States Have Concerns on USF Overhaul, Indiana’s Landis Says

States have concerns about a revamp of the Universal Service Fund, Indiana Utility Regulatory Commission member Larry Landis said Tuesday. The Republican supported the FCC’s undertaking a USF overhaul that could reallocate some money to broadband service. Some states are worried about how companies that rely on the high-cost part of the fund will be affected by a revamp, Landis said at an American Cable Association conference. Some providers get a large chunk of their revenue from that part of USF, he noted. “The one concern that would be shared by many of my colleagues” is that whenever intercarrier compensation and USF overhauls are done, “you are bound to have some unexpected challenges that come up,” Landis said.

The FCC is continuing its outreach to state and other interests regarding USF, said Zac Katz, an aide to Chairman Julius Genachowski. There will be at least one additional USF workshop, outside Washington in May, Katz said. “I'm expecting a very busy spring, a very busy summer, but I hope it won’t be much longer before we have final reform.” He pointed to a March 15 blog post from the five FCC members on USF and intercarrier compensation.

On net neutrality, the FCC is “evaluating” comments it received on the paperwork burden that complaint procedures set up in its December order would impose, Katz said. The study is being done under the Paperwork Reduction Act. After the review, the commission will pass any proposed changes to the Office of Management and Budget, which will offer a 30-day comment period, Katz said. When OMB is “comfortable with the rules, then there is another 60 days,” he said. “We're not quite there, but I don’t think it will be much longer” before the rules become final, Katz said.

All the commissioners apparently deem nondiscriminatory access to video programming “a really important issue,” Katz said. On retransmission consent deals between TV stations and subscription-video providers, “it’s important to recognize that the tools provided to the FCC are limited in the retrans context,” he said. Nondiscriminatory access “remains a priority, and I think we'll see what the record shows” in the retrans rulemaking notice, Katz said.

"We've seen a great amount of outreach” by Genachowski and others high in the FCC to the USF Joint Board and other players concerning an overhaul of the fund, said Landis, a joint board member. One state concern “is how the repurposing of high-cost funds will proceed, and whether it’s appropriate,” and states have differing views, he said. “We believe for the most part” USF is “a part of the urban-rural covenant,” Landis said. “So we will not hesitate to voice those differences when we see them.” States were “pleasantly surprised” by outreach from the NTIA and the Rural Utilities Service regarding their $7 billion total in broadband stimulus grants, Landis said.

Some stimulus projects have faced local environmental challenges, NTIA and RUS officials said. “When you take grant money from the federal government, you want to make sure that all the local environmental guidelines” are met, said NTIA Chief of Staff Tom Power. “We've done a lot of work to help” recipients comply. The NTIA is managing about 230 grants, totaling $4 billion, Administrator Larry Strickling said Friday.

Construction of some RUS broadband projects is going slower than had been hoped, said David Villano, the agency’s assistant telecommunications program administrator. The agency has obligated $3.5 billion in funding, and after a few awards were withdrawn, 310 projects are being built out, he said. Construction has been “a little bit slow, but pushing through that many awards in that time frame was a huge challenge for us,” Villano said.

Recipients of broadband stimulus awards must get approval from local authorities, such as those dealing with historic preservation, and that has slowed progress, Power told us in Q-and-A. “You basically have to get sign-off from all these various different entities,” some facing budget cuts, he said. “It just gets slowed down, depending on which offices you're dealing with.” At RUS, “we haven’t seen any tremendous barriers,” Villano said. “It’s just taking a little bit longer than we had hoped.”