Australian Minister for Communications, Information Technology & Arts Sen. Richard Alston Tues. released to stakeholders booklet Australian Telecommunications 2002 outlining govt.’s policy framework for encouraging growth of telecom services there. Report said govt. had “underpinned” competition encouragement approach with comprehensive suite of regulated consumer safeguards, including Universal Service Obligation, Customer Service Guarantee, Network Reliability Framework, Telecom Industry Ombudsman, untimed local call obligation and price controls on Telstra. Report said govt. had recognized there were areas where “competition may not deliver fully on all community needs,” and provided $1 billion in targeted funding programs to overcome barriers to service improvements in rural, regional and remote areas of Australia. Booklet describes govt.’s approach to competition and consumer safeguards for fixed line, mobile and Internet services and summarizes development of services in recent years -- www.dcita.gov.au.

CHICAGO -- Policy committees advanced only one telecom resolution, addressing broadband content neutrality, as state regulators met here Mon. for National Assn. of Regulatory Utility Comrs. (NARUC) Annual Meeting. Resolutions addressing universal service portability and wireless consumer disclosures failed, but for widely different reasons.

FCC asked Federal-State Joint Board on Universal Service to review Commission’s rules for high-cost universal service support in areas where competitive ETCs (eligible telecom carriers) provide service. Commission also asked Joint Board to reviews agency’s rules on support for 2nd lines. FCC said late Fri. it was asking Joint Board for recommendation on “if and how those rules should be modified… in light of developments in the telecommunications marketplace.” It also asked panel to look at process for designating ETC status. Joint Board review appears to center on issues that have been brewing between rural ILECs and competitors as well as concerns about increasing demand on universal service funds as competitive ETCs continue to qualify for more support. FCC said that under its rules competitive ETC that served customers in incumbent LEC area “receives the same per-line amount of high-cost universal service support that the incumbent LEC would receive for serving the same customer.” Rules “do not distinguish between primary and secondary lines” and “therefore, multiple connections to a single end- user in high-cost areas may receive universal service support,” FCC said: “Since the adoption of these rules in 1997, there have been many changes in the telecommunications marketplace. As competitive ETCs enter new markets and expand services, they are increasingly qualifying for high- cost universal service support.” FCC also asked for comments on whether “measures might be necessary to prevent such growth” in universal service fund. Agency said those issues also had been raised in other proceedings and petitions by ACS Fairbanks and National Telecom Cooperative Assn.

SBC and BellSouth proposed “alternative connections- based” universal service contribution method they said would ease concerns about earlier proposal and could be implemented by Jan. 2004. In meantime, companies urged FCC in Nov. 5 letter to modify existing revenue-based methodology through interim plan similar to that proposed by group of other carriers. SBC and BellSouth recommended that starting April 2003 FCC: (1) Eliminate “lag issues” by implementing “bill and remit” process. (2) Establish “an uncollectible safe harbor in the funding demand.” (3) Increase wireless safe harbor percentage and require “companywide election.” (4) Remove DSL services from the contribution base pending decision in wireline broadband proceeding. Longer term proposal would retain connections-based assessment for most types of interstate telecom services, including bundled switched local and interstate long distance services, BellSouth said. However, “in those cases where an end user buys switched local service and interstate long distance service from different carriers, one half of the connection assessment is assigned to the local service and the other half of the connection assessment is used to calculate a residual funding requirement. This residual funding requirement will be recovered from IXCs, including dial- around and prepaid calling card providers, on a revenue basis.”

OPASTCO told FCC it supported interim universal service contribution proposal such as one offered by USTA in Oct. (CD Oct 22 p5). OPASTCO said it agreed with USTA that interim plan should continue to use interstate, end-user revenue as contribution base and should raise “safe harbor” contribution limit for wireless carriers to 20-28% from current 15%. It said it also would like to see Commission “exercise its permissive authority to require all facilities-based broadband Internet access providers to contribute to universal service.” OPASTCO spokeswoman said that phrase didn’t target any particular broadband platform but rather “we're saying all facilities-based Internet access providers should contribute, regardless of platform.” Such providers potentially would include cable, DSL, satellite, wireless. “Some of these platforms hold a very small percentage of the market but all should be contributing to the universal service fund,” she said. Assn. said it opposed connection- based contribution mechanism proposed by Coalition for Sustainable Universal Service and “numbers-based solution supported by AT&T.” OPASTCO said it envisioned interim proposal’s giving Commission time to work with telecom industry “to devise a workable and lawful flat-fee-based universal service contribution methodology.”

