Contribution, Speed, Rural Roles Missing in USF/ICC Revamp, NARUC Speakers Say

LOS ANGELES -- Panelists at NARUC’s summer meeting urged the FCC to address the missing pieces in the Universal Service Fund and intercarrier compensation revamp. Those are contribution, speed and roles for small and rural phone companies, speakers said Sunday. Meanwhile, FCC Chairman Julius Genachowski was expected to meet with the NARUC Telecom Committee and the Federal/State Joint Board at NARUC’s summer meeting late Monday.

The purpose of the meeting is to give the chairman an opportunity to “hear the concerns of several state utility regulators from around the country with certain proposals in the Universal Service Fund/Intercarrier Compensation” notice of proposed rulemaking, James Cawley, Pennsylvania Utility Commissioner and chair of the USF Joint Board, told us. State concerns include “key elements that will be proposed soon in a USTA-mediated ex parte filing that may provide the nucleus of an FCC order that would pre-empt state jurisdiction over intrastate access charges and possibly eliminate them altogether (or virtually so), substituting for the loss with federal USF funds without growing the fund size or sensibly broadening the contribution base,” he said. The proposals could vastly favor large carriers at the expense of customers, provide small rural carriers with inadequate resources to do their jobs, “destroy the decades old partnership between the FCC and the states and favor those states that have done nothing to promote broadband deployment while penalizing those who have,” he said.

The telecom ecosystem can’t continue to rely on voice, a shrinking revenue source, to support USF, especially if the fund is transitioning to focus on broadband, said Director Peter Sywenki of Sprint Nextel. On intercarrier comp revamp, he said Sprint agrees with the FCC: As networks evolve, it may make little sense for providers to maintain different interconnection arrangements for the exchange of VoIP and other forms of Internet traffic. Fast transition can generate significant economic activity and at the same time lower total cost, he said, citing recommendations from the FCC’s Technical Advisory Council. Regulators can’t focus solely on availability, he said, urging looking at ways to improve adoption. “I am not sure if there’s room to do both adoption and availability programs,” he said.

Targeting is the primary USF solution to the rural divide, said Director Jeff Lanning of CenturyLink. The FCC’s rulemaking didn’t address contribution issues, he said: “It’s better to define a goal -- where we want to be and how do we get there.” There needs to be a more-efficient way to provide support, Sywenki said. Sprint’s concern is that money intended to invest in one area could be spent on something else, he said. A challenge for state regulators is getting more deployment as much as possible while ensuring competitiveness, said Diane Smith, Rural Broadband Alliance policy and rural development counsel.

The identical support rule is a problem, said Smith. A big piece missing in the USF rulemaking is the role of small and rural phone companies, she said. Speed is also missing in the discussion, she said. Speed matters, but what services companies are able to provide with higher speeds is equally important, Sywenki said.

About 95 percent of wireless wholesale minutes are provided by three major wireless providers, said Joe Witmer, assistant counsel with the Pennsylvania Public Utility Commission. And 95 percent of the doubling in the USF over the past eight years went from regulated wireline carriers to unregulated wireless carriers for their networks and services, he said. Addressing contribution and recipient-contributor issues is critical, he said. State preemption is another important issue: If the FCC preempts states, where do consumers go with rate/quality of service reliability concerns, Witmer asked. The FCC has been actively talking to state commissioners and the Federal/State Joint Board members throughout the process, he said, praising the FCC’s “openness and willingness to listen.”