there’s been “limited private equity involvement,” he said. The measure of value has shifted from the historical one of access line numbers to a multiple of EBITDA and, most recently, to free cash flow, Hendon said. Buyers have had telecom operations near those of purchased companies, and a seller’s ability to extract a strong price for all its assets, notably wireless interests, has been a major variable in valuations, said other panelists.

The Internet access tax moratorium is the “most pressing broadband issue” before Congress, Senate Commerce Committee Vice Chairman Ted Stevens, R-Alaska, said in floor remarks Wednesday. The moratorium expires Nov. 1. “Tremendous investment growth and innovation” in broadband deployment followed the moratorium passed in 1998, but the taxes that states may levy if the moratorium isn’t extended “would only serve to expand the digital divide between those who can afford broadband access and those who cannot,” Stevens said. Alaska has been helped by the moratorium because it can market its goods on the Internet to customers in the lower 48 states and the world, he said. Stevens didn’t say the moratorium should be permanently extended, as most industry supporters argue but tax officials vehemently oppose. He also called for the universal service fund to expand to broadband to help rural residents. The senator seemed to make a cryptic reference against net neutrality, saying the government “should try to stay away from doing things that would reverse the recent policy trends of encouraging broadband deployment through free market principles.” The National Association of Manufacturers sent letters to the House Judiciary and Senate Commerce and Finance committees Wednesday, asking for them to pass and send to the floor bills (HR-743, S-156) that would permanently extend the moratorium and also block “multiple and discriminatory taxes” on e-commerce. Manufacturing is the largest sector in business-to-business e-commerce, spending nearly a trillion dollars in 2004 for cost-savings operations like just-in-time inventory management, the group said. Its costs are nearly a third higher than manufacturers abroad, and ending the moratorium would raise the cost of doing business, it said.

There were 5,428 telecom carriers operating as of November, compared with 5,632 the year before, according to the annual FCC “Telecommunications Provider Locator” report. The report mainly aims to give customers and vendors material useful in contacting carriers. The report notes that only 2,462 of the 5,428 carriers contribute to the Universal Service Fund; the rest are too small.

Both broadband and wireless should be in the mix for high-cost Universal Service Fund reform, the Federal-State Joint Board on Universal Service said Thursday in a brief statement. The board adopted the statement in July, but it took the FCC two months to release it, sources said Friday.

Both broadband and wireless should be in the mix for high-cost Universal Service Fund reform, the Federal-State Joint Board on Universal Service said Thursday in a brief statement. The board adopted the statement in July, but it took the FCC two months to release it, sources said Friday.

The California Public Utilities Commission restructured its state High Cost Fund B to greatly reduce its size while better targeting state subsidies to truly high cost, hard-to- serve areas. The restructuring will reduce the fund’s size from the current $336 million annually to $121 million by the end of 2008, for a 74 percent reduction in subsidies. The state universal service surcharge will be cut to 0.5 percent in January 2008 from the current 1.3 percent, the PUC said. The commission said it rewrote the official definition of a high cost area to reflect that many areas once defined as rural and hard to serve are now thriving suburbs with an incumbent facing vigorous competition from landline and intermodal rivals. The PUC said the move will benefit competition by leveling the playing field between incumbents and competitive carriers, and benefit consumers by reducing the state universal service fee. Separately, the PUC authorized a 2.36 percent increase in the rate cap for AT&T and Verizon basic exchange service, effective Jan. 1, to reflect inflation.

The Texas Supreme Court said a state trial court shouldn’t have heard a class action suit alleging SBC (now AT&T) improperly collected a state universal service fund surcharge. The state’s top court said the Public Utilities Commission had exclusive primary jurisdiction over the plaintiffs’ claims and lower courts erred in not granting SBC’s motions to dismiss the suit and refer the case to the PUC. The ratepayer plaintiffs alleged SBC violated the state’s 2004 price cap regulation law when it continued collecting the state universal service fee, effectively imposing a prohibited rate increase for basic exchange service. SBC sought dismissal at a state trial court on ground the core claims were under the PUC’s primary jurisdiction, but the trial court refused to dismiss. SBC appealed but lost at the appellate level. It subsequently turned to the Supreme Court. The Supreme Court (Case 05- 0951) said the trial court’s decision to proceed in an area where the PUC had exclusive primary jurisdiction “disrupted the orderly process of government.” It said the proper course was for the PUC to issue its ruling on the dispute, with trial courts having jurisdiction only after a party exhausted all administrative appeals at the PUC. It said the trial court in this case abused its judicial discretion by not dismissing the case.