The United States prohibits the export of a broad range of telecom equipment, systems and technologies if the exporter does not first obtain a government license. Controlled telecom products can be as diverse as parts and components, network equipment, encryption technology and satellites. Failure to comply with export control restrictions can result in a fine
USF Contribution Reform–It’s Time to Move Forward with a New Approach
Despite an energetic reboot earlier this year, the FCC’s most recent effort to reform the rules and policies for funding the Universal Service Fund—USF contribution reform—has lost momentum. In its Further Notice, the FCC raised every conceivable issue and policy question and sought comment on each of them. To no one’s surprise, countless services
Softbank to Purchase Controlling Interest in Sprint; Domestic Regulatory Approvals Likely
Over the weekend, the boards of both Sprint and Softbank agreed to terms under which the Japanese wireless carrier would acquire a 70% equity interest in Sprint, providing substantial cash infusion into Sprint. In light Deutsche Telekom’s controlling interest in T-Mobile and Vodafone’s longstanding ownership interest in Verizon Wireless and that Sprint is often regarded
FCC Suspends Further Grants of Special Access Pricing Flexibility
In late August, the FCC adopted a Report and Order suspending new grants of interstate special access pricing flexibility for the “Price Caps ILECs”—principally Verizon, AT&T and CenturyLink (formerly Qwest)—adopted in the agency’s 1999 Pricing Flexibility Order. The Report and Order is a breath of fresh air in terms of acknowledging that a predictive
FCC Approves Verizon Wireless’ Acquisition of AWS-1 Spectrum with Conditions
Following the Department of Justice’s conditional approval of the spectrum transaction, including the so-called “Commercial Agreements,” under which Verizon Wireless acquires the AWS-1 licenses of by Comcast, Time Warner Cable and Bright House networks via Spectrum Co and those of Cox Communications, the FCC granted its consent to these license assignments and related applications calling
Major Carriers on Spectrum Buying Binge
In theory, the basic direction of domestic telecommunications policy is set by Congress and implemented through rulemaking proceedings, principally before the FCC. The reality is that Congress moves at a glacial pace in enacting telecommunications legislation and the FCC often struggles with vexing issues such as whether the special access market is competitive and how
Interested Parties Emphasize Drawbacks in Current and Proposed End-User Revenue USF Contribution Rules and Policies
With Universal Service Fund outlays approximating $9.0 Billion annually, a contribution factor well above 15% and a declining revenue base, the FCC’s Further Notice of Proposed Rulemaking (“Further Notice”) on USF contribution reform elicited unusually candid responses from services providers and other parties in Comments filed in early July.
Overview
Wireless and Wireline carriers expressed
A Closer Look at the FCC’s USF Contribution Reform Proposals
Introduction. In a recent entry, we noted that the FCC had released a Further Notice of Proposed Rulemaking (“Further Notice”), requesting comment on proposals to revise the manner in which it assesses telecommunications carriers (Wireline and Wireless) for Universal Service Fund (“USF”) contributions. This entry provides a more in-depth look at these proposals; principally, how, if adopted, the proposals could impact enterprise customers.
The FCC has outlined extensive changes to the current, “end-user revenue” approach for determining USF contribution obligations, focusing on currently excluded services and revenue streams. The Further Notice also proposes two alternative approaches as potential replacements.
What’s at Stake. The annual revenue requirement for the FCC’s Universal Service Program lies between $8 Billion to $9 Billion. During the first six months of 2012, the USF contribution factor exceeded 17% of Wireline carriers’ end-user revenues on carriers’ interexchange (interstate and international) services. For the 3rd quarter, the contribution factor is just below 16%. USF assessable revenues of Wireless carriers range between 20% to 37.1% of total services charges, excluding texting and data charges. Reportedly, most Wireless carriers rely on traffic studies to establish what percentage of their traffic is jurisdictionally interstate, rather than rely on 37.1% “safe harbor” set by the FCC.
Carriers recover their USF contributions through surcharges added to customers’ monthly bills. Depending on the proposals ultimately adopted, business customers could find themselves paying substantially more in USF surcharges.
Why Reform the USF Contribution Rules? The base of USF assessable revenues is dwindling largely due to the migration to high speed Internet access services (Wireline and Wireless) and IP-based services such as MPLS. These services are either information services or do not fall clearly within the statutory definitions of “telecommunications services” or “telecommunications.” Exclusions and exemptions apply to other revenue streams and/or services. In addition, the FCC appears to be looking to resolve multiple issues raised in long pending appeals of Universal Service Administrative Company (“USAC”) contribution decisions.
Possible Modifications to the End-User Revenue Approach. The most significant proposal is to classify the revenues on high speed dedicated Internet access services (residential and business; Wireless and Wireline) and text messaging as USF-assessable; either in their entirety or assessing a set percentage of these revenues. The FCC also appears intent on clarifying whether MPLS offerings should be subject to USF assessments.Continue Reading A Closer Look at the FCC’s USF Contribution Reform Proposals
Sprint Scores a Spectrum Windfall
Late last month, the FCC adopted a Report and Order granting SprintNextel flexibility to channelize its area-wide assignments in the ESMR portion of the 800 MHz band (817-824/862-869 MHz) to accommodate CDMA and LTE technologies. Even though the SprintNextel merger proved a terrible deal for Sprint shareholders, as noted recently by David Goldman, as
Telecom Legal/Policy Projections for 2012
This is BeyondTelecomLawBlog’s first annual Telecom Legal/Policy Projections for the New Year. While multiple policy and legislative initiatives were launched in 2010 and 2011, we expect the courts, the FCC and Congress to define the scope of these initiatives in 2012.
Net Neutrality Order Heading for Reversal in Court of Appeals. Assuming the D.C. Circuit