There was no agreement on whether the FCC should grant Level 3 petition seeking relief from access charges on “voice-embedded IP communications,” in comments filed with the Commission. Level 3 had asked the agency to forbear on rules that might be interpreted as permitting LECs to impose access charges on IP traffic originating or terminating on the public switched telephone network (PSTN), while the agency completes its reform of intercarrier compensation. The FCC last month ruled that Pulver.com’s computer-to- computer Free World Dialup service was an unregulated information service, marking the first “easy” step in addressing IP-based services (CD Feb 13 p1). However, many agreed Level 3 petition dealing with VoIP that touches the PSTN, raised more complicated issues, which should be addressed in the forthcoming VoIP rulemaking proceeding.

The FCC could “come under heavy pressure from lawmakers to back away” from a proposal by the Federal-State Joint Board on Universal Service to limit universal service funding to customers’ primary lines, Legg Mason said Mon. in a research report. The proposal released late Fri. sought to curtail the burgeoning increase in demand on the Universal Service Fund (USF), fueled in part by the growth of competition from wireless providers. The action means the current situation in which USF support can go to multiple lines and multiple carriers no longer would exist. The board offered the FCC suggestions for easing the plan’s impact on rural telephone companies: (1) “Restate” existing USF support for rural LECs (RLECs) based on primary lines so they wouldn’t lose support at first. (2) Order lump sum payments for RLECs so they would be kept whole at first. In both cases, RLECs would lose support only as they lost primary lines to competitors. (3) Freeze the per-line support available to competitors but “hold harmless” the RLECs so they don’t lose funding. FCC Comr. Martin had said his support for the primary line restriction was contingent on adopting the hold-harmless approach. The primary line plan was criticized by both competitors and RLECs. Western Wireless said the proposal would create “huge implementation difficulties” and was “antithetical” to the Telecom Act’s goals. The National Telecommunications Co-op Assn. (NTCA) said limiting universal service support to a single line “is not the right way to control the growth of the fund.” NTCA said “better management” could accomplish the same end: “All carriers should demonstrate their costs and receive support based on those actual costs.” NECA Pres. Bob Anderson said he was concerned that providing support to only one line would “seriously disrupt the flow of revenue to rural telephone companies.” He said rural companies depended on universal service revenue to provide services such as broadband: “Without these revenues it would be very difficult, if not impossible, for these companies to continue providing the telecommunications services that their customers are now receiving.”

Inflexion Communications asked the FCC to rule that the VoIP services it provides for underserved markets are exempt from the access charges applied to circuit switched telephone toll calls. “The petition is specifically focused on underserved market segment,” Inflexion CEO Dwayne Goldsmith said in a conference call Mon. with reporters.

The Senate could take up Internet tax moratorium legislation as soon as Wed., Sen. Alexander (R-Tenn.) predicted Mon. Alexander urged officials attending the National Assn. of Counties (NACo) conference Mon. to contact their senators urging support for his bill (S-2084) with Sen. Carper (D-Del.) that would revive the expired moratorium for 2 years while grandfathering those currently taxing DSL and other Internet-related services. “You might want to make a phone call to your local budget officer” to ask them “how much money you'd lose… if Congress banned taxes on telephone services,” he said. “Don’t ask them about Internet access taxes,” he added, because while that is what a rival bill -- S-150 by Sens. Allen (R-Va.) and Wyden (D-Ore.) -- states it’s targeting, he said language added to the bill would end telecom taxes once voice moved to the Internet through VoIP. “High-speed [Internet] access is a wonderful thing,” Alexander said, but he questioned whether it needed to be subsidized given its explosive growth, or whether banning taxes on VoIP was the most efficient way to subsidize it. Allen, meanwhile, has insisted S-150 doesn’t address VoIP and has made changes in a manager’s amendment to try to appease opponents. Alexander said he viewed the House measure, HR-49 by Rep. Cox (R-Cal.), as “the worst possible bill,” but made clear Allen’s compromises weren’t enough. Alexander also said he welcomed “less regulation” rather than more for VoIP, while adding that contentious issues such as E-911 service and the Universal Service Fund “have to be considered.” The audience applauded frequently and gave him 2 standing ovations. After his speech, NACo Pres. Karen Miller awarded Alexander the 2003 Legislator of the Year Award for managing to block consideration of Allen-Wyden last year.

