Universal service fund (USF) contributions would be applied to all 2-way voice services under a bill introduced late Fri., just before the summer congressional recess. Sponsored by Sens. Smith (R-Ore.), Dorgan (D- N.D.) and Pryor (D-Ark.) , the bill broadens the base of contributors and establishes a separate fund capped at $500 million a year to encourage broadband deployment in rural, “unserved” U.S. areas.

FCC efforts to give wireline broadband services regulatory parity could harm rural and small telephone firms unless the FCC moves to protect them, 6 groups representing small telephone companies warned in a July 22 ex parte filing. The FCC, in the wake of the U.S. Supreme Court’s Brand X ruling, is expected to act soon on a plan to give phone firms parity with cable broadband services, the associations said. However, the FCC “should bear in mind that not all wireline carriers are similarly situated,” the filing said: “While regulatory parity may be expected to stimulate investment in broadband networks in areas served by larger wireline carriers, mandatory deregulation of wireline broadband services may have the opposite effect in areas served by smaller rate of return carriers.” More than 900 small firms offer DSL under National Exchange Carrier Assn. (NECA) tariffs and participate in revenue pools, the filing said. The FCC should preserve this option for rate-of-return carriers, since pooling gives firms “stable cash flows and protection against unexpected demand reductions or increased costs,” the groups said: “Absent pooling, for example, the potential loss of only one large customer could make a significant difference in whether a rural company can risk investments in new service deployments… Rate-of-return carriers face financial and competitive circumstances that differ markedly from those faced by larger companies. These companies may be forced to increase DSL rates or perhaps refrain from enhancing or even offering broadband services if existing tariff and pool mechanisms become unavailable to them.” The filing was signed by NECA, OPASTCO, USTelecom (USTA), the National Telecom Co-op Assn., the Independent Telephone & Telecommunications Alliance and the Western Telecom Alliance.

Sen. Ensign (R-Nev.) Wed. introduced a broad telecom update bill that would erase local video franchise requirements, let municipalities invest in broadband networks via competitive bid and set consumer protection standards for carrier service. The bill did not address universal service fund (USF) reform, an issue Ensign said Senate Commerce Committee Chmn. Stevens (R-Alaska) and co- chairman Inouye (D-Hawaii) want to handle separately. A Committee aide confirmed that Stevens plans to address USF this year, separately or in a larger telecom bill.

The Bells and USTA told an appeals court UNE rules the FCC okayed in Dec. remain too “broad” to address issues raised in past judicial rulings. In a joint July 26 brief, the Bells and USTA told the U.S. Appeals Court, D.C., that the FCC UNE rules were vacated 3 times -- once by the U.S. Supreme Court, twice by the D.C. Circuit -- because they required incumbent LECs such as the Bells to offer unbundled elements to competitors “even when competitors could and did provide service without forced access to the ILECs’ facilities.” The brief said the latest rules still don’t satisfy the courts’ concerns: “Although, after three judicial reversals, the FCC finally removed unbundling obligations as to the switching facilities that are used to serve ‘mass market’ residential consumers, the FCC yet again ordered what its then-chairman [Michael Powell] called ‘wide unbundling.'” The filing made 3 arguments: (1) The FCC didn’t adequately weigh competitors’ ability to use tariffed special access service as an alternative to unbundled elements. (2) The FCC unlawfully let carriers convert existing special access circuits to UNEs “solely to obtain a price break.” (3) The FCC denied unbundling only in areas with “extraordinary levels of competition” and ignored more reasonable examples of competition. The UNE rules the FCC approved Dec. 15 (CD Dec 16 p1) phased out CLEC use of TELRIC-priced UNE platforms (UNE-P), a move Bells backed. Their opposition lies in another area, where the FCC cut only slightly the number of situations when the Bells must share high-capacity loops and transport used to serve business customers. The Bells have called those reductions too limited. The Bells and USTA jointly appealed the FCC order Feb. 24. USTA now is known as USTelecom.

Tremors on Capitol Hill over impending telecom and IT bills accelerated lobbying outlays in the 2nd half of 2004, said PoliticalMoneyLine. The service, which tracks corporate political contributions, said the communications and technology sector ranked 2nd behind health care in federal lobbying dollars with $144,130,547, up from $138,351,891 in the first half of 2004, when it also was No. 2. USTelecom (formerly USTA) joined the top 10 list of contributors with $10.1 million, up $5.4 million from the previous 6-month period. BellSouth and AT&T each spent $4.8 million, the report said. Computer software makers spent $17.1 million, including $4 million from Microsoft and $3 million from IBM. SBC spending shrank during June-Dec. by about $3.4 million to $2.3 million.

There’s no need for legislation to change the nation’s antitrust laws, USTelecom, formerly USTA, said in comments filed late Fri. with the Antitrust Modernization Commission. The Commission was formed under a 2002 law to determine if antitrust laws should be changed. Four of its 12 members were appointed by the White House, 4 by the Senate and 4 by the House. USTelecom submitted testimony by former DoJ antitrust officials and a former FTC chmn. For example, James Rill, ex-DoJ antitrust chief, said it’s not only unnecessary but “unwarranted and unwise” to introduce legislation to modify the effect of the Trinko decision in which the U.S. Supreme Court said violations of the Telecom Act aren’t antitrust violations. Rill said Trinko was “entirely consistent with fundamental antitrust principles and strikes the right balance between antitrust and regulation.” Ex-FTC Chmn. Timothy Muris said it would be wrong to legislate rules against companies offering discounted bundled services. The history of antitrust enforcement “should give one pause about formulating aggressive rules against what is, at bottom, an important form of price competition,” Muris wrote.

Companies with public right-of-way access would not need a franchise to provide video services under 2 bipartisan bills introduced Thurs. in the House and Senate. The House bill, by Reps. Blackburn (R-Tenn.) and Wynn (D-Md.) is similar to but not a companion of the Senate bill, by Sens. Rockefeller (D-West. Va.) and Smith (R--Ore.). Both would have new entrants such as telecom companies pay the same fees as incumbent cable operators and make govt. and education channels available.

Telecom groups praised efforts to repeal the 107- year-old federal excise tax on telecom services in a bill introduced Tue. by Sen. Santorum (R-Penn.). The Joint Committee on Taxation said in a Jan. 2005 report there is no need for the tax. The CBO said in Feb. the tax hurts the economy. The tax, imposed to pay for the Spanish- American War, is deemed regressive because lower-income taxpayers pay more of their income on the tax than the wealthy. “There is no justification for a luxury tax on telephone calling. Americans regard staying in touch with friends, family and business associates as a normal and important part of their daily lives,” said Herschel Abbott, BellSouth vp govt. affairs. USTelecom, formerly USTA, also praised the bill. Santorum was joined by Sens. Crapo (R-Ida.) and Smith (R-Ore.). Rep. Miller (R-Cal.) introduced a bill in April also to repeal the excise tax.

A bipartisan coalition of rural lawmakers said the House should take the first crack at addressing problems with the Universal Service Fund (USF) in telecom rewrite legislation. The proposal came Tues. at a press conference announcing 9 principles to be included in a bill. Sixty members of the Rural Caucus sent a letter to House Commerce Committee Chmn. Barton (R-Tex.) and Ranking Member Dingell (D-Mich.), outlining the principles, which include extending the base of contributors to USF to include “all providers of 2-way communications regardless of technology used to ensure competitive neutrality.”