USF Rulemaking Leaves Tough Questions for Another Day
FCC Chairman Julius Genachowski is taking an aerial view of revamping universal service and intercarrier compensation in a new rulemaking notice. It takes up in general the necessity of subsidizing and deploying high-speed broadband but leaves contentious questions like the contribution factor for another day, commission and industry officials said. As expected, the FCC circulated a rulemaking notice late Tuesday for the commission meeting Feb. 8. The commission wants to use “market-driven, incentive based policies and increased accountability” to shift universal service money to “near term support for broadband deployment in unserved areas,” the agency said in a news release. It seeks to adopt measures to address intercarrier compensation (ICC) “arbitrage, as well as a long-term transition from current high-cost support and ICC mechanism to a single, fiscally responsible Connect America Fund,” the FCC said.
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Industry has been generally supportive of redirecting Universal Service Fund money to broadband, but some officials said they were disappointed that the FCC put off a fight over the contribution factor to another day. “It’s a little discouraging,” Vonage Senior Regulatory Counsel Brendan Kasper said. Kasper said his company’s initial contact from the commission on universal service changes came from a working group focused on contributions. Vonage pays about $50 million into the USF but doesn’t receive a direct subsidy. Broadband support is long overdue, Kaspar said.
The commission wants to concentrate on a “framework that would spur jobs and investment,” an FCC spokesman said. “We fully appreciate the need to address contributions reform and will do so in due course.”
Other industry officials said they wish Genachowski had gone straight to orders on sub-issues such as traffic pumping or VoIP calls. “The first step is to adopt an order confirming the appropriate treatment of IP-based voice traffic -- an issue that can easily be separated from the broader proceeding,” wrote the CEOs of CenturyLink, Frontier, Qwest and Windstream in a letter to Genachowski dated Tuesday. They're worried that VoIP providers “have unilaterally decided to decrease or eliminate the long-standing industry practice of honoring the appropriate and lawful intercarrier compensation charges,” the letter said. “We believe the time to act is now. By taking decisive action, you will end the self-help arbitrage opportunity that is running rampant in the unchecked ICC system and will provide the commission with a clear framework for moving forward with real reform.”
The FCC rulemaking should “recognize the critical importance of support in enabling the deployment, operation and adoption of broadband services,” National Telecommunications Cooperative Association CEO Shirley Bloomfield said. The commission’s local competition report shows that the USF is in “crisis,” AT&T Vice President of Federal Regulatory Hank Hultquist told us. ILECs shed nearly 74,000 switched access lines from December 1999 to December 2009. And the decline accelerated from 2007 to 2009. “We must move the USF business model away from narrowband voice to broadband data, or we're not going to be able to afford USF in seven years,” Hultquist said.