FCC bureau chief: USF reforms will provide 'stable' inter-carrier compensation system

The FCC plans to “quickly” issue a public notice requesting additional information related to Universal Service fund and inter-carrier compensation reform, FCC Wireline Competition Deputy Bureau Chief Carol Mattey told attendees at the OPASTCO convention in Minneapolis today.

“We’re talking days, not weeks,” said Mattey, who also noted that the FCC’s goal is to issue an order formalizing USF and ICC reforms this fall. Apparently some FCC staffers already have begun to draft portions of the order, which Mattey said she was reading on the plane to Minneapolis.

Mattey several times referenced a USF reform proposal expected this week from the United States Telecom Association with the endorsement of several large carriers (CP: Verizon reportedly ready to file universal service reform proposal), noting that she was looking forward to reading the proposal. Surprisingly, considering the OPASTCO audience, she didn’t mention that several rural telco groups, including OPASTCO, also have jointly submitted a reform proposal. (CP: Financial analysts: Large carriers will recommend cost model for broadband Universal Service program). She did note, however, that “our job is not to rubber stamp any proposal . . . but to ask if it will benefit consumers.”

What the FCC is leaning toward

Mattey offered some broad comments about the direction toward which the FCC is leaning in its USF and ICC reform plans, including:

1. The commission plans to provide a “stable framework” for inter-carrier compensation

2. The size of the high-cost fund needs to be controlled by putting it on a firm budget

3. Mobile broadband likely to be supported in a targeted manner, only in areas where it wouldn’t be available without support

4. The identical support rule for competitive carriers is likely to be eliminated (CP: The real story of USF data)

5. A reverse auction for mobility is “very much on the table”—Mattey emphasized the word “mobility” here, implying that perhaps a reverse auction might not be used to award some other types of funding

6. Proposed reforms should generate savings to help fund broadband build-out and an access charge recovery mechanism

7. Changes to the high-cost fund likely to be implemented immediately

8. There may be ways to improve the rate of return system without ending it altogether- the FCC is “looking at suggestions,” Mattey said

9. The commission is “committed to addressing arbitrage opportunities today” but will only address them as “part of comprehensive reform” (Mattey was likely talking about issues such as phantom traffic, traffic pumping (CP: Free Conference Call study aims to justify the company’s business model) and the like.

10. The FCC’s inter-carrier compensation reform plan is expected to provide a “recovery mechanism” for lost access revenues

11. While not making any specific predictions about targeting satellite broadband for the highest-cost areas, Mattey said the commission continues to consider the role of satellite service

What it means for rural telcos

Rural telcos will be pleased to hear that the FCC is considering keeping some form of today’s rate of return system, that it plans to eliminate identical support for competitive carriers and that it plans to address access arbitrage or avoidance, including calls that are not being completed to rural areas (CP: Rural carriers ask FCC to intervene in call blocking disputes)

ICC reform and the replacement mechanism for it seem to be the big question marks and I’m sure rural carriers are eager to hear more details about what the FCC has in mind there, which hopefully will be forthcoming in the impending notice.

Several times in her address, Mattey used a moniker for access charge arbitrage that I hadn’t heard before. In what may be the euphemism of the year, she referred to it as “self-help.”

Mattey noted several times that today’s ICC system is not sustainable, as more people move away from voice communications and as arbitrage and “self-help” continues to be an ongoing problem.

“Doing nothing is not an option for you or for us,” Mattey told OPASTCO attendees.