Ore. PUC reduced state universal service fund surcharge to 3% from 3.24%, effective Oct. 1, based on semiannual review of projected fund needs. Fund need was projected at $48 million over next year, but PUC said collections were producing more revenue than required so agency decided to cut rate now rather than have buildup of big surplus. Reduction will save typical customer about 20 cents monthly.

FCC’s Consumer/Disability Telecom Advisory Committee meets at 9 a.m. Mon. at Commission hq to discuss whether changes could be made in Universal Service Fund to improve services for disabled. Meeting will be broadcast on Internet in Real Audio/Real Video format with captioning at www.fcc.gov/cib/cdtac. -- Scott Marshall, 202-418-2809.

U.S. Appeals Court in Denver reversed one of FCC’s main universal service orders Tues., saying agency didn’t “provide sufficient reasoning or record evidence” to back it up. The 10th Circuit, acting on challenges brought by Qwest, Vt. Dept. of Public Service and Mont. PSC, didn’t rule on underlying issue of whether order provided enough funding for rural areas. Instead, court ruled on more legalistic issue of whether FCC adequately supported its conclusion that order would result in enough funding. Concerns about actual amount of funding may become moot once FCC provides more explanation for its decisions on remand, court said. However, it added, “if they do not become moot, petitioners may reassert them in a later appeal to this court.”

Sen. Dorgan (D-N.D.) pledged to support lifting of universal service funding caps and inclusion of advanced services in definition of universal service, OPASTCO said Mon. at its annual convention in Minneapolis. “We must preserve, protect and nurture the universal service fund or we will have a digital divide,” OPASTCO quoted Dorgan as saying.

Citing foreign ownership and designated entity status, Alaska Native Wireless, VoiceStream and Verizon Wireless have challenged eligibility of NextWave to receive PCS licenses returned last month by U.S. Appeals Court, D.C. Carriers filed petition at FCC Thurs. challenging C- and F-block license cancellation that Appeals Court had overturned. Petition said D.C. Circuit addressed only Sec. 525 of U.S. Bankruptcy Code, meaning it covered only FCC’s cancellation of NextWave’s licenses because of failure to make payments on them. “Nothing in the court’s decision precludes the Commission from determining not to reinstate NextWave’s licenses on grounds in combination with, in addition to or unrelated to, its failure to make timely installment payments,” petition said. Carriers challenging eligibility all were successful bidders in Jan. re-auction of C- block licenses, most of which had belonged to NextWave. Largest U.S. carrier Verizon was largest bidder, winning $8.8 billion in spectrum. Carriers called on FCC to “conduct an investigation and audit” on NextWave’s eligibility as part of license remand ordered by D.C. Circuit. They also want public comment on their petition and issues uncovered by audit.

Western Wireless CEO John Stanton told state regulators that fixed wireless local loops were a key technology for providing phone service, Internet access and local competition to nation’s rural areas. In speech at NARUC summer committee meetings, Stanton said wireless carriers could serve high-cost, thinly populated rural markets with investment less than half what wireline carriers must put into market, greatly reducing need for universal service subsidies. In some rural areas, he said, fixed wireless is only way public ever will see any phone service, let alone Internet access. Widespread fixed wireless loops in rural areas, he said, could reduce burden on federal and state universal service funds by $2.4 billion annually. He said his company’s experience with competitive local service in rural towns with populations under 1,000 had been initial rapid penetration of market, followed soon after by lower prices, more service options and better service quality from incumbent wireline telco. He said wireless represented only economically practical way to reach isolated rural communities when terrain and distance made stringing phone lines uneconomic. He said Western had received eligible telecom carrier (ETC) status to receive federal universal service subsidies in 12 states, but had encountered regulatory obstacles in such states as Mont., N.M., S.D., Wyo. He said obstacles arose when rural incumbents pulled out all stops to deny Western any subsidies, or state regulatory processes became protracted ordeals. Realizing competitive promise of fixed wireless in rural areas, he said, will require expedited ETC reviews, neutral entry rules, universal service subsidies that are explicit and portable.

