Adam Bender

The proportion of long distance revenue carriers must contribute to the Universal Service Fund in the second quarter of 2008 increased to 11.3 percent from 10.2 percent in Q1, the FCC said Friday. To get the “contribution factor,” the agency divides projected carrier revenue by expected USF subsidies for the quarter. Of an estimated $1.91 billion in Q2 subsidies, about $1.15 billion is for the rural high-cost program, $532.53 million for the E-rate program, $208.08 million for low-income support and $61.18 million for the rural health-care program. Rural wireless carriers are to blame for the “hike” in phone bill USF fees, said Tom Tauke, Verizon public affairs, policy and communications vice president. He urged the FCC to vote for an interim cap. “Consumers will thank the FCC when three commissioners finally call a halt to funding windfalls for some companies from the Universal Service Fund,” he said. A wireless source shot back: “If you really want to do something about controlling fund growth, then a good place to look would be to change the rules that allow the incumbent’s support to grow even after the incumbent wireline carrier loses customers.”

Telecom groups and companies are sounding alarms on broadband data collection proposals as FCC commissioners prepare to vote next week on the subject. Meanwhile, industry sources expect little opposition to a wireline item extending a ban on exclusive contracts with apartment buildings, they said. The FCC agenda for next week’s meeting was released late Wednesday.

The FCC “doesn’t know how to regulate packet networks” caught up in the net neutrality debate, “and in fact nobody does,” Silicon Valley network architect Richard Bennett said at an Information Technology and Innovation Foundation forum Wednesday. The FCC “knows how to regulate telecom networks,” but should refrain “from getting too nuts” making rules hampering engineers’ efforts against IP network congestion, he said.

Adoption of net neutrality rules is “eminently doable” despite challenges, and the FCC should act soon, Commissioner Michael Copps said in a VON TV webcast Tuesday. After Copps spoke, officials of Free Press, Progress & Freedom Foundation and other groups debated the need for such regulation.

The FCC should adopt procedural rules for forbearance to get more competition data in less time, said comments on a CLEC petition to adopt rules for forbearance procedures. NCTA, EarthLink and state regulators supported tightening controls on petitioners to relieve a time crunch for replies. But the FCC should also require competitors to be timely, said Alaska incumbent ACS. Meanwhile, the Independent Telephone & Telecommunications Alliance (ITTA) warned against adopting “redundant or superfluous” rules that could undermine deregulation.

The universal service high-cost fund will “spiral completely out of control” if the FCC grants a Hawaiian Telecom waiver petition, the National Telecommunications Cooperative Association said in reply comments. The carrier disagreed, saying “special circumstances” justify its exemption from usual measurement methods used to set a non- rural local incumbent carrier’s USF support. Even if USF measurement methods need an overhaul, opponents said, it should come in three proposed rulemakings now before the FCC.

The U.S. broadband problem is adoption, not deployment of facilities, said U.S. Internet Industry Association President David McClure Tuesday as his group issued a report on rural broadband. The study mainly used secondary data, such as listings from state development bodies and telecom groups. Deployment is moving at a “pretty remarkable pace” considering the nation’s size and geography, McClure said. Broadband has seen faster deployment than any major technology in “human history,” he said. But there has always been “significant lag” between deployment and adoption, McClure said. Educational programs promoting broadband adoption could “give us as much or better return on investment” than those on deployment, he said. “Regulation of the Internet of almost any kind isn’t going to stimulate adoption,” he said. Regulation won’t address issues slowing adoption including income, education, and “the viability of the Internet in the lives of individual consumers,” he said. Penetration is the “real conundrum,” agreed David Freet, USIIA board member and Pennsylvania Telephone Association president. Pennsylvania’s greatest broadband challenge has been explaining why consumers should buy it, he said.

A federal court declared it “unlawful” for Nebraska to force Vonage to pay into a state universal service fund. The U.S. District Court for Nebraska slammed the Nebraska PSC with a preliminary injunction, saying the PSC’s “authority to regulate the nomadic interconnected VoIP service provided by [Vonage] is preempted by the FCC, and Vonage need not comply with the [Nebraska USF order].” The order applies only to Nebraska, but will “send a signal” to other states, said Stifel Nicolaus analyst David Kaut.

Sprint Nextel will sell an unlimited voice and data plan for $99.99 as it tries to rebuild the company, CEO Dan Hesse said as the carrier released dismal Q4 results. Sprint hopes the new plan will highlight its data strengths and be a step toward repositioning the brand, Hesse said. “Data will be the next battleground.”

NASHVILLE -- CompTel plans to amplify its regulatory influence in 2008, the CLEC association’s leaders said in an interview. Momentum from last year’s FCC denial of Verizon’s forbearance petition is giving CompTel members “more incentive to participate,” said CEO Jerry James. Under a new dual leadership, “we intend to take it to the next level,” said President Matthew Salmon.