Federal Universal Service Fund

Telecom Act revision should be legislation of few words and fewer regulations, BellSouth Chmn. Duane Ackerman told an American Enterprise Institute/Brookings Institution forum Tues. If Congress concludes competition between multiple facilities-based networks works better than traditional regulation -- which Ackerman believes it will -- telecom reform “could be dealt with in a very short bill in a matter of months, not years. This is not complicated.” Ackerman emphasized that telecom reform must be simple, to avoid lengthy litigation like that over the Telecom Act of 1996.

The Senate sent telecom legislation to President Bush on Wed. evening in a literal 11th-hour vote. By approving HR-5419, the Senate approved 3 legislative measures and ended weeks of political infighting about everything from Congressional Budget Office scoring to appropriators’ authority and boxing regulation. Sources said the White House would sign the act, which includes the spectrum relocation trust fund, E-911 funding and a temporary fix to accounting problems in the E-rate program. The junk fax bill, HR-4600, was the only legislation that had a reasonable chance to pass and didn’t. “The legislation brings needed changes that will promote homeland security and increase wireless broadband opportunities,” FCC Chmn. Powell said.

At our deadline, Congress had taken no action on pending telecom legislation and appeared unlikely to do so. Conflicting stories and behind-the-scenes finger pointing highlighted the debate this week, but congressional and industry sources attributed the collapse of legislation to one central theme: Political infighting and retaliation.

FCC Chmn. Powell and USTA urged Congress Mon. to pass legislation that would exempt the universal service fund from Anti-Deficiency Act requirements that would delay E- rate payments and could lead to higher USF fees on telecom consumers. The USF provision is part of HR-5419, which also includes spectrum trust fund relocation legislation and federal funding for E-911 deployment. The bill has been stalled by Senate Commerce Committee Chmn. McCain (R- Ariz.), who’s insisting that the House also consider his legislation that would establish a national boxing commission. In a public statement Mon., Powell said all 3 measures were important and urged Congress to pass the bill before it adjourns. Congress is scheduled to meet this week to consider the intelligence reform legislation, but many in the telecom industry hope the impasse on HR- 5419 can also be resolved this week, though sources have said both McCain and House leaders appear reluctant to change their position. “The temporary Anti-Deficiency Act exemption is necessary to mitigate unnecessary increases to our contribution factor as well as ensure our school children have continued access to computer resources,” Powell said. A letter Mon. from 219 USTA members to Senate leaders urged Congress to pass the USF legislation. “Unfortunately, if not corrected, this bureaucratic change could also cause consumer phone rates to rise dramatically,” said USTA Pres. Walter McCormick.

State regulators don’t see a VoIP-like FCC preemption of broadband over power lines (BPL), said Mich. PSC Comr. Laura Chappelle, who heads the NARUC BPL task force. “I don’t see the FCC or FERC [Federal Energy Regulatory Commission] as overly anxious to jump and try to preempt BPL,” she told us. The task force is in the final stages of its BPL inquiry and expects to present a white paper to NARUC by Feb., she added.

Congress left town without acting on some telecom bills, but also left a window of opportunity for telecom- related legislative measures to move in Dec. Congress finished its most important work -- the omnibus appropriations bill -- and set time to allow work to continue on intelligence reform, meaning there’s a chance telecom actions could be taken as well. Congress this weekend did approve the Satellite Home Viewer Improvement Act (SHVIA) and the Senate approved FCC Comr. Adelstein for a 2nd term (CD Nov 21, Special Report). The omnibus appropriations bill also included a ban on the FCC’s imposing a USF “primary line restriction” and an exemption of AT&T from collecting fees on calling card use.

The prospects for FCC Comr. Adelstein to be renominated to the Commission appeared bright Thurs. after his hearing before the Senate Commerce Committee. Senators from both parties praised his attention to rural issues and Committee Chmn. McCain (R-Ariz.) told reporters afterwards that he expected Adelstein’s nomination to pass.

NASHVILLE -- Federal regulators should reform intercarrier compensation and universal service subsidy eligibility standards if they want to make real progress on fundamental reform of the universal service high-cost support system, telecom interests told the Federal-State Universal Service Joint Board.

Senate Appropriators have agreed to add language to appropriation legislation that would forbid the FCC from adopting a primary-line restriction for the universal service fund, a Senate source told us. The language in the Commerce Justice State portion of the Omnibus Appropriations Bill would prevent the FCC from spending any money to enact a primary-line restriction. The FCC’s Joint Federal-State board on USF reform recommended earlier this year that the FCC give USF funding only to the primary line that delivers service to consumers. The recommendation is strongly opposed by rural groups. Several sources said this week that it was very likely that the amendment would be included in appropriations language.

Several important communications-related items could pass Congress this week as it returns for a brief lame- duck session, industry and congressional sources said. The loudest buzz is on the universal service fund (USF) and the controversy over the FCC’s change in accounting mechanisms that could slow some E-rate payments and possibly lead to a rise in contributions, and several sources expected some efforts to push a legislative solution.