The FCC Wed. placed universal service obligations on VoIP providers, setting a “safe harbor” of 64.9% of interstate revenue for their payments -- a figure based on the percentage of interstate revenue wireline toll providers report. The FCC also raised the wireless safe harbor from 28.5% to 37.1%. As wireless carriers already can, VoIP operators will be able to submit traffic study data to show they should pay less than the safe harbor percentages. FCC officials declined to comment on whether they will impose new rules on how such studies should be done.

House Commerce Committee Chmn. Barton (R-Tex.) took another swipe at the Universal Service Fund (USF), regaling onlookers at a hearing Wed. with examples of questionable use of USF support by seemingly flush rural telecom companies in Tex. A company in Big Bend, Tex., with 6,000 customers got $9.6 million in USF money, posted a 12.8% return on equity and paid $3 million in dividends to shareholders, he said: “It also runs a hunting ranch to entertain rural phone lobbyists.” A Tex. panhandle company got $2.6 million in federal USF money and “paid back more in dividends than it charged customers,” Barton said: A small telecom operating outside Houston gets “huge subsidies” to serve wealthy customers.

With the FCC apparently poised to impose Universal Service Fund (USF) assessments on all voice-over-IP (VoIP) providers this week, cable operators expanding into telephony with IP-based offerings face the unappetizing prospect of having to compete by markedly hiking their rates for those services or cutting into their profit margins.

Incumbent telcos would be the clearest winners, and small providers of interconnected VoIP the biggest losers, if the FCC and Senate proceed as they have been on changes in the Universal Service Fund (USF), according to interviews with industry executives and analysts. Satellite would benefit by becoming eligible under a new fund for places unserved by broadband.

Telecom companies have much work to do to comply with FCC CALEA rules by May 14, 2007, especially since some probably don’t understand the complex requirements, panelists said Thurs. on a USTelecom webinar. Developing a system to give law enforcement access to subscriber activity is hard because such data usually are distributed over multiple networks, said VeriSign Vp Raj Puri. Real time access to content requires quickly identifying and isolating all services a targeted subscriber uses, he said.

USTelecom took offense at a Sprint Nextel executive’s call for heightened special access regulation in testimony at a Tues. Senate Commerce Committee hearing. In a Thurs. letter to Committee Chmn. Stevens (R-Alaska), USTelecom Pres. Walter McCormick said Sprint Nextel Senior Vp Robert Foosaner called for a “dramatic re-regulation” of the special access service offered by ILECs even though a federal court 2 years ago found wireless carriers’ reliance on ILEC special access wasn’t any entry barrier. “Sprint Nextel is asking Congress to force ILECs to subsidize the construction of its wireless networks rather than making the investment itself,” McCormick wrote. USTelecom said a working draft released May 24 by Committee minority staff would go even further “by extending special access regulation to all ILEC broadband services and entangling the United States Congress in setting specific prices for special access services.” The proposals by Sprint Nextel and the minority staff aren’t needed because special access markets are competitive, customers such as large carriers are capable of deploying their own circuits and the FCC has tools to ensure rates are reasonable, the letter said.

Net neutrality policy sparked a sharp clash of viewpoints at a Senate Judiciary Committee hearing Wed., where Chmn. Specter (R-Pa.) said he wants the committee to “play a significant role” in developing telecom legislation. He stopped short of saying he would write his own bill; he said he’s been collaborating with Commerce Committee Chmn. Stevens (R-Alaska). “I want to see what Commerce has and see if we can piggyback” on that legislation, Specter said.

A proposal by Core Communications to reform intercarrier compensation through a forbearance petition got angry responses from many telecom companies. In comments filed at the FCC, Bells and rural telecom companies alike said the proposal wouldn’t work and probably would dramatically increase demands on the universal service fund. Core filed the petition April 27 asking the FCC to refrain from enforcing Sec. 251(g) of the Telecom Act -- in essence replacing access charges with reciprocal compensation payments. Verizon accused Core of trying to “promote its own short-term interest in regulatory arbitrage at the expense of rational, pro-competitive regulation.” USTelecom said intercarrier compensation reform is “urgently” needed but the Core plan isn’t the way to do it. “These issues are complex, inter-related and of vital importance to carriers and customers alike,” said Embarq, a new company formed from Sprint Nextel’s former local exchange operations. Instead of resolving the issues in the ongoing proceeding, “Core proposes an end-around to the process via… a forbearance petition [with] only cursory analysis and assumptions,” Embarq said. The Western Telecom Alliance of rural telephone companies in western states questioned Core’s “flawed reasoning that a flash-cut elimination of access charges constitutes a feasible approach to intercarrier compensation reform.” The alliance took offense at Core’s “baseless factual assumptions” that opposition from rural telephone companies made intercarrier compensation reform difficult. It urged the FCC to quickly deny the petition “so that others will be discouraged from misusing forbearance petitions to attempt to circumvent the industry negotiations and rulemakings necessary to consider and resolve critical and complex matters like intercarrier compensation.” Some of the phone companies were less harsh on a 2nd part of the Core petition seeking forbearance from provisions in Sec. 254(g) that require rate integration and averaging. Rate integration requires carriers to offer the same long distance rates in all states while rate averaging requires similar rates in urban and rural areas. AT&T said it supported the 2nd part of the petition because “rate integration and rate averaging are tools that no longer serve any legitimate purpose.” Qwest said it supported the thinking behind the rate integration part, but forbearance might “sweep too broadly and include rules that remain publicly beneficial.” Instead, the FCC should begin a proceeding to reform rate integration and averaging, completing it within the 12-month clock that the forbearance petition set in motion. The FCC must act on forbearance petitions in 12 months unless it gives itself 3 months more. The petition is automatically granted if the deadline is missed. The comments were filed June 2.

CHICAGO -- TIA will make stronger carrier participation a major priority next year, for its 2nd Globalcomm event, TIA Pres. Matt Flanigan told us as the first Globalcomm wound down here this week. While TIA won’t make the first move, the group is open to working with USTelecom to combine their shows into a reconstituted Supercomm, he said.

Amid fears that lawmakers lacked a complete grasp of net neutrality’s implications, the House Judiciary Committee approved 20-13 its leadership’s Internet Freedom & Nondiscrimination Act (HR-5417). The legislation, sponsored by Chmn. Sensenbrenner (R-Wis.) and Ranking Member Conyers (D-Mich.), would amend the Clayton Act regarding “competitive and nondiscriminatory access to the Internet.” A manager’s amendment to clarify that nothing in the bill restricts broadband networks from offering controls to protect against objectionable content or manage their networks in a nondiscriminatory manner was also approved by the committee.