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CONGRESS CONCERNED ABOUT IMPACT OF UNIVERSAL SERVICE

WASHINGTON-As Congress comes back to Washington after the July 4 recess, members again are poised to lean on the Federal Communications Commission on the sticky issue of how the agency is implementing the universal-service provisions of the Telecommunications Act of 1996.

Members are concerned the FCC’s implementation will lead to higher phone bills for all consumers, including wireless subscribers.

In the meantime, the FCC has tried to respond to congressional concerns by reorganizing the administrative functions of universal service.

Universal-service debate

This Thursday, the Senate Commerce Committee plans to hold a hearing on whether the FCC improperly delegated the administrative functions of universal service to an illegal body. Sen. John McCain (R-Ariz.), chairman of the Commerce Committee, asked the General Accounting Office last month to investigate and audit the operations of the controversial Schools and Libraries Corp. In February, GAO said the FCC exceeded its authority in establishing SLC and its sister organization, the Rural Health Care Corp.

SLC was created to administer the $2.25 billion subsidy program to connect schools and libraries to the Information Superhighway. RHCC was created to administer the $600 million subsidy program to connect rural health-care centers to state-of-the-art medical facilities by the use of telemedicine.

On July 1, the FCC received a reorganization report from the Universal Service Administrative Corp. that proposed to meld the functions of SLC and RHCC into the USAC. USAC believes the reorganization will lead to a more streamlined organization. However, the proposal does not eliminate any personnel.

Additionally, funds administered today by SLC and RHCC would be administered by a separate department within USAC with overall administration occurring by the USAC CEO, Cheryl Parrino, according to the report.

On the House side, Rep. Billy Tauzin (R-La.), chairman of the House telecommunications subcommittee, is preparing legislation that would use a portion of the so-called “tax on talking”-the 3 percent excise tax on telephone bills-to fund the schools and libraries program. The legislation does not address funding for rural health care or the rural service program. These last two programs still would be funded by universal-service contributions from carriers. These contributions most likely will continue to be passed onto consumers.

Listing line items

While telecom policy makers are not arguing carriers should eat these contributions, officials on Capitol Hill and at the FCC want to see these charges reflected as new line items on phone bills.

To stop the practice that started this spring when long-distance companies began listing “universal service fund” line items, legislation is being considered by Congress, and FCC Chairman William Kennard has indicated his support for a notice of proposed rule making requiring carriers to accurately reflect contributions to the universal-service fund.

In the case of long-distance carriers, this could mean the charges disappear because the FCC claims to have lowered long-distance rates by lowering the money long-distance companies pay to local phone companies to connect long-distance calls.

These access charges were decreased to compensate for the new preferred interexchange carrier charge. It is these PICCs that long-distance carriers have been recovering by the universal-service line item charge, but they have not mentioned the corresponding decrease, the FCC said.

Truth in billing

The legislative and regulatory fixes known as “truth in billing” unintentionally may have snared wireless companies in a trap because they would be required to list all charges and regulatory reliefs, but the reliefs may be difficult to quantify, according to Steven K. Berry, senior vice president for congressional affairs for the Cellular Telecommunications Industry Association. “Sometimes it is difficult to tell how costs have been reduced,” Berry said.

Sen. Jay Rockefeller’s (D-W.V.) bill seems to be an example of unintended consequences. “There are practical things that people don’t think about when they introduce legislation,” Berry said in explaining the industry’s opposition to the legislation. Rockefeller was successful in attaching the truth-in-billing language to an anti-slamming initiative that passed the Senate in May.

The bill is awaiting House action. Slamming is transferring customers from their chosen long-distance carrier without their consent. It is the most-often-cited consumer complaint at the FCC.

A House version of the slamming legislation introduced by Tauzin does not contain the truth-in-billing language.

If Congress does not act, Kennard said he plans to release an NPRM on the subject. “Consumers have the right to know what they are paying for. I am adamant that we replace confusing phone bills with clear information that can help customers make the best choices in the telephone marketplace,” Kennard said.

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