RLECs Gear Up for Fight Over USF Cap

Rural carriers are gearing up to fight against the proposed cap on the Universal Service Fund and other objections they've found to the FCC’s rulemaking notice, association lobbyists said Tuesday. The cap, which would freeze the fund at 2010 levels, “has to be proven flawed,” Organization for the Promotion and Advancement of Small Telecom Companies Vice President Randy Tyree said on a conference call for members of several rural associations. It’s important that rural telcos and their supporters convince policy makers and legislators that the telcos are handling their USF cash well and that broadband will expand even further if the fund is allowed to expand, too, he said.

Lobbyists and the 600-plus members on the call also expressed concerns about contribution, reverse auctions, traffic pumping and interconnected VoIP calls. The commission’s rulemaking notice is expected to be published in the Federal Register shortly, starting the comment clock. “If there has ever been a time where a unified rural voice is necessary, this is it,” National Telecommunications Cooperative Association Policy Director Josh Seidemann said on the call.

Glenn Brown of the Rural Broadband Alliance wondered aloud how the fund could deploy expensive broadband around the country and still be capped. If USF is capped, nearly half of rate-of-return carriers won’t even be eligible for Rural Utilities Service loans by 2020, National Exchange Carrier Association Director Bob Gnapp said.

Tuesday’s callers said they were upset that the FCC hadn’t tackled contribution in its proposed reforms, as are many other industry officials. “It’s one of the uphill battles we have at the FCC right now is to act on contributions even as they're working on the distribution system,” Seidemann said. Western Telecom Alliance officials met with Capitol Hill aides last week and got a sympathetic ear for their proposals to expand fees to companies such as Netflix and Google, Government Affairs Director Derrick Owens said. “The concern, politically, is that members of Congress will say, ‘Well, now we're taxing the Internet.'” The effect is to give a competitive advantage to cable and other non-telco broadband providers, Gnapp said: While telcos that provide broadband are subject to USF regulations and fees, cable and other broadband providers are not.

Confusion over Title I-Title II questions has enabled a lot of “arbitrage,” Seidemann said. The commission could require VoIP to pay for use of the switched network without even getting into Title II questions, he said. Owens said reverse auctions might work in the “near term,” but rural carriers ought to be worried about them for the long-term. “Most important,” though, Owens said, “we're going to focus on making sure that the companies that have in-ground investments or have committed to in-ground investments are allowed to recover their costs.”