With the FCC apparently poised to impose Universal Service Fund (USF) assessments on all voice-over-IP (VoIP) providers this week, cable operators expanding into telephony with IP-based offerings face the unappetizing prospect of having to compete by markedly hiking their rates for those services or cutting into their profit margins.
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.
The 3rd draft of a telecom reform bill from Senate Commerce Committee Chmn. Stevens (R-Alaska) addresses net neutrality but doesn’t assuage critics’ fears that network operators like AT&T and Verizon will be able to discriminate against content providers like Google and Amazon.com, sources told us Sat. It goes further than Stevens’ previous draft, which simply required the FCC to conduct a study on the controversial topic. The new version of S-2686 is expected to become public Mon.
The House video bill’s passage (CD June 9 Special Report) doesn’t presage smooth Senate approval of franchise reform, including Commerce Committee Chmn. Stevens’ (R- Alaska) telco proposal, said industry and Hill sources. They give low odds on 2006 overhaul because between now and the midterm elections there’s little time to pass Stevens’ bill - - still in draft -- and then reconcile the 2 bills. Differences between House and Senate proposals further complicate the path, they said.
At our deadline, the House was expected to endorse a rule allowing a net neutrality amendment to the House video bill (HR-5252), which in turn was set for vote later Thurs. The amendment, by Rep. Markey (D-Mass.), would subject network operators to anti-bias rules and provide for expedited complaint review. It’s among 8 amendments the Rules Committee decided to accept late Wed. after a hearing on about 25 proposed changes to the bill.
The FCC is poised to impose a mandate on VoIP providers that they pay into the Universal Service Fund (USF) and also may raise significantly the “safe harbor” for wireless carriers. FCC Chmn. Martin began to circulate a USF item last week, timed to the June 15 agenda meeting -- likely the first with new Comr. McDowell.
The draft telecom bill (S-2686) was too hard on cities, Senate Commerce Committee Chmn. Stevens (R-Alaska) said Wed. at the first of 2 hearings on it. Acknowledging as “fair criticism” complaints about the bill’s local franchising provisions, Stevens said those parts of the bill were “put in by others.” Stevens said he takes “credit or blame” for the bill’s handling of net neutrality, but wants more Democratic input before revising the bill.
Communities across the Empire State should look to Philadelphia’s model of offering municipal broadband access to citizens, N.Y. Attorney Gen. Eliot Spitzer (D) told the Personal Democracy Forum conference in N.Y.C. Mon. The gubernatorial candidate said the problem “isn’t a lack of resources, it’s a lack of imagination and a lack of leadership.”
The Senate likely will learn the “hard way” to pare a 10-title telecom bill to get it passed, Rep. Pickering (R- Tenn.) said Tues. at a Pike & Fischer lunch. Pickering called the Senate’s broader approach to telecom legislation a “generous hodgepodge of issues” that need to be addressed.
WHITE SULFUR SPRINGS, W.Va. -- If FCC staff could change communications law, they'd get the agency Sunshine Act relief, many said when asked at an FCBA seminar here for their “wish lists” for Congressional action. Another top wish: Expanding Universal Service Fund contributions by including intrastate and interstate revenue, now barred by statute. Both changes are pending in a bill introduced by Senate Commerce Committee Chmn. Stevens (R-Alaska).
The satellite industry hailed language deep in a telecom bill by Sen. Stevens (R-Alaska) that would strengthen the satellite industry’s hand in 2 arenas where it claims unique utility: disaster communication and rural broadband deployment. If the bill’s satellite provisions survive conference, “it’s a big win for the satellite industry,” Satellite Industry Assn. (SIA) Exec. Dir. David Cavossa.