WASHINGTON–As the Federal Communications Commission began examining industry reaction to its June decision to raise the safe-harbor amount the wireless industry can use to pay into the universal-service fund, FCC Chairman Kevin Martin found himself defending a more radical reform effort known as reverse auctions.
The Federal-State Joint Board on Universal Service has sought comment on an approach whereby a bidder would specify the amount of money it would need to provide service in a rural area. The wireless industry backs this “reverse-auction” scheme, while many rural telecommunications carriers oppose the idea.
Noting his own rural North Carolina roots, Martin said he appreciated how important it is that rural citizens not be left behind, but “we have to do so in the most efficient manner possible and I think a reverse-auction methodology is a serious proposal we should consider.”
Martin said that the USF program should not freeze in place one set of technologies, but rather allow the best new technologies to efficiently serve rural customers.
Sen. Ted Stevens (R-Alaska), chairman of the Senate Commerce Committee, blasted Martin’s support for reverse auctions. “The rural telephone companies in my state have serious problems with that concept,” said Stevens.
Stevens disagreed with Martin’s assessment, saying reverse auctions would stack the deck against incumbent rural telecom carriers.
“A small rural carrier in a small community that has met the needs of that community for years facing a national company that comes in and wants just to replace it completely with a wireless system, to do that nationally in many, many areas, has an enormous advantage over the local provider,” said Stevens. “I would hope you really take a look at the concept of continuity and really community presence, because the absentee owner?once they get the ability to serve?they have no further interest in that community as the local provider that’s home-grown and started the system does. I really think it’s going to be a system whereby the existing local providers are going to be wiped off the map, quick. And I hope that’s not the case.”
“There are significant problems with the universal-service fund, both on the number of carriers and providers that contribute into the fund and on the way their current resources are distributed,” Martin told the Senate Commerce Committee. “The commission has tried to take action on both and I think there are additional steps we need to take on both, both of broadening the base that people that are contributing and to make sure we’ve got an assessment rate on a broad base that’s as low as possible.”
Martin said since his time at the commission, the amount of money in competitive universal-services grants has grown from under $1 million to nearly $ 1 billion today. “That’s putting an incredible strain on the universal-service fund and I think we need to make sure we are distributing these universal-service resources in the most efficient manner possible.”
Martin said there are various proposals before the FCC, noting he has talked about an assessment based on telephone numbers.
Martin and wireless trade association CTIA favor an approach that would assess the fee based on the number of telephone numbers each carrier controls.
It appears that Martin was forced to raise the safe-harbour amount to 37.1 percent as an interim solution because groups like the Keep USF Fair Coalition oppose a numbers-based system.
However, problems with Martin’s interim approach prompted CTIA to ask for clarifications. The FCC in turn asked the telecommunications industry at large to respond to CTIA’s concerns.
Many in industry took the opportunity to not only address CTIA’s concerns but to argue?not for the first time either?for or against large-scale reform.