A federal-state board recommended Fri. that the FCC limit universal service support to one line per customer to make sure the Universal Service Fund (USF) remains solvent. The recommendation by the Federal-State Joint Board on Universal Service drew partial dissents from 3 members. FCC Comr. Adelstein, Mont. PSC Comr. Bob Rowe and Nanette Thompson of the Alaska Regulatory Commission said restricting funds to primary lines “is a well-intentioned effort that will have a deleterious effect on the provision of universal service.” In a joint statement, they said “restricting funding to primary lines is not necessary to control fund growth.”

State PUC members from 13 states urged Congress to reform a “broken” universal service support system this year through targeted changes in the high-cost support program for non-rural carriers. The joint letter signed by 27 state commissioners from Ariz., Colo., Ida., Ind., Kan., Mich., Minn., Mo., Neb., N.D., Okla., S.D. and Wash. was sent to Senate Commerce Committee Chmn. McCain (R-Ariz.) and to incoming House Commerce Committee Chmn. Barton (R-Tex.). The letter said comprehensive universal service reform may take years to accomplish, but “in the interests of ensuring fair treatment for millions of rural Americans, the high-cost, non-rural program can and should be fixed this year.” The letter said 70% of rural Americans are customers of large non-rural carriers such as the Bell companies. The letter said all the benefits from the non-rural high-cost support program were spent in just 8 states -- Ala., Ky., Me., Miss., Mont., Vt., W. Va., Wyo. -- with customers in the other 42 states paying $200 million in universal service assessments but receiving zero benefit in return. For 2004, the letter said 2 more states (Neb. and S.D.) will receive support payments while the other 40 states are shut out of the program entirely: “Congress did not intend these huge disparities. Something is very wrong.” The state commissioners said they supported passage of legislation such as S-1380 and H-1582 that would “ensure a fairer, more targeted distribution of the non-rural fund.”

The FCC’s emphasis on VoIP is fine but the FCC should first make sure the underlying broadband infrastructure is deployed throughout the country, FCC Comr. Copps said Wed. at a symposium sponsored by Mich. State U.’s Quello Center. “No matter how enthusiastic the rhetoric [about VoIP], IP technologies will only reach their potential if the infrastructure is there,” he said. “We should be thinking larger thoughts,” Copps said: “If we ever needed a national conference on how to deal with disruptive technology it’s now.”

FCC Chmn. Powell endorsed reform of the Telecom Act during his testimony Tues. before the Senate Commerce Committee. He told the committee regulation of new technology such as VoIP couldn’t be resolved under the Telecom Act of 1996, and legislative reform should occur. Powell said the current law wouldn’t allow such services as VoIP to be “harmonized” and would make it difficult to resolve intercarrier compensation. “The days are numbered on the way we're doing this under the current statute,” Powell said: “I do believe there is going to have to be a statute in the future that recognizes these dramatic technical changes.”

The FCC should broaden its definition of “rural” for the Commission’s rural health care universal service support mechanism, according to several comments filed with the Commission. Some rural health care providers even argued that none of the definitions available could be applied to all rural areas and asked the FCC to adopt multiple methods of defining rural.

Giving VoIP a “new voice in Washington and in states,” several VoIP providers led by the VON Coalition officially announced a group to encourage a public policy that refrains from applying traditional telecom regulation to Internet voice communications. The group, called The Voice Over Internet Coalition, includes AT&T, Callipso, Convedia, iBasis, Intel, Intrado, ITXC, MCI, PointOne and Texas Instruments. The group, which has unofficially operated a few weeks (CD Dec 10 p4), announced new members and expanded principles Mon.