Market forces are driving cable companies to implement cable open access without govt. involvement, and same forces will drive spread of cable-based telephony, NCTA Pres. Robert Sachs said at NARUC summer meetings in Seattle. Sachs said in speech: “Consumer choice of multiple ISPs over cable is being resolved by the market through voluntary, arm’s-length business agreements, without government involvement.” He said local open access initiatives had been defeated in the courts and no proposed state open access law had made it through any state legislature. Sachs commended NARUC for “wisely choosing not to endorse mandated access to cable facilities.” He said at least top cable companies had 4 different trials under way of multiple ISP access over their cable modem platforms. He said cable companies 18 months ago began moving away from exclusive ISP agreements and some began voluntarily to carry multiple ISPs because they realized “offering a choice of ISPs is in everyone’s best interest.” He said cable companies were beginning to offer competitive local phone services providing substantial savings. As result, Sachs said, cable companies now were providing business phone service in more than 100 markets serving 1.3 million residential phone companies using traditional circuit-switched technology. He said cablephone hadn’t spread faster because many companies were awaiting development of commercial-quality voice-over-Internet technology. He cited field trials under way in Colo., Mo. and Wis. of Internet-based phone technology as 2nd-line service. In next 5 years, Sachs said cable would become leading facilities-based competitor to incumbent telcos, largely displacing resale and unbundled network element (UNE)-based services. In response to question, Sachs said no cable company had been approved to receive federal universal service subsidies, but Cox Cable in Cal. had been authorized to receive subsidies from state’s universal service fund. On another question, he said it was true that cable video services had refused to carry ads from their telecom competitors: “The practice varies by company, but this is fairly common among media companies. Our competitors have many other advertising media they can use.”

FCC released report Fri. on state-by-state telephone penetration at various income levels. Report, covering data through 2000, is used to assess success of federal Lifeline program in making telephone service available to low-income household in each state, Commission said. Lifeline program, part of Universal Service Fund, provides discounts on monthly services to qualified telephone subscribers. Current discounts are $5.25- $13.85 month, depending on state and carrier. Among report highlights: (1) Between 1984 (before Lifeline program) and 1997, states with federal Lifeline program had greater increases in telephone penetration compared with states without Lifeline -- about 1.5% for all households and more than 3% for low-income households. (2) In 1998, FCC expanded Lifeline program by offering states new matching funds. States taking steps necessary to receive maximum federal matching funds saw telephone penetration for all households rise 1% between 1997 and 2000 and 2.25% in low income households. (3) States that didn’t take steps to receive full federal matching funds saw no improvement in telephone penetration -- www.fcc.gov/ccb/stats.

Two advocacy groups presented White Papers at NARUC, lobbying state regulators to accept views on issues ranging from Bell company structural separations to universal service payments for wireless competitors. CompTel paper said Telecom Act and regulatory orders hadn’t been enough to force ILECs to relinquish “strong incentive to preserve their local monopoly.” Solution is “structural incentives” that would “turn the monopolists’ retail organizations into competitors.” Paper is titled Structural Incentives: The Simpler, More Efficient Path to Local Competition. Competitive Universal Service Coalition (CUSC) White Paper -- The Road to Competitive Universal Service Reform -- extolled consumer benefits of easier access to universal service funding by wireless competitors and other new entrants. CUSC said there should be faster, “nondiscriminatory process” for designating competitive entrants as eligible telecom carriers (ETCs). CUSC paper also urged action to assure all federal and state universal service mechanisms were explicit and fully portable.

NARUC Telecom Subcommittee staff killed 5 proposed policy resolutions that: (1) Expressed NARUC support for policies that would facilitate availability of advanced services to all customers over multiple broadband networks. (2) Supported legislation providing loans or grants to encourage rapid deployment of broadband services in rural and other underserved areas. (3) Urged FCC to obtain full and accurate cost-benefit information before making any change in services to be supported by federal universal service fund. Those 3 were tabled indefinitely because states couldn’t agree whether they were necessary or what message they were supposed to send. Also killed were 2 resolutions relating to jurisdiction over Internet-bound traffic, offering made suggestions to FCC for clearing up jurisdictional confusion over Internet-bound calls. States decided the resolutions were premature because they assumed the states would lose their intended appeal of FCC remand order’s finding that Internet access was interstate.