TELECOM Digest OnLine - Sorted: The Front Lines - June 15, 2005

The Front Lines - June 15, 2005

Jonathan Marashlian (
Wed, 15 Jun 2005 16:06:44 -0400 The FRONT LINES

Advancing The Cause of Competition in the Telecommunications Industry


The Wireline Competition Bureau of the FCC announced that the
Universal Service Fund contribution factor for the Third Quarter of
2005 will be 10.2%, nearly a full percentage decrease from the prior
quarterly factor of 11.1%. The 10.2% contribution factor will become
effective unless the FCC takes action in response to the proposed
increase, which is not anticipated.

Contributors are reminded that they may not mark up federal universal
service line-item amounts above the contribution factor. Thus,
contributors may not, during the third quarter of 2005, recover from
end users through a federal universal service line item an amount that
exceeds the interstate telecommunications charges on a customer's bill
times 10.2%.


On June 14, 2005, the Federal Communications Commission launched a
broad inquiry into the management, administration and oversight of the
Universal Service Fund. The FCC's goals are to improve the operation
of the program for its beneficiaries and contributors and to enhance
program integrity.

Since 1997, the Universal Service Administrative Company ("USAC"),
which administers the USF Program, has disbursed approximately $30.3
billion from the fund. The Notice of Proposed Rulemaking proceeding
will provide an opportunity for the FCC to work with all USF
stakeholders to learn from the experience of the past eight years and
find new, constructive ways to both meet the needs of those who depend
on the USF and protect the integrity of the program.

In particular, the FCC is seeking comment in the following areas:

* Managing the Program: The FCC is exploring ways to simplify and
streamline the management of the program. In particular, the FCC
tentatively concludes that a multi-year application process for
telecommunications services for the E-rate and Rural Healthcare programs
would simplify the process in a way that still guards against potential
abuse. The FCC also seeks comment on, among other things, reducing or
consolidating application forms and adopting deadlines and other criteria to
provide certainty to program applicants.

* Improving Oversight: The FCC seeks comment on the effectiveness
of existing efforts to protect the fund against potential misuse. The FCC
tentatively concludes that more aggressive debarment procedures are
necessary to safeguard the fund and seeks comment on ways to improve the
debarment rules. In addition, the FCC seeks comment on establishing
independent audits for certain USF beneficiaries and contributors and seeks
comment on what rules would help ensure that any audits are effective and
fair. The FCC is also seeking comment on establishing rules for recovering
USF monies that were not used in accordance with program rules.

* Administrative Structure: The FCC is examining the effectiveness
of the existing administrative structure and seeks comment on whether any
rule changes are needed to ensure the USF is administered in an effective,
competitively neutral way.

* Performance Measures: The FCC is seeking comment on establishing
performance measures to assess the effectiveness of the program

Through the rulemaking process, the FCC will determine whether it needs to
change any rules in order to manage and administer the USF more effectively
while deterring waste, fraud and abuse.

The Front Lines is a free publication of The Helein Law Group, LLLP,
providing clients and interested parties with valuable information, news,
and updates regarding regulatory and legal developments primarily impacting
companies engaged in the competitive telecommunications industry.

The Front Lines does not purport to offer legal advice nor does it establish
a lawyer-client relationship with the reader. If you have questions about a
particular article, general concerns, or wish to seek legal counsel
regarding a specific regulatory or legal matter affecting your company,
please contact our firm at 703-714-1313 or visit our website.

The Helein Law Group, LLLP
8180 Greensboro Drive, Suite 700
McLean, Virginia 22102

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