FCC Chairman Martin Picks Up Needed Vote To Cap USF

Tue. Apr. 29, 2008


After months of rancor and political horse-trading, the FCC’s three Republicans are poised to impose a temporary cap on the $7 billion universal service fund in what is being billed as a major step toward comprehensive overhaul.

FCC regulator Robert McDowell announced Monday that he supports an interim threshold, providing Chairman Kevin Martin, who already has the backing of Commissioner Deborah Taylor Tate, with a crucial third vote for passage.

“Like an unabated fever, expenditures from this fund continue to spike out of control. Ultimately, it is consumers who pay for these unbridled escalations,” McDowell said in a statement. “While the commission works toward broader and permanent reform, it is our duty to enact a temporary measure to instill fiscal discipline.”

On May 1, a federal-state advisory board headed by Tate recommended an interim ceiling on the $4 billion high-cost portion of the fund, which reduces telecommunications fees in low-income and rural areas. The move drew criticism from wireless carriers, who would bear the brunt of the limit, and lawmakers worried about the effect on constituents.

The agency, which is striving to reach a decision by the one-year anniversary of the recommendation, has softened the impact by conditioning several wireless industry mergers with temporary thresholds.

Democratic Commissioner Michael Copps opposes the idea while Democrat Jonathan Adelstein has been undecided, with sources predicting he will dissent. Wireless carriers often receive support for providing redundant services, prompting accusations that they expanded the fund by $1 billion in recent years. CTIA, the wireless trade association whose membership seems divided on whether a cap is needed, was not immediately available for comment.

During an event Monday sponsored by the Free State Foundation think tank, Mark Rubin, vice president of federal government affairs at Alltel, said mobile providers are being unfairly “tarred and feathered.” While cellular firms are responsible for a third of contributions into the fund, they only draw 25 percent from it, he said.

“Consumers will be happy to hear the FCC is taking control of the fund’s growth,” said Tom Tauke, a lobbyist at Verizon, which has wireline and wireless divisions. “The next step is comprehensive reform of the universal service high-cost fund.”

McDowell said he supports language that would provide carriers serving tribal lands nationwide with an exemption from the restrictions. “These terms do not favor any specific provider,” he said, a reference to efforts by Alaska-based General Communications Inc., to obtain a carve-out that critics said would favor only that company.

The FCC’s action is likely to trigger fresh debate over how the program should be revised going forward. That point was underscored Monday with news that House Energy and Commerce ranking member Joe Barton, a longtime USF critic, is floating legislation to cap the entire fund permanently.

While his discussion draft stands little chance of passage, it already has drawn criticism from a key constituency: rural telecom companies seeking to secure subsidies for deploying high-speed Internet service.

“If you’re in favor of broadband getting to every person in this country, that bill is not going to do it,” said John Rose, president of the Organization for the Promotion and Advancement of Small Telecommunications Companies, during the Free State event.

Colin Crowell, a top aide to House Energy and Commerce Telecommunications and the Internet Subcommittee Chairman Edward Markey, D-Mass., said the Barton draft is “positive and beneficial” and would be considered alongside other related measures.

Crowell complained about apparent disparities that result in more universal service assistance for rural residents and less for poor urbanites. “It doesn’t seem to be equitable from our standpoint,” he said, adding: “That is something that has always been a cause of concern to Chairman Markey, who philosophically supports the [subsidy] program.”

by David Hatch

Tue. Apr. 29, 2008