Fifth U.S. Appeals Court in New Orleans late Mon. upheld most of FCC’s May 2000 “CALLS” order that reformed universal service and access charges for Bells and other price-cap-regulated telcos. Acting on appeal by consumer groups, court said most of FCC’s order was reasonable. However, it remanded 2 parts of it, saying Commission hadn’t provided enough justification. Court didn’t vacate those provisions but FCC will have to open proceeding to justify them. They are: (1) Size of new universal service fund, which FCC had set at $650 million per year. Court said it wasn’t enough that figure was recommended by interindustry CALLS coalition or that agency chose number between the highs and lows of various industry estimates of how much implicit subsidy had to be converted to explicit funding. (2) FCC’s use of 6.5% productivity factor, called X-factor, which is important part of formula used to set access rates.

Bill by Rep. Boswell (D-Ia.) would authorize $3 billion in loans and credits for broadband deployment projects in rural areas and on Indian reservations. Legislation (HR-2847), introduced Sept. 6 and co-sponsored by Rep. Osborne (R-Neb.), would authorized funds for FY 2001-2005 or until expended. Loan program would be administered by Rural Utilities Service (RUS). Bill would provide up to $100 million in annual grants for rural Internet, telecom and computer technology projects. RUS would make grants available to educational institutions and state agencies, nonprofit entities or consortium of at least 2 of such organizations. Legislation would amend Sec. 254 of Communications Act by inserting language referring specifically to use of Universal Service funds for rural broadband support. FCC would be required under bill “to initiate a proceeding to provide federal universal service support for the deployment of broadband service to eligible rural communities.” Support provided as result of that proceeding would be determined without cost averaging, and could be used to deploy: (1) Loop treatments and DSL access multiplexers. (2) Cable modems. (3) Wireless technology. (4) Satellite technology. Boswell said bill also would create Office of Rural Technology within Dept. of Agriculture to “coordinate rural technology programs and serve as clearinghouse for [govt.] and private high-tech grant information.” HR-2847 would establish RUS-administered National Centers for Distance Working, which would provide $11 million in grants to develop and promote rural teleworking in communications and information technology sectors. It also would provide tax credits for rural or Indian reservation: (1) Broadband facility or enhanced broadband facility investments. (2) Expansion and relocation of high-tech businesses. (3) High- tech education or training.

Former FCC Chmn. William Kennard told Western Wireless Chmn. CEO John Stanton in recent letter that he offered “support” for company’s efforts to be designated by Commission as eligible telecom carrier (ETC) for service at Pine Ridge Reservation in S.D. “I'm very hopeful that the FCC will grant you the ETC designation,” Kennard wrote in Aug. 30 letter. “I believe that the ‘96 [Telecom] Act contemplated that competitors should be given ETC status, which can only be good for underserved consumers, like many residing on Indian reservations,” Kennard said. FCC is expected to act shortly on Western Wireless request that Commission give it ETC status so it could qualify for universal service funding for service at Pine Ridge.

Once again, dispute over CLEC access to enhanced extended links (EELs) has erupted at FCC, complete with flurry of ex parte filings, pending legal appeal and at least one aborted effort by FCC Common Carrier Bureau to fix problem. Seemingly arcane debate over EELS, which is combination of 2 unbundled network elements (UNEs) -- loop and transport -- is one of most important issues facing CLECs, ALTS Gen. Counsel Jonathan Askin said. CLECs complain that they have gotten very few conversions to EELs since FCC cleared way for them almost 2 years ago. However, ILECs question whether competitors’ requests for them are legal. ILEC representatives say competitors are stretching FCC-granted authority for limited use of EELs. ILECs also have mounted counteroffensive by urging FCC to drop transport element from mandatory UNE list, which effectively would eliminate EELs. FCC official wouldn’t comment about what action agency might take or when, but said there would “sharp focus on it this fall.”

