Verizon Wireless used Alltel’s license to obtain high-cost Universal Service Fund support without getting permission from state regulators, U.S. Cellular, Allied Wireless, Commnet Wireless, and Viaero Wireless said in an ex parte filing published Tuesday. The wireless companies said “the core issue is whether Verizon Wireless was ever properly designated by state authorities” and that using Alltel’s high-cost support caused “ongoing harm … by driving up statewide support levels, causing steep reductions under the cap.” The high-cost issue involves tens of millions, if not hundreds of millions of dollars, in USF support, one industry official said.
Federal Universal Service Fund
The FCC's Universal Service Fund (USF) was created by the Telecommunications Act of 1996 to fund programs designed to provide universal telecommunications access to all U.S. citizens. All telecommunications providers are required to contribute a percentage of their end-user revenues to the Fund, which the FCC allocates for four core programs: 1. Connect America Fund, which subsidizes telecom providers for the increased costs of offering services to customers in rural and remote areas 2. Lifeline, which directly subsidizes low-income households to help pay for the cost of phone and internet service 3. Rural Health Care, which subsidizes health care providers to offer broadband telehealth services that can connect rural patients and providers with specialists located farther away 4. E-Rate, which subsidizes rural and low-income schools and libraries for internet and telecommunications costs The Universal Service Administrative Company (USAC) administers the USF on behalf of the FCC, but requires Congressional approval for its actions. Many states also operate their own universal service funds, which operate independently from the federal program.
A group of small wireless carriers asked the FCC to reject a TracFone petition seeking new rules for eligible telecommunications carriers (ETCs) under the Link-Up program. The Competitive ETC coalition accused TracFone of seeking a competitive advantage. TracFone, which provides pre-paid wireless service, asked the FCC for a ruling that ETCs may not receive support for providing Link-Up benefits unless they routinely charge customers for commencing service, and may not expand services they offer under the program to wireless service without obtaining approval from the proper authority.
The FCC’s proposed mobility fund is too small to help build out 3G broadband for the nation’s under-served areas, T-Mobile, the Rural Telecommunications Group and South Dakota-based Flow Mobile said in comments filed in docket 10-208 and released Friday. Verizon and Windstream disagreed, saying the fund was appropriate. Verizon, in fact, went further and said that not only is the $100-$300 million proposed mobility fund adequate, but the FCC should phase out other support for competitive eligible telecommunications providers.
The FCC would get its full request of $355.5 million for FY 2011 if Congress approves the latest version of its omnibus spending bill, which was released Tuesday. The bill appropriates $41.5 million for the NTIA, including money for oversight of broadband stimulus grants. The bill also includes an Anti-Deficiency Act exemption of interest to the telecom industry. The Universal Service Fund program needs an annual exemption from ADA, which sets accounting rules for federal programs. Due to USF’s unique accounting methodology, the program would technically violate the Act without the exemption, which must be obtained in every budget cycle. Also of interest, the bill prohibits the FCC from adopting a restriction limiting USF funding to primary lines. Senate Democrats hope to move the 1,900-page bill to the floor within the next week.
The FCC won’t have an order ready on reverse auctions for the proposed mobility fund until mid-February at the earliest, Chief Margaret Wiener of the Wireless Bureau’s Auctions & Spectrum Access Division said Monday at a Federal Communications Bar Association lunch. In October, the commission opened a rulemaking on whether it should use between $100 million and $300 million left over in the high-cost Universal Service Fund to create a reverse auction in which wireless companies in underserved areas have a chance to win subsidies to build out 3G networks. The comment period for the current rulemaking closes Dec. 16, and replies are due Jan. 17, Wiener said, making it unlikely that an order will be ready to go out before mid-February.
Carriers shouldn’t get reimbursed by the Universal Service Fund Link-Up fund for activation charges that the carrier waives or reduces when customers buy extra airtime, said TracFone Wireless in a Dec. 1 petition for declaratory ruling. At least one eligible telecommunications carrier, ReachOut Wireless, is doing that, TracFone said. Also in the petition, TracFone asked the FCC to declare that a carrier receiving Link-Up money for wireline services may not use the money for wireless unless it first gets FCC approval. And TracFone wants the FCC to declare that a carrier must use “some of its own facilities” to be designated as an ETC in a particular state. The FCC should clarify that a carrier can’t cite wireline facilities to meet that requirement if it’s providing wireless services, “unless those wireline facilities are being used to transmit or route the wireless services that are designated for support.” TracFone’s proposed rules “are necessary to ensure that disbursements from the federal USF are only received by properly-designated ETCs and are only used to support services as allowed by the Commission’s rules,” TracFone said.
FCC Chairman Julius Genachowski formally announced Wednesday that he'll bring a net neutrality order to a vote at the Dec. 21 meeting. The draft had been expected for several days. Genachowski and his staff said they have broad support from industry, public interest and other stakeholders. Senior officials said privately that they had secured no commitments not to challenge the proposed rules in court. Nonetheless, the chances of being sued by a major ISP are much lower if the commission doesn’t reclassify broadband and instead proceeds with net neutrality sticking with its Title 1 authority, industry executives and lawyers said.
ATLANTA -- The Rural Utilities Service will help the FCC carry out the National Broadband Plan, revamp the Universal Service Fund and accomplish other goals, Administrator Jonathan Adelstein said Tuesday at the National Association of Regulatory Utility Commissioners conference.
ATLANTA -- The FCC is “moving forward strongly on implementation of the National Broadband Plan,” including fixing the spectrum, intercarrier compensation and Universal Service Fund systems, said FCC Chairman Julius Genachowski, speaking at a NARUC annual meeting for the first time. Two areas in which innovation is essential are broadband and the smart grid, said Commerce Secretary Gary Locke. NTIA has identified government spectrum for commercial broadband, he said. (See separate story in this issue.)
The FCC’s order Friday that requires nomadic VoIP providers to pay into state Universal Service Funds and federal USF could lead to more regulatory activities in some states, officials said in interviews. The order (CD Nov 8 p2) had been expected since September, when Kansas and Nebraska amended their petition to the FCC by deleting language that would have allowed states to assess fees retroactively.