Intercarrier Compensation, USF High Cost Fund Reform Top FCC Agenda

Posted on January 19, 2011 by Steve Augustino

As expected, late yesterday, the FCC announced that it would again attempt to tackle its "holy grail" of regulatory action:  reforming carrier-to-carrier compensation mechanisms and the high-cost program of the Universal Service Fund.  The FCC has placed a Notice of Proposed Rulemaking addressing both intercarrier compensation and USF reform on its agenda for February 8.  The combined NPRM furthers the National Broadband Plan's promise to refocus FCC policy to supporting broadband networks.

These two topics are at the core of what we cover in this blog.  The complicated mix of carrier-to-carrier compensation mechanisms, which make how a call is classified critical to determining its cost, has engendered significant litigation involving such issues as VoIP, prepaid calling cards, access charges, reciprocal compensation and many others.  Meanwhile, the funding and administration of the $7 billion per year Universal Service Fund is a constant source of audit issues, enforcement actions and rulemaking proposals.

According to the FCC's release, the February 8 agenda will include a Connect America Fund and Intercarrier Compensation NPRM.  The agenda item is described this way:

Connect America Fund and Intercarrier Compensation Reform NPRM: A Notice of Proposed Rulemaking to get broadband to all of rural America and spur investment and job creation, by modernizing the Universal Service Fund and intercarrier compensation (ICC) system while cutting waste and inefficiency. Through the use of market-driven, incentive-based policies and increased accountability, the NPRM proposes near-term support for broadband deployment in unserved areas and measures to address ICC arbitrage, as well as a long-term transition from current high-cost support and ICC mechanisms to a single, fiscally responsible Connect America Fund.

Readers should note the reference to "measures to address ICC arbitrage."  It appears that some of the compensation issues that have been on hold pending comprehensive intercarrier compensation reform may be singled out for separate action.  At the same time, the item raises the long-promised "long term transition" from the current compensation mechanisms.  Mark February 8th on your calendar.  Will this be the beginning of the end of the FCC's quest? 
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FCC Issues Universal Service Reform Proposals

Posted on April 22, 2010 by Danny Adams

On April 21, 2010, the FCC issued a Notice regarding proposed universal service reforms. The document is 28 pages long plus some lengthy appendices.  The Notice itself is divided into a Notice of Inquiry section discussing steps to implement the Connect America Fund proposed in the National Broadband Plan, and a Notice of Proposed Rulemaking addressing specific ideas about reducing amounts currently committed to the High Cost Support portion of the USF program. The High Cost Support aspect of USF consumes about half the total of $8 billion now spent on universal service support each year.  The procedural difference between the NOI and the NPRM portions is this: a Notice of Inquiry generally cannot be followed by the adoption of rules without first issuing a follow-on Notice of Proposed Rulemaking. Thus, an NOI tends to be more ethereal and not focused on near term action. The NPRM portion, on the other hand, can result in rules to be adopted at any time after the expiration of the public comment period.  The FCC itself described the Notice as "the first in a series of proceedings to implement" the National Broadband Plan.   

Public comments on the Notices are due 60 days from publication in the Federal Register, and Reply comments are due 30 days later.

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