Anyone doing business with FCC will have to obtain ID number -- called FCC registration number (FRN) -- starting Dec. 3. Ten- digit FRN will have to be provided any time individual or organization conducts transaction with agency involving payment of money. That would include filing license applications, tariff documents and other submissions requiring fee payment. It also includes payments made to participate in spectrum auctions and contributions to universal service fund. Organizations permitted to file tariffs without fees still would have to get FRN, FCC said. Commission said it taking action “to better manage our financial systems,” improve efficiency of agency processes and improve compliance with govt. requirements. For information: Click CORES link at www.fcc.gov. CORES is Commission Registration System.

AT&T filed formal complaint with N.Y. Attorney Gen. Office alleging Verizon long distance advertising contained 2 misleading claims. AT&T in its complaint about Verizon’s plan that offers 10 cent per min. rate at any time of day without “hidden charges,” alleges Verizon’s imposition of 6.89% universal service fund (USF) fee on long distance bills is hidden charge. AT&T contends USF is Verizon’s passthrough to customers of FCC’s universal service assessment, but isn’t tax because Verizon isn’t required to pass burden on to customers and USF charge is billed with services, not with taxes. AT&T also charged that Verizon’s claim to always give customers its best price was misleading because fine print said promise applied only if prices were cut in customer’s current calling plan, not if company offered lower price in different calling plan.

Idaho PUC approved stipulated agreement to establish basic structure for new and expanded state universal service fund to fulfill legislative mandate that all consumers in state, regardless of location, have comparable access to affordable telecom services. Approved agreement (Case GNR-T-00-2) was developed by PUC staff, Idaho Telecom Assn., Citizens Telecom, Century Telephone and TDS Telecom. Qwest didn’t sign on to agreement but also didn’t oppose it. New fund would be available to any eligible telecom provider, unlike current fund that’s restricted to handful of small rural incumbent telcos. Agreement said fund would use FCC Synthesis Model to identify and rank relative high-cost areas into 5 groups and separate process for dividing wire centers in high-cost areas into low-density zones eligible for support and high-density zones that are not. Fund also will require that carriers applying to receive support must reduce basic service rates to offset support received. PUC said other issues such as what lines were eligible for support, fund size, contributions, customer mapping and administrative mechanisms would be deferred until eligible telecom carrier applied for high-cost support.

Comsat asked FCC for full refund of $503,201 in Universal Service or TRS fund overpayments between 1993 and 1998, it said in Aug. 15 ex parte filing. Comsat said it was entitled to refund because it had provided no interstate portion of services that could be assessed for TRS payments, and services it did provide shouldn’t have been considered telecom under Commission rules. For TRS funding purposes, interstate services include interstate portion of video, satellite and international services. Comsat said that as provider of bare transponder capacity to mainly international destinations, it didn’t provide interstate portion of telecom service within meaning of Commission rules.

Estimated receipts from FCC spectrum auctions “are projected to be $1.2 billion lower in 2002 and $1 billion higher in 2004” than it had estimated in April, Office of Management & Budget (OMB) said. OMB, which released midsession federal spending report Wed., said revised estimate was part of several “technical changes” in April projections. Change in projected spectrum auction receipts “reflects regulatory actions taken by [FCC], which shifts the expected receipts from two major auctions.” OMB couldn’t tell us immediately what FCC actions report involved. OMB also said universal service fund spending estimates for fiscal year 2001 had declined by $1.1 billion. It said change in projected universal service spending reflected “decrease in expected collections in various programs and a slower rate of spending from obligated balances within the schools and libraries program than had been previously assumed.”

FCC got strong message from small telcos and some state PUCs Tues. in comments opposing agency’s idea of moving all intercarrier compensation to bill & keep regime. Although proposal is supported by large ILECs, rural and state interests expressed fear that it would harm universal service, threaten state independence, encourage more cream-skimming and raise consumer rates. FCC has been eying idea of making intercarrier charges more uniform for more than year and recently issued notice of proposed rulemaking (NPRM) asking for views. Plan would be to replace patchwork of compensation schemes -- such as reciprocal compensation and access charges -- with one form of payment, probably bill & keep. Bill & keep essentially means neither carrier pays other.