Carriers remain split on a proposed FCC rule to apply federal wiretap requirements to VoIP and broadband service. In comments on the Commission’s CALEA proceeding, a broad array of lobbying groups drew lines in the sand on the role of CALEA on a new generation of IP- based communications products.

The Va. Supreme Court ruled the state Corporation Commission acted lawfully late last year when it denied Level 3 Communications of Va. retroactive state operating authority needed to secure network facilities previously built by its corporate parent. The state’s highest court (Case 04-0481) said the commission acted consistently with state and federal law and its own rules when it rejected Level 3’s certification request. The commission in its Nov. 2003 ruling said the facilities were built without obtaining state construction authority and the company showed disregard for concerns raised by property owners along the route. The commission had concluded the construction project didn’t serve the public convenience and necessity. The Level 3 operating unit said the commission’s issues with its parent’s construction project didn’t constitute a lawful reason for denying its request to provide telecom services. But the court said the commission had acted in a manner consistent with statutes and hadn’t improperly applied the legal public interest standard. As to the claim that the commission had violated its own rules, the court said it generally gives deference to an agency’s interpretation of how its rules apply to a specific situation and that Level 3 hadn’t raised any issues to cause the court to deny that deference in this case.

Vonage’s DigitalVoice VoIP service is interstate so it can’t be regulated by state PUCs, the FCC ruled Tues. The ruling, which asserts federal jurisdiction over Vonage-like services, came in response to a preemption petition filed last year by Vonage. Although referring to Vonage service, the decision applies to other types of IP- enabled services, the Commission said.

USTA is urging Senate Appropriations Chmn. Stevens (R-Alaska) and Sen. Inouye (D-Hawaii) to include language in omnibus appropriations legislation that would exempt the Universal Service Administrative Corp. (USAC) from the Anti-Deficiency Act. Stevens and Inouye will likely be next session’s Senate Commerce Committee chmn. and ranking Democrat. Congress will return for a lame-duck session next week, where completion of the remaining appropriations bill will be a top priority. The anti- deficiency act (ADA) provision will cause USAC to “radically change the timing” for distributing USF funds, USTA said. In a letter sent Mon., USTA Pres. Walter McCormick said the ADA requires USAC to have funds on hand before committing them to particular programs. The FCC’s ruling has already caused USAC to delay new E-rate funding commitments, McCormick said. To make future commitments, USAC may need to raise USF contributions to 12.5% of interstate revenue from 8.9%, he said. “Of deep concern to USTA is the fact it is possible that a similar interpretation of the applicable rules could be applied to the high cost, low income and Link Up programs. If that occurs, USAC would likely have to suspend the High Cost program for three to six months to collect adequate funds going forward. In addition, the first quarter Contribution Factor could climb to 25% of interstate revenues, significantly impacting our members and customer bills,” McCormick said: “Unless Congress acts quickly, this situation could further undermine the stability of the nation’s universal service fund. Meanwhile, OPASTCO sent an alert to its members urging them to ask congressmen and senators that serve their communities to support legislation to exempt the universal service program from the ADA. OPASTCO is part of a coalition of groups trying to resolve the issue. Another coalition member, the Alliance for Public Technology (APT), circulated a letter to other public interest groups, asking them to sign it. The letter asks for swift action by the House and Senate Commerce Committees to solve the problem. “This problem will have widespread consequences if it is not addressed immediately,” APT told other groups in urging them to sign: “We must not allow unintended administrative flaws to get in the way of a program as vital to our country as E-rate.”

