NASHVILLE -- Telecom makes investors nervous because it has regulatory and technological uncertainties that don’t exist in other industries competing for capital, said NARUC panelists at the group’s annual meeting here Mon. The advent of paradigm-breaking new technologies like VoIP and the prospect of a major rewrite of the federal Telecom Act next Congress have led many telecom investors to move to the sidelines and wait out the stormy times, panelists said.

A coalition of fair-use groups will try to defeat an omnibus copyright bill during the lame-duck session of Congress, which convenes today (Tues.). The coalition -- which includes CEA, CCIA, Public Knowledge, Verizon and the American Conservative Union -- said the legislation would deeply limit public access to content, create a new class of copyright violators and overlook key advantages of new technology in the marketplace.

NASHVILLE -- NARUC’s Telecom Committee adopted 3 controversial policy resolutions on preemption, intended to send a signal to the FCC and Congress that it recognizes the possible need for preemptive national policies in some telecom areas and is willing to discuss new jurisdictional alignments in such areas. A 4th resolution in the set, specifically addressing VoIP, was tabled until the group’s winter meeting in Feb. The telecom panel’s resolutions, adopted Mon. at the NARUC annual meeting here, must be approved by NARUC’s board before becoming official policy. A board meeting was scheduled after our deadline.

Several important communications-related items could pass Congress this week as it returns for a brief lame- duck session, industry and congressional sources said. The loudest buzz is on the universal service fund (USF) and the controversy over the FCC’s change in accounting mechanisms that could slow some E-rate payments and possibly lead to a rise in contributions, and several sources expected some efforts to push a legislative solution.

Citing an 800% rise in counterfeit and pirated goods intercepted at European Union (EU) borders 1998-2002, the European Commission (EC) approved an action plan Wed. aimed at persuading non-EU countries to clean up their intellectual property (IP) enforcement acts. The strategy covers copyright, patent and trademark violations in all sectors, including Internet piracy, bogus music and software CDs, and DVDs. It claims not to impose any new IP enforcement rules on poor countries, but to help them comply with existing commitments.

More groups are urging Congress to pass legislation that would exempt the universal service fund (USF) and E- rate programs from Anti-Deficiency Act (ADA) account requirements. Several groups joined NTCA -- which sent letters Mon. -- in sending letters to the Hill urging a legislative fix in the lame-duck session scheduled to start Nov. 16. By applying the ADA rules to USF, the FCC forced the Universal Service Administrative Company (USAC) to withhold millions in E-rate funds until cash flow issues can be corrected. These groups also said the accounting change could affect USF programs and force USAC to raise USF contribution levels. NARUC told Senate Commerce Committee Chmn. McCain (R-Ariz.) that USAC already has been forced to hold $460 million in E-rate funding. “It is our strong view that applying the accounting standards contained in these acts does nothing to stabilize the fund or promote the goals of universal service, and in fact jeopardizes the stability of the fund,” NARUC said. These groups urged action before the congressional session’s end. NARUC also said USF should also be exempted from the Miscellaneous Receipts Act, even though the Office of Management & Budget ruled that the Act’s not applicable to USF. NARUC noted that the Federal Highway Fund and Fish & Wildlife Service were also exempt from ADA. Joining NTCA and NARUC were OPASTCO, the Independent Telephone & Telecom Alliance, the Rural Telecom Group and the Western Telecom Alliance.

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.”