Neb. bill addressing involvement of local govts. in fiber leasing cleared unicameral legislature’s committee process. Bill sent to floor (LB-827) still would allow local govts. to lease dark fiber to retail telecom carriers, but amendments would require that PSC: (1) Review all fiber leases to ensure rates are market-based. (2) Ban municipalities from using their own dark fiber for providing retail telecom service. (3) Direct that locality’s profits from dark fiber leasing be paid into new Neb. Internet Enhancement Fund to support high-speed Internet access for local govt. agencies statewide. Legislative committees also cleared amended version of universal service bill (LB-389), originally intended to make wireless carriers eligible for state universal service support. As sent to floor, bill now would leave it to PSC to determine which local service providers were eligible to receive state universal service subsidies, but all telecom carriers, including wireless, would be required to contribute to Neb. universal service fund.

FCC denied petition by Operator Communications (Oncor) for forbearance of rule requiring that contributions to federal universal service fund be based on carrier revenue from prior year. Oncor contended that basing contributions on prior-year revenue harmed carriers with declining revenue. It asked FCC to forbear from assessing revenues for years 1998-2000 and then reassess contribution based on actual revenue for those years. Commission said requested action would give unfair advantage to carriers with declining revenue. FCC Comr. Furchtgott-Roth issued statement agreeing with FCC’s denial but emphasizing that problem raised by Oncor was serious: “Because carriers contribute to the universal service fund based on the prior year’s revenues, those carriers whose revenues have declined find themselves paying a higher percentage of their current revenues… than do carriers with stable or increasing revenues.” He said end-user surcharges could be “promising solution.”

Rural telephony is ripe for investment as regulatory reform, consolidation and divestiture of rural exchanges by Bell companies change way telephone service is offered in small communities, panelists told representatives of investment companies attending conference in N.Y.C. sponsored by Legg Mason. “This a good time for you to come in,” NARUC Pres. Bob Rowe said: “There is tremendous growth. Rural America awaits your participation.” Panelists at all-day conference represented telcos, regulators, financial investors.

This year’s Commerce Committee communications picture became clearer Wed. in both houses of Congress. Senate Communications Subcommittee Chmn. Burns unveiled his technology agenda with emphasis on wireless and Internet issues. Counterpart House panel, whose Chmn. Tauzin (R-La.) has been explicit about his agenda for some time, finally passed its organizing resolutions appointing subcommittee members.

Parallel Minn. bills to carry out telecom reform plan of Gov. Jesse Ventura (I) have been introduced. Measures (HF-510/SF-554) would create state universal service fund to support high-cost service areas, Lifeline phone subsidies, state deaf relay service, $100 million revolving loan fund for deployment of advanced telecom services. New fund would be supported by 5% state excise tax on all retail telecom and cable services and “other multichannel video programming services” billed to Minn. customer. All retail rate changes would be presumed just and reasonable unless 5% of customers petitioned PUC for rate review. Legislation would deregulate rates for any telecom service where 75% of customers had competitive alternatives and deregulate telecom resale by hotels, motels and resorts except for requirement that providers notify customers of their rates and of any rate changes. For companies under alternative regulation plans approved before measure’s passage, deregulation provisions wouldn’t become effective until current plan expired. Bill also would require cost-based rate deaveraging for retail basic services, with resulting rates capped for next 2 years. Other provisions would streamline process for obtaining state telecom certificate but require all prepaid and competitive telecom providers to obtain certificate or license from PUC, and for prepaid providers to post bond against failure to deliver services. Bill also would allow municipalities to provide telecom services to their citizens on their own or through joint ventures where fewer than 50% of customers enjoyed actual competition. Measure would give PUC jurisdiction over telecom mergers, broad power to combat slamming and cramming, toughen minimum requirements for establishing extended local calling, and require landlords to allow access for competitive telecom and cable providers wanting to serve tenants. It would end cable franchising by municipalities, with franchises after Dec. 31, 2002, granted only by PUC, for up to 15 years. PUC could terminate franchise for cause, and would review all cable franchise transfers. Municipalities would get 5% franchise fee on gross receipts from locality. PUC could delegate franchise enforcement to municipalities. Cablers would have to give customers 30 days’ notice of changes in rates, channel positions or programing, provide emergency alert override capabilities and public access channels. Parallel bills are pending in House and Senate utilities committees.

Senate Communications Subcommittee Chmn. Burns (R-Mont.) will unveil his Tech 7 agenda for 107th Congress in news conference Wed. Spokesman said 3 items are “brand spanking new,” but wouldn’t elaborate beyond telling us one was “an Internet issue,” one “a spectrum issue” (that spokesman said would be “an enormous undertaking) and “the last one is largely telephony.” Among returning issues, Burns will discuss 4 bills under heading of “high-speed Internet access": (1) Eliminating regulations on 2% telcos, which serve less than that proportion of nation’s access lines. (2) Removing interim caps on size of telephone universal service fund. (3) Allowing low-power TV stations to offer high- speed access. (4) Giving tax incentives for broadband deployment to underserved areas, as recently proposed again by Sen. Rockefeller (D-W.Va.). Other returning issues will include spam, privacy, e-govt.