Verizon Wireless proposed to FCC methodology for wireless carriers to ascertain percentage of their revenue that was interstate and international for purposes of universal service fund (USF) contributions. Carrier joined CTIA, Qwest, USTA and Verizon in offering compromise on revising USF contribution methodology (CD Oct 28 p7). In separate filing, Verizon Wireless said safe harbor played key role in minimizing complexity of wireless carrier contributions to USF. Challenge for wireless carriers is in separating end-user revenue into interstate and intrastate categories, it said. Carriers can use software, system upgrades and baseline assumptions to track interstate and intrastate minutes of use, filing said. That can create “reasonable proxy” for allocating wireless revenue for USF contributions, it said. “A safe harbor, updated to reflect current wireless calling activity, furthers the policy objectives of promoting equitable contributions, fund stability and administrative simplicity,” it said. Verizon Wireless said because calling patterns could vary among states and carriers, operators should be able to file interstate/international revenue calculation based on company-specific calling patterns if they had system to track such traffic. Carriers could create such systems based on FCC-approved methodology and Commission could require retention of records that were used to develop company- specific levels. Proposed methodology would: (1) Track min. of use from call records, dividing all interstate and international min. by total min. over certain time period to come up with percentage of interstate and international min. of use. (2) Multiply that percentage of interstate/international min. of use by qualifying service revenue to come up with total revenue base that would count toward USF contribution.

USTA, CTIA, Qwest, Verizon and Verizon Wireless offered FCC compromise position on revising universal service contribution methodology. In letter submitted late Fri., groups said they thought FCC was moving too quickly to overhaul contribution system and they had agreed on interim approach: Moving to modified revenue-based system using collect-and-remit approach, until FCC could “more fully examine the potential impacts of any new assessment method.” Under that system, carriers would contribute to universal service funds based on interstate revenue they collected, letter said. Carriers could recover their contribution amounts from end-user customers based on factor derived by Universal Service Administrative Co. (USAC) plus “limited administrative markup.” Letter said group also agreed to wireless carrier safe harbor of at least 20% unless wireless carrier could determine its actual interstate revenue. “In addition, the safe harbor percentages should be applied on a companywide basis.” Letter said there was agreement that: “For purposes of reporting interstate revenue, CLECs should impute an amount equal to the federal Subscriber Line Charge [SLC] charged by the ILEC in that CLEC’s serving area. CLECs should have the option of reporting the actual amount charged by the ILEC or the nationwide SLC cap.” Groups said those actions would address immediate concerns about sustainability of current assessment method. They also would give FCC “additional time to develop the record on how best to balance the contribution levels from different classes of consumers and ways to reduce the administrative difficulties in implementing a new system.” Groups said more time was needed because several proponents of per-connection proposals have made changes “and in some cases, parties are suggesting entirely new approaches that have not been adequately aired in the record.”

Voice on the Net (VON) Coalition said it supported connections-based approach to funding universal service, concept backed by several telecom industry groups. FCC is considering changing current revenue-based method of assessing universal service contributions. “A connections- based contribution methodology will ensure that USF [Universal Service Fund] payments are assessed in a fair and economically efficient manner,” group said. VON Coalition includes companies offering products and services for use on Internet or IP networks, including Intel and Microsoft.

Federal-State Joint Board on Universal Service issued recommendation on how FCC should act on remand by 10th U.S. Appeals Court, Denver (CD Feb 20 p5). Court remanded FCC’s 9th universal service order, which had set mechanism for determining how much federal universal service support would go to larger ILECs. In recommended decision issued Oct. 16, Joint Board proposed that FCC: (1) Adopt additional measures “to induce states to ensure reasonable comparability of urban and rural rates.” (2) “Implement a supplementary rate review as a check on whether nonrural high-cost support continues to provide sufficient support to enable the states to maintain reasonably comparable rural and urban rates.” (3) “Continue use of statewide average costs to determine nonrural high- cost support.” Court ruled in Qwest v. FCC that order didn’t adequately define and apply Telecom Act’s requirements that rates in rural areas be “reasonably comparable” with urban areas and that support should be “sufficient.” It also faulted FCC for not properly explaining its reasoning for setting funding benchmark at 135% of national average.

Senate Commerce Committee Chmn. Hollings (D-S.C.) remains interested in moving legislation that would consider subsidies to aid broadband rollout, but time ran out this session to float bill on which everyone could agree, said Kevin Kayes, panel’s Democratic staff dir. Kayes spoke Mon. on regulatory panel at Yankee Group Telecom Industry Forum in D.C. “It’s not such a far-fetched idea,” he said of subsidization possibilities. “It shouldn’t be dismissed out of hand.” While Senate drafters went through 4-5 versions of bill that would include subsidies, he told reporters after panel that in discussions with equipment-makers, incumbents and competitors: “Nobody was really ready to subsidize. There was sort of a feeling that this was interesting but nobody was really ready to do this.”