Tennessee should keep separate state funding to speed broadband deployment and any state universal service fund, the Tennessee Regulatory Authority said Friday in a report on legislation proposed to remedy problems caused by diminishing revenue from intrastate switched access. The Tennessee Rural Affordability Fund (TRAF), authorized but not yet mandated into existence, would be funded much as the federal universal service fund is, the report said. The proposed legislation covers phone companies serving the most remote areas -- rural incumbent local exchange carriers and rural phone cooperatives with fewer than a million lines. The bill would require such carriers to reduce their intrastate switched access rates to their interstate switched rate levels. “The revenue loss resulting from these reductions will be recovered from funds paid into the TRAF,” the report said. The authority urged legislators to focus on “keeping local phone rates affordable” and to make sure that “any funding to support rural broadband deployment should be established as a separate portable fund.” Legislators should not set a statewide benchmark rate for local phone service “as a litmus test to determine support from TRAF,” the authority said. The bill should include a sunset provision requiring a report and recommendation from the authority before legislators consider extending the fund’s life, it said. The fund should be capped as determined by the state regulator, the report said. Recipients of money from the new universal service fund should be designated “carriers of last resort” and should have to provide Lifeline, Link-up and other “social and safety services,” it said. Companies electing market regulation should not be allowed to draw from the fund, the authority said. “Because a carrier operating pursuant to market regulation can adjust its rates to respond to competition, the need for specific subsidies such as that from the TRAF would become unnecessary,” it said. “Therefore it is appropriate to cease such TRAF assistance if the carrier elects Market Regulation.” Carriers paying into the federal USF also should pay into the TRAF, the authority said, asking that the Legislature empower the regulator “to assess and collect fees” and “establish criteria and procedures for assessing, collecting and dispensing fees, and for monitoring the operation of the TRAF.” If the bill is enacted, it should include a provision delaying implementation for a year to give the authority time to write procedures and criteria for running the fund, the report 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.
With a deadline next week on the latest inquiry on special access prices, a Sprint Nextel executive said Tuesday the FCC appears ready to address the company’s long standing complaints. Sprint is also asking the FCC to act quickly to reallocate spectrum bands totaling 100 MHz, which the company believes could be addressed well ahead of eventual decisions about broadcast spectrum or spectrum in federal government hands.
Availability of universal service funds for broadband access should focus on disadvantaged users where areas with low adoption rates can be attributed to an “inability to pay for service, lack of computer literacy, unavailability of computers, social factors, lack of subscriber interest,” and lack of perceived value, said ViaSat in an ex parte filing. Because ViaSat-1, scheduled for launch in 2011, will be able to serve remote users and bypassed users, disadvantaged users should be the focus, the company said. The FCC should develop nationwide “price benchmarks” for broadband installation, user education and monthly service and then choose among different levels of federal support for customers who meet state eligibility requirements, it said. The USF program should continue to be technology neutral and should promote the development of new technologies for users, said ViaSat.
State commissions urged the FCC to ignore Vonage threats that the company would go to court if the regulator modifies without a rulemaking proceeding a 2004 declaratory ruling preempting state regulation of interconnected VoIP. In a letter Wednesday to the FCC, the Nebraska Public Service Commission and Kansas Corporation Commission said no administrative law bars the FCC from immediately issuing a fresh declaratory ruling saying VoIP must pay state Universal Service Fund fees. “The prospect of judicial review should not prevent the FCC from reaching the right decision, which is to act expeditiously to protect universal service and fair competition (currently nomadic VoIP is the only category of provider not paying state USF assessments) by issuing a second declaratory ruling supplementing, clarifying (or if necessary modifying) the first declaratory ruling issued in 2004,” they said. The Kansas and Nebraska regulators also rejected arguments by the VON Coalition that state USF assessments are “economic and entry regulation” preempted by the 2004 decision (CD Dec 14 p12). State USF assessments create no conflict between federal and state policies that would necessitate preemption, the states said. “Both the FCC and the State Petitioners share the common policy that nomadic VoIP providers, like all their competitors, must do their part to support the paramount statutory mandate of ensuring universal telephone service throughout the Nation.”
Comprehensive FCC action by July on jurisdictional separations may be a long shot, given a short time frame and ongoing work on the National Broadband Plan, said officials for state commissions and state consumer advocates. The FCC may again extend the nearly nine-year-old freeze on separations, which expires June 30, they said. “Another freeze is certainly a possibility,” said Commissioner John Burke of the Vermont Public Service Board. If the FCC chooses to go in that direction, state regulators believe “interim changes to key factors are an absolute pre-requisite to extending final comprehensive review beyond June of this year,” he said.
AT&T asked the FCC to set a deadline to move telecom from circuit-switched to IP-based networks. The request came in comments this week on an FCC National Broadband Plan public notice that proposed the release of a notice of inquiry (NOI) on the transition. Small rural carriers cautioned the commission not to move too fast. Meanwhile, competitive carriers fought with Verizon over whether interconnection and traffic exchange requirements under Sections 251 and 252 of the Communications Act apply to IP networks. Wireless carriers said the rules should ensure regulatory parity.
Spectrum audit legislation will be a high priority for the House and Senate Commerce Committees when Congress reconvenes next year, industry and Hill sources said. Work likely will start in the House Communications Subcommittee with markup of two bills that address the scope of a spectrum inventory (HR-3125), and strategy for relocating holders of federal agency spectrum, freeing it for commercial use (HR- 3019). The Senate Communications Subcommittee also has an audit bill (S-649). Negotiations are ongoing among congressional staff and the administration on a comprehensive approach, industry sources said. There’s strong bipartisan support for an inventory bill.
The FCC broadband team believes private investment is essential and competition drives innovation and better choices, said Blair Levin, the plan coordinator, at the commission’s meeting Wednesday. The U.S. must make better use of “existing assets” such as the Universal Service Fund, spectrum and rights of way, he said. Chairman Julius Genachowski agreed that USF and spectrum are critical areas and said the government can’t afford to put off a thorough USF overhaul much longer.
The FCC tentatively concluded that the timing of the National Broadband Plan makes it impossible to overhaul the Universal Service Fund high-cost support mechanism for non-rural carriers like Qwest “at this time.” The commission had committed to answer a remand by the 10th U.S. Circuit Court of Appeals on the subject by April 16. In a further notice of proposed rulemaking released late Tuesday, the commission sought comment on specific “interim changes” to address the court’s concerns and marketplace changes. While voting for the order, Commissioners Meredith Baker and Robert McDowell expressed some disappointment that the notice didn’t say more.
The FCC needs to make solving the digital divide a high priority for its broadband plan, Commissioner Michael Copps said at a Practising Law Institute conference Thursday. People are starting to realize that the broadband plan is not just “technospeak from broadband geeks” but can lead to policies that improve peoples’ lives, said Copps, who was introduced at the conference by Chairman Julius Genachowski. But if policymakers don’t get it right, the result could be “more and even wider divides in this country,” Copps said.