Minn. House Regulated Industries Committee opened hearings Mon. on telecom reform plan proposed by Gov. Jesse Ventura (Ind.). Panel heard administration’s description of legislation that would be required to carry out his plan. Centerpiece of plan is imposition of state telecom excise tax to support new Minn. fund that would subsidize universal service in high-cost areas, support deployment of high-speed digital services, start $100 million revolving loan fund to encourage competitive local-carrier entry and service rollouts. Meanwhile, rural incumbent telco interests said they opposed Ventura’s plan, saying it would reduce their revenue from intrastate access charges with only partial offset from subsidies. Net effect, said Minn. Assn. for Rural Telecommunications, would be rural rate shock and stalled network improvements that would lead to “economic havoc” in rural communities. Rural telcos said they wanted reforms that would benefit rural and urban areas alike.

Bill introduced in N.J. Assembly effectively would prohibit Verizon from seeking deregulation of retail or wholesale rates and services until its local market share fell below 50%. Measure declares that Verizon’s loss of half its current market share would be proof that effective local competition existed in state. At that point, company would be allowed to seek rate and service deregulation. Legislation (AB-3122/S-1522) would act by tying variety of regulatory requirements to market share test, including requirement for cost-based Verizon rates for unbundled network elements and carrier access, performance standards for wholesale services to CLECs, mandatory service quality standards, caps on retail basic service rates. Bill also would require full 3rd party testing of Verizon operation support systems and 90-day monitored commercial operation study as soon as practical, new service performance standards for all local exchange providers within 9 months of enactment, review of state’s service quality standards within 12 months of enactment. Bill would establish state universal service fund for high-cost areas. Another new Assembly bill (A-3103) would allow Board of Public Utilities to suspend payment of dividend distributions by any operating unit of an energy or telecom utility if board found company was providing inadequate service or was guilty of other major rule violations. Measure would allow company to place dividend payments in escrow pending finding that it had remedied problem. Bill is similar to Ohio law that state regulators last year used against Ameritech because of company’s inadequate service. Both N.J. bills are before Assembly’s Telecom & Utilities Committee.

FCC asked for comment on Rural Task Force (RTF) proposal for reforming universal service program for rural telcos. Federal- State Joint Board forwarded plan to FCC Dec. 22 (CD Dec 26 p4). In proposed rulemaking issued Jan. 12, FCC said it sought comments on: (1) In general, whether RTF plan should be adopted “as a means of providing stability to rural carriers,” whether it provided “sufficient” universal service support. (2) Effect of plan on competition, how small ILECs and new entrants would be affected. (3) More specific implementation details such as proposed “safety valve mechanism” for providing additional support to rural carriers. For example, agency asked how that support should be distributed if rural carriers were eligible for more than proposed fund cap. (4) Implementation of RTF proposal to fix per-line support at a specific level in competitive study areas. (5) Implementation issues involving “safety net additive support.” Comments will be due 30 days after proposal is published in Federal Register, probably this week.

Since 9th U.S. Appeals Court, San Francisco, ruling classifying cable modem service as telecom service are “nonbinding dicta,” FCC is free to embrace Cox’s position that it’s pure information service devoid of telecom service component, Cox told Commission in reply comments in open access inquiry. Explaining recent decision to stop paying franchise fees on cable modem service to local govts. in 9th Circuit jurisdiction, Cox said court decision meant it had no choice but to suspend payment and collection of fees pending further clarification of issue by FCC. Recognizing its decision would have adverse financial impact on some local franchise authorities, company said it was in discussion with local govts. “in hopes of reaching a mutually satisfactory resolution.” Referring to criticism by National Assn. of Telecom Officers & Advisers (NATOA) that Cox was refusing to pay franchise fees mandated under Title 6 after declining to contribute to universal service fund and failing to secure necessary state or local certificates required under Sec. 253, company said it continued to pay cable franchise fees on all services that had been deemed Title 6 cable services. It would have continued to pay franchise fees on cable modem services in 9th Circuit jurisdiction states but for Portland decision, Cox said, pointing out it was paying such fees in other states. As for USTA’s charge that Cox hadn’t shown any intent to make payments to universal service fund despite concluding data service was telecom service, company said its telephone subsidiaries in 9th Circuit states paid “significant portion” of revenues into state and federal universal funds. “Far from ‘reasoning’ that its cable services are telecommunications services, as USTA claims,” Cox has “vigorously” and “repeatedly” disputed such suggestion, company said, and not until FCC determines that cable Internet service should be subject to Title 2 common carrier requirements can Cox comply with them.