FCC Confirms USF/ICC Order Imminent, But Details Still Up in the Air
The FCC confirmed that Chairman Julius Genachowski will circulate a proposed order that he hopes will lead to reform the universal service and intercarrier compensation regimes. The FCC called a briefing with reporters where agency officials spoke on the condition they not be named and said Genachowski will deliver a speech Thursday laying out some of his proposals. FCC officials declined to discuss specifics in Tuesday’s briefing, set for Thursday at 10:30 a.m. at FCC headquarters, instead reiterating their talking points about why reform was necessary.
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FCC officials reacted to criticism from consumer groups that Genachowski has essentially outsourced Universal Service Fund reform to industry, allowing telcos to “reform” the system by jacking up fees for customers. An agency official said the commission wasn’t going to “rubber stamp” any industry-backed proposal. As to concerns about the proposed subscriber line charge (SLC) increase, Genachowski and his staff are convinced that the other intercarrier compensation regime reforms will offset and outpace the increase, so that consumers will benefit in the long run, the FCC official said. When the commission last reformed intercarrier compensation -- more than a decade ago -- consumers profited, the official said.
Staff is continuing to work on the draft of Thursday’s order, another FCC official told us. Industry executives are worried that the consumer groups’ criticisms are getting traction, especially with the two Democratic commissioners, a telecom official said. Commissioners Michael Copps and Mignon Clyburn have each asked about the proposed line charge increases, telecom and FCC officials said.
While work on the order is evolving, it’s possible the right of first refusal will be trimmed back from the incumbent-backed ABC plan to focus on unserved consumers within certain high-cost areas of the country, an FCC official said. The official said the order may provide future wiggle room for the commission. Discussions continue on whether the FCC should approve interim solutions in some areas complete with further notices of proposed rulemaking, which could provide some protection for elements of the order from being overturned by an appeals court, the official said. Concerns also remain about how the FCC will make clear that while consumers could see a higher SLC, the net effect will be lower prices for consumers in the long term, the official said.
Consumer groups have come relatively late to the reform process, but have made a more concerted effort to lobby against the incumbent-backed ABC plan and rural-backed consensus framework. A coalition of such groups visited the eighth floor this week and last week, urging Clyburn and Copps to reject the two industry plans. A letter signed by Consumers Union, Consumer Federation of America, National Consumer Law Center, National Association of State Utility Consumer Advocates and AARP said that “reform is possible without increasing the burdens on consumers, especially in an already difficult economy.” Worse, the consumer advocates said, “the proposal does not allow for consumer protections or accountability” (http://xrl.us/bmfbu4).
Consumer advocates have also pointed out that the last time the FCC overhauled the intercarrier compensation system, it required industry to make concessions to customers. The ABC plan “does not provide for any mechanisms to ensure that USF funds would be used to provide affordable and high quality service,” the letter said.
Incumbents appeared cautiously optimistic as word circulated an order is imminent. “We are pleased to hear reports that Chairman Genachowski intends to unveil his further vision for USF and ICC reform on Thursday,” NTCA CEO Shirley Bloomfield said. “While we await the details and will need to assess how they impact the many consumers served by small rural telcos, we support the continued forward momentum and look forward to working with the commission to define detailed, credible solutions for reform.”
In a statement, Edie Herman, spokeswoman for the ABC plan, said the proposals “will create enormous benefits for consumers. Most importantly it will bring broadband to millions of people who do not have access today.” Herman in particular defended the intercarrier compensation proposals: “A key element of the plan is moving to a more rational intercarrier compensation system that reflects today’s all distance world of bundles and packaged services. Every major ICC/USF reform proposal for more than a decade has included some adjustment to the subscriber line charge because the Federal Communications Commission recognized that shifting from permanent usage-based carrier charges to end-user monthly charges benefits consumers. In fact, the ABC Plan included economic analysis that quantified those consumer benefits, finding them to be worth nearly $9 billion a year. We are pleased that the FCC is committed to working on USF reform.”