The FCC should impose the proposed temporary cap on subsidies to competitive carriers from the high-cost Universal Service Fund (USF), several members of Congress said in letters to the FCC the past few weeks. The letters came as wireless carriers worked the Hill seeking political support for encouraging the FCC to tweak a May 1 Federal- State Joint Board proposal to place an interim cap on funding for competitive eligible telecommunications carriers (CETC), who mostly are wireless providers. Most lawmakers writing the FCC said consumers will see higher costs without the cap.

Verizon agreed to pay $500,000 to the U.S. Treasury as a “final settlement” of a case involving debt to the Universal Service Fund and other regulatory funds owed by MCI before its 2005 merger with Verizon. Announcing the decree Tuesday, the FCC said MCI voluntarily reported the deficits in January 2006 after an internal review. Verizon has made payments to cover MCI deficits since 2003 owed the USF and Telecommunications Relay Service Fund, plus unpaid numbering administration, local number portability and regulatory fees. Verizon agreed to create a “compliance training program” and audit controls on its revenue reporting process, the basis for assessing such fees.

Engineering studies show large areas in rural states where coverage by major wireless carriers is not an option, Alltel said in reply comments in an FCC docket advising the Federal-State Joint Board on Universal Service on longterm universal service reform. Meanwhile, AT&T provided updated recommendations on its proposal for a pilot program to pay for rural broadband deployment.

AT&T’s acquisition of Dobson Cellular likely faces few regulatory hurdles at the FCC or Justice Department, analysts and industry sources agreed Monday. AT&T announced a deal late Friday to buy Dobson for $2.8 billion. Dobson sells service to some 1.7 million customers under the Cellular One brand. Both use GSM-based technology, simplifying system integration. And Dobson has 850 MHz spectrum well-suited to serving rural areas, analysts said. AT&T and Dobsons hope to close the deal this year.

Consumers will face rising phone bills unless the Federal-State Joint Board imposes a cap on the Universal Service Fund (USF) high-cost support for competitive eligible telecommunication carriers (CETCs), said Sen. Robert Casey, D-Pa. In a letter sent to the FCC Friday, Casey said the fund’s growth is due to subsidies for wireless carriers. Without a cap, USF funding will rise as much as $500 million this year, Casey said. Pennsylvania paid $124.9 million more into the fund than carriers received in 2006, he said. “It is a major concern that without a freeze on CETC support distributions, Pennsylvania’s net contributor role to the federal USF will greatly increase.”

The Texas Public Utility Commission (PUC) modified rules on the state’s universal service high-cost fund to lend it flexibility to address possible changes. The PUC amended the rules to give it discretion to decide which lines are eligible for support, and to set the benchmarks to be used to calculate support. Current rules spell out explicit line standards and benchmarks, with flexibility. The PUC (Case 34060) said much change has hit telecom markets since 2000 when the rules last were modified; the PUC needed flexibility to address those changes’ impact on the state fund. Major competitive and incumbent carriers backed the reform. Competitive carriers said the change will allow the PUC discretion to implement critical universal service policy changes. AT&T and Verizon endorsed the change, but said the PUC in any rulemaking on overhauling the fund to match current market conditions must take care not to invalidate the present fund and end support to carriers now getting subsidies. The PUC assured them all subsidy recipients will continue to get funds without change until the PUC completes its hearings and issues a final order replacing the current rules.

Alltel asked the Arkansas Public Service Commission to deny requests by Windstream and CenturyTel to delay a decision on the wireless carrier’s application for eligible telecom carrier (ETC) status, qualifying it for universal service subsidies. The two incumbent phone companies cited general industry concern over the federal high-cost fund ballooning size, saying the PSC should delay action on Alltel’s petition until the FCC acts at the federal level on universal service fund reform. They said granting Alltel ETC status now would exacerbate problems with the federal universal service system. They also urged delay until the PSC finishes a pending generic docket on state universal service reforms. But Alltel said whatever problems the federal fund has are matters for the FCC, Congress and the federal courts, not the Arkansas PSC. Alltel said the PSC’s role is to apply state and federal law and decide if Alltel meets legal requirements. Alltel said no one disputes that it meets applicable state and federal qualifications for ETC designation, and said it had already agreed to abide by any state universal service changes the PSC adopts in its general reform case. Alltel said “there is no reason, requirement, or basis for delay or denial” of its ETC petition.

The South Carolina Supreme Court upheld Public Service Commission (PSC) orders requiring competitive local service providers to contribute to the state universal service fund, and the PSC’s determination of an appropriate fund size. The case arose from a 2001 PSC decision to shift state universal service support from implicit to explicit subsidies, and several supplemental orders. The suit by the state Office of Consumer Advocate and trade groups representing the state’s cable companies and competitive local providers alleged the PSC discriminated against competitive providers and acted unreasonably in setting fund size and contribution amounts. The state’s highest court (Case 26354) agreed with a trial court that the PSC universal service orders were supported by substantial evidence. The competitive providers contended the revised state fund would give incumbents an unfair advantage by letting them cut prices for competitive services, making up the difference from state subsidies. But the state court said competitive carriers can do so, since they can draw subsidies from the fund. The court said explicit universal service subsidies give all companies a chance to compete more equally. The court said the record supported the PSC’s choice of cost model to produce reasonable estimates of the cost of universal service in the state, meeting a statutory requirement to match costs and revenues. With the court case decided, the PSC can resume a suspended docket on whether to widen the contribution base by including revenues from directory listings, special access, wireless and broadband services, and whether Lifeline customers should pay universal service surcharges.

More accurate broadband data could be useful for business and social service purposes, researchers and broadband providers said at a Progress and Freedom Foundation panel Thursday. But they disagreed on to how to improve data collection methodology to find areas of the country that do not have service. Large broadband providers such as Comcast, Verizon and AT&T said they support better data collection but want to make sure their proprietary market information is protected.

More accurate broadband data could be useful for business and social service purposes, researchers and broadband providers said at a Progress and Freedom Foundation panel Thursday. But they disagreed on to how to improve data collection methodology to find areas of the country that do not have service. Large broadband providers such as Comcast, Verizon and AT&T said they support better data collection but want to make sure their proprietary market information is protected.