"The odds favor” the FCC adopting the USTelecom-brokered agreement on the Universal Service Fund and intercarrier compensation regime reforms, MF Global analyst Paul Gallant said Thursday. The so-called framework could be filed as early as Friday (CD July 28 p8). It “would be a neutral-to-positive” for publicly-owned, mid-sized rural carriers such as Frontier, CenturyLink and Windstream, Gallant said. “We also believe the plan would be a boost for AT&T and Verizon by reducing their overall payments into the federal and state subsidy mechanisms.” Despite some opposition, he expects the commission to adopt the USTelecom-brokered deal more or less as-is because FCC Chairman Julius Genachowski has made USF and intercarrier comp reforms “a centerpiece of his National Broadband Plan” and the framework “would redirect federal subsidies from voice to broadband buildout, which is what the Broadband Plan called for.” Also, he said the proposal “has the support of a strong coalition” and Gallant “would not be surprised if it gained additional support” in the next few weeks, and “key legislators have indicated that the FCC is better suited than Congress to reform USF/ICC because of the level of detail required for reform. Congress’s key asks are that rural and urban interests are both clearly recognized, and that the overall USF … not grow larger -- and ideally shrink over time. We think the FCC’s final rules this Fall are likely to satisfy those criteria."

Companies that buy telecom services have “a healthy skepticism” about claims that changes in network technology require changes in regulation, Ad Hoc Telecommunications Users Committee counsel Colleen Boothby said Thursday. Most businesses see claims that switching to all-IP networks means the federal government doesn’t need to regulate the markets anymore as mere “marketing.” Businesses require someone to make sure that infrastructure monopolies don’t drive up prices, she said on a panel at Wiley Rein Thursday. “It’s just a new transmission technique,” she told us later. AT&T Vice President Hank Hultquist, who was more sanguine about the transition away from the PSTN, said policymakers, industry and customers ought to do “a gap analysis” to try to figure out what regulations, finances and technology will be needed as telephony moves to IP. “We need a lot of work by experts and not necessarily the regulatory experts,” Hultquist said. Boothby agreed, saying, “The role of Congress is to give the FCC enough money so they can hire more engineers and fewer lawyers.” But Boothby and tw telecom outside counsel Thomas Jones clashed with Hultquist over whether the Telecom Acts of 1934 and 1996 need to be overhauled. Jones and Boothby said current law is “sufficient” to protect customers and markets. “The extent to which people talk about the need for a new statute, what they mean is the FCC should have less authority,” Jones said. Boothby said that even in IP traffic, there are appearances of competition, but businesses often find that most of the vendors in a given market are merely reselling access from a monopoly. Hultquist, who is active in the USTelecom-led talks to come up with an industry-wide universal service reform package, said he has learned from his involvement that “there are smart lawyers in this town who say the FCC can’t do it.” He and his company agree, but it at least demonstrates that there are gaps in the law, Hultquist said.

A breakaway group of rural telcos organized a last-ditch effort to keep their trade associations from signing on to a USTelecom-brokered agreement on Universal Service Fund and intercarrier compensation regime reforms. “It is simply a bad deal for rural America!” said a draft letter circulated by the Rural Broadband Alliance’s Diane Smith and Stephen Kraskin.

The three largest rural telecom associations defended their decision to engage in the USTelecom-led talks on universal service and intercarrier compensation revisions, but told their members to brace themselves for “give-and-take” on rate-of-return cuts and “deeper” cuts in intercarrier compensation. “We understand that many of you may see it as hard to work with carriers and other companies who often look to undermine the support networks that are essential to operation in rural areas,” said NTCA CEO Shirley Bloomfield, OPASTCO President John Rose and Western Telecom Alliance Vice President Kelly Worthington in a mass email to their members.

Phone companies aren’t the only industry group divided by potential Universal Service Fund change proposals. With a group convened by USTelecom poised to give the FCC on Friday a plan to make USF pay for broadband (CD July 26 p1), large and small cable operators also have different views on that framework. Just as major phone companies like AT&T and Verizon are expected to back the plan, with some mid-size telcos also joining in, the biggest U.S. cable operators also may support many if not all parts of the plan. As with small telcos that are net recipients of USF money and intercarrier compensation funds, cable operators that get such money also may back few if any aspects of the framework. That’s according to interviews with cable executives Tuesday.

The FCC wouldn’t distribute Universal Service Fund cash for broadband in areas where any ISP already sells Internet service, under a USTelecom-brokered industry agreement that could be made public as early Friday (CD July 22 p3), industry and FCC officials told us. Talks are still going on, they said Monday. Under the agreement, which USTelecom has been calling a “framework,” VoIP wouldn’t be classified either as telecom or information service, and VoIP carriers would be required to pay interstate access rates for all non-local calls, the officials said. Comcast and other major cable operators continue to evaluate the USTelecom proposal, and it’s possible they'll join it, industry officials said.

A closely watched FCC filing on reforming the Universal Service Fund to pay for broadband, which is backed by Comcast and others selling landline phone connections, will be ready as soon as next week. Verizon’s top executive in Washington predicted at a Minority Media and Telecom Council conference Thursday that the filing will be made next week and may be joined by the cable operator. Talks among many USF stakeholders led by USTelecom have been ongoing for some time, with the expectation of finishing the work this month or early next. Regardless of how wide support is for the USTelecom plan, the agency needs to soon approve an order on USF, Commissioner Robert McDowell told the conference. The USTelecom-led “framework” reached its conclusion in late June and has won favor with mid-sized telcos Windstream, CenturyLink and Frontier (CD July 6 p6).

Sprint Nextel’s fight with AT&T and T-Mobile over the GSM carriers’ proposed combination led to increased spending on lobbying for all three carriers in Q2, according to quarterly lobbying reports released this week. The fight over the extent to which LightSquared’s planned terrestrial system will disrupt GPS signals also continued to be a boon to the lobbying industry. Google, Facebook and other Internet companies continued to expand their Washington presence, while major telecom associations maintained spending consistent with 2010 levels.

Four Missouri Republicans joined rural telcos’ campaign to ward off what they see as the worst of the pending Universal Service Fund and intercarrier compensation regime reforms. Reps. Blaine Luetkemeyer, Sam Graves, Jo Ann Emerson and Vicky Hartzler said a letter dated Tuesday and released the next day. “We believe that in order to achieve the goals of this [1996 Telecom] Act, changes to the USF and ICC system must be made carefully and in a way that would enable carriers serving rural areas to sustain and improve upon affordable broadband where it already exists, to encourage deployment to unserved customers and not to harm rural customers who already have broadband service,” the letter said.

NBCUniversal promotes Frances Berwick to president of Bravo and Style media … Brandon Heiner, ex-USTelecom, becomes CenturyLink director-federal legislative affairs … Vindco online video ad company hires Jes Santoro, ex-NBCUniversal, as senior vice president of sales … Lobbyist Registrations: Comcast, Cabralgroup and Gephardt Group, both effective April 1 … Google, Chesapeake Enterprises, effective April 29 … Netflix, Kountoupes Consulting, effective June 1, and Franklin Square Group, effective June 2 … PCIA, Patton Boggs, effective June 22.