WASHINGTON-FCC Chairman Michael Powell last week appointed Lisa Zaina to be chief executive officer of the Universal Service Administrative Co. “I will sorely miss Lisa, but I’m proud to know she will continue a mission we both believe in so strongly: making universal service work at its best. With her calm demeanor, sound judgment, and great sense of humor, she will serve USAC well,” said FCC Commissioner Jonathan Adelstein. Zaina had been his senior legal adviser. Zaina comes on board at a time of angst in the universal service arena. Because the universal-service program is financed by long-distance and international calls, revenues have been decreasing at the same time more carriers, predominantly wireless, have received eligible telecommunications carrier status allowing them to take out of the fund. All parties believe that some type of reform is needed.
Last fall, the Progress & Freedom Foundation held a forum that examined the issues. “It is easiest to look at universal service in terms of both the supply side and the demand side. The supply side for universal service is the pool of money that is collected from telecommunications carriers to ensure the availability of affordable telecommunication services throughout the country, including in high-cost rural areas that otherwise, without this subsidy flow, would be very, very expensive to serve. On the demand side, we have all of the different support mechanisms that collectively make up universal service,” said Matt Brill, senior legal adviser to FCC Commissioner Kathleen Abernathy.
Brill and others debated whether wireless and the emergence of voice over Internet Protocol is hurting universal service.
The Federal-State Joint Board on Universal Service is preparing recommendations on what criteria should be used to grant ETC status. Abernathy said Thursday that she expects the joint board to forward its recommendations to the Federal Communications Commission in February. The FCC would have a year to act on the recommendations. Rural carriers have called for stricter criteria to be used in designating ETCs.
Western Wireless Corp. in November submitted perhaps the most radical idea that aims to reform universal service.
The Western proposal would eliminate the current rate-of-return system, which sets rates targeted to recover a rural local exchange carrier’s embedded cost. Today the rate of return is current operating costs and current year’s share of past capital expenditures plus 11.25 percent.
Not surprisingly, when the industry commented on the proposal recently, wireless carriers supported Western’s proposal and rural carriers were opposed.
“Western Wireless has simply repackaged into its petition its arguments that the FCC has already rejected in prior rulemakings. Western Wireless has offered no substantiation that a forward-looking economic costs mechanism could produce sufficient and predictable universal-service support to smaller and rural carriers. In the absence of any new evidence that the existing mechanism is broken for small and rural carriers, there is no justification for the commission to start a new proceeding to `fix it’,” said the Puerto Rico Telephone Co. Inc.
“Western Wireless’ petition makes a strong case that the current universal-service funding system may have the effect of encouraging inefficient operations by rural incumbent LECs, and these inefficiencies have a societal cost-they ultimately must be paid for by all users of interstate telecommunications services,” said Nextel Communications Inc. “These inefficiencies may even affect the success of intermodal competition. The FCC itself previously has noted the need for additional USF distribution reform aimed at eliminating the virtual guarantees rural ILECs have in the USF program.”