An accounting change that resulted in loss of money in the Universal Service Fund (USF) (CD Nov 1 p1) could bankrupt some rural telephone companies, NTCA said in a Nov. 3 letter urging key members of Congress to take legislative action to solve the problem. “The entire portfolio of federal programs supported by the… USF, including its premiere high-cost program, is facing a politically perilous situation as a result of a recent accounting modification mandated by the… FCC,” NTCA CEO Michael Brunner wrote. Subjecting the high-cost and related low-income programs to the Anti-Deficiency Act (ADA) would “either skyrocket the contribution factor to 25% or more, or… rural telephone companies could be bankrupted should support payments be withheld in order to avoid such an escalation,” the letter said. The letter was sent to House and Senate leadership as well as the chmn. and ranking minority member of Commerce and Appropriations committees in both houses. NTCA followed up with a letter Fri. to FCC Chmn. Powell, urging the agency’s support for Hill efforts. NTCA told Powell it was in discussions with members of Congress about a solution “but your leadership is critical.” NTCA said in a news release that it has been working “with a broad coalition of private as well as public interests as this situation unfolds in an effort to prevent any harm to the high-cost program.” Required changes in the accounting practices of the Universal Service Administrative Co. (USAC) have resulted in a loss of money and disrupted USAC’s procedures for funding schools, libraries and possibly rural telephone companies. Recipients of universal service funding are particularly concerned about an ADA requirement that USAC can’t make “commitments” to provide funding unless the funds are in hand, which appears to conflict with the way some USF funds are provided. Recipients say the changes could result in higher contribution costs by carriers, which would be passed onto consumers, or serious disruptions to universal service programs. Spearheaded by outside members of USAC’s board, organizations such as NTCA are seeking legislation to exempt USAC from the ADA. Brunner’s letter said Sens. Snowe (R-Me.) and Rockefeller (D-W.Va.) “are engaged in discussions with the FCC chairman and others to develop a legislative solution to this dilemma.” Meanwhile, the USAC has issued its projected “demand” figures for first quarter 2005, which the FCC will use to determine a contribution percentage “factor” in Dec. Based on the USAC filing, a number of parties are estimating the factor could raise to around 12.74% from the current 8.9% due to the accounting changes. Legg Mason said in a report Fri. that it thinks “Congress will be very interested in a permanent legislative fix, possibly during this month’s lame-duck session.” The goal is a rider to the appropriations bill, but it’s possible Congress will settle for a continuing resolution and not pass the appropriations bill this year, the analysts said.

Verizon Wireless agreed to buy all of NextWave’s PCS licenses for $3 billion, the companies said Fri. A federal Bankruptcy Court will be asked to rule on the request at a Nov. 30 hearing in White Plains, N.Y., since the sale represents NextWave’s new reorganization plan. Meanwhile, a top FCC official said the deal likely won’t set off regulatory red flags.

At CE’s urging, the Cal. Energy Commission (CEC) has adopted changes limiting the impact of its energy efficiency proposals for TVs and DVD players/recorders.

At the industry’s urging, the Cal. Energy Commission (CEC) adopted changes limiting the impact of its energy efficiency proposals for TVs and DVD players/recorders. The CEC put off until next year consideration of standards for cable and satellite set-top boxes. “We do like the progress that we made, but there still are a few outstanding issues,” Jason Linnell, EIA staff dir.- environmental affairs, told us. Meanwhile, the CEC heard comments at its 2nd public hearing Wed. and prepared for early Dec. adoption of its final rules. The industry said the CEC proposals for external power supplies were still “problematic.”

The rights of Canadian broadcasters are at stake as a result of a new ruling by a Quebec court that would allow Canadians to subscribe to U.S. satellite TV signals, said representatives of the Coalition Against Satellite Signal Theft (CASST) in Canada. “We're urging the government to appeal it as quickly as possible,” said CASST Co-Chmn. and Canadian Cable Telecom Assn. (CCTA) Senior Vp Harris Boyd. A spokeswoman for the Satellite Bcstg. & Communications Assn. (SBCA) said the “satellite radio and [TV companies] are thrilled to possibly in the future offer their products to Canadian customers.”

The Universal Service Administrative Co.’s (USAC’s) outside board members are trying to get a legislative fix to solve an accounting problem (CD Oct 6 p1) that caused the $6.5 billion universal service program to lose money and jeopardized not only to the E-rate program but also high-cost rural telephony support. Although USAC can’t lobby Congress, its board has been meeting with state regulators, telecom industry associations, education groups and others to seek help in gaining legislation during the lame-duck session of Congress beginning Nov. 15. “The USAC board is reaching out to constituents, talking to people about a solution, trying to do as much as we can,” said USAC Chmn. Frank Gumper, a Verizon consultant: “We've got to do something to get the situation under control, to get the program back to normal.”