Rural and national wireless carriers clashed over whether the FCC’s analysis of the economic impact of intermodal local number portability (LNP) requirement on small carriers is adequate. Calling the analysis “severely deficient,” rural companies and organizations said the agency’s initial regulatory flexibility analysis (IRFA) failed to address the compliance burdens that small carriers will face as a result of the Intermodal LNP Order and to recognize that costs to carry out intermodal LNP substantially outweigh its benefits some places. National carriers argued the opposite.

High-cost universal service support is being distributed properly despite claims by General Communication Inc. (GCI) that ILEC payments must be reduced when competitors take their customers, 6 telecom associations told the FCC. GCI in June asked the FCC Wireline Bureau to instruct the Universal Service Administrative Co. to alter its method of distributing universal service payments because the FCC’s 1997 Fourth Reconsideration Order on universal service called for such “subtraction” of payments. The telecom associations argued that the 4th order was supplanted by the Ninth Report and Order in 1999, which eliminated the subtraction language: “GCI’s request fails to recognize that the methodology changes made in the Ninth Report and Order… rendered the ‘ILEC support subtraction’ language… superfluous.” The companies also argued that “the rule provision that GCI seeks to have restored was shown to be unworkable, unnecessary and anti-competitive more than 6 years ago and should not be resurrected at this late date.” The filing was submitted by the Independent Telephone & Telecom Alliance, National Exchange Carrier Assn., National Telecom Co-op Assn., OPASTCO, USTelecom (USTA) and Western Telecom Alliance. USTA also filed separately (CD Aug 19 p5).

USTelecom (USTA) urged the FCC to deny a General Communication Inc. (GCI) request to change the way high cost support is distributed to carriers. GCI said the FCC should clarify its procedures to reflect an earlier decision that can be interpreted as barring ILECs from getting universal service payments for customers who have switched totally to facilities-based competitors. USTelecom said the GCI request is “procedurally improper” because “the rule that supposedly needs clarification… was modified over 5 years ago and, critically for GCI’s request, has been applied in the way about which GCI complains ever since.” According to Aug. 17 USTelecom comments: “During those 5 years, the entire industry has understood the application of the rule, so there is no need for ‘clarification’… GCI has cloaked what would be a monumental and, for many communities, a possibly catastrophic change in rural high cost support in a seemingly minor, even innocuous, ‘request for clarification’… In any meaningful sense, the rule is clear -- when a rural incumbent LEC loses customers, the cost of its network remains fully supported. This is the rule and GCI is asking for the rule to be changed not clarified.” USTelecom said the rule at issue involves carriers of last resort: “When a carrier of last resort loses a customer, it does not lose most of the cost of providing service to that customer. Instead, the network and its associated costs remain, as does the obligation to provide service.”

The FCC’s request for comments on whether to expand its new E-911 rules for VoIP providers generated little enthusiasm from telecom or Internet providers in filings late Mon. Businesses from SBC to Skype to Motorola told the FCC expansion could add consumer confusion, particularly if regulations were too specific for an ever- changing technology. The FCC had issued a Notice of Proposed Rulemaking (NPRM) as part of its E-911 VoIP order that asked about a variety of expansions, such as applying the rules to more types of VoIP services or adding more requirements such as performance reporting or deadlines for applying location technology.

Verizon this year has hired 5 firms to lobby Congress, according to the latest filings with the Secy. of the Senate reflecting a flurry of activity over DTV and telecom legislation. Verizon hired the lobbyists on issues such as telecom and broadband, spectrum allocation and regulatory parity in broadband deployment, the documents show. “As issues change you want to give yourself flexibility to be effective,” said a Verizon spokesman.

Lobbying filings for the first half of 2005 are starting to arrive in Congress, according to documents filed with the Secy. of the Senate. Aug. 14 is the deadline for Jan. 1-June 30 mid-year reports. Initial reports show that Quinn Gillespie reported receiving $260,000 in fees from its new client, USTelecom (USTA), which it added in Feb. to lobby on telecom issues before the White House, Senate and House. The firm also received $160,000 from SBC to advocate telecom merger policy and telecom update legislation before both chambers of Congress, the White House and the Commerce Dept.; $160,000 from Verizon Wireless to discuss spectrum issues with the White House, Senate and House; and $160,000 from Verizon to lobby on telecom update reform before the House, Senate, White House and FCC. Wexler & Walker Public Policy Assoc. reported receiving $300,000 from Nielsen Media Research to “educate” both chambers of Congress, the White House and FCC on TV audience ratings systems. Wexler also received $240,000 from Comcast to lobby the House, Senate and FCC on multichannel capacity, program access and regulatory policy on broadband cable; and $80,000 from Mobile Satellite Ventures to lobby the White House and the Commerce and Defense Departments. on permissible uses of mobile satellite services spectrum. MCI terminated Wexler’s services after spending $100,000 to discuss VoIP and UNE-P competition in long-distance services before the Senate, House, White House and Commerce Dept.

The FCC voted at its open meeting Fri. to reduce regulation of wireline Internet access service by reclassifying it as an “information service,” in line with the FCC’s treatment of cable modem service. The U.S. Supreme Court in June upheld the agency’s cable modem classification in the Brand X case, triggering action on the wireline companion piece which had been placed on hold during the litigation. DSL is the most common wireline Internet access service.

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.