USTelecom Submits Comments in IRS Proceeding June 10th, 2008

Yesterday, USTelecom submitted comments to the IRS in response to the agency’s request for comment on its proposed regulations on the deduction and capitalization of expenditures related to tangible property. In May, the IRS issued a notice of proposed rulemaking, announced a public hearing, and withdrew regulations previously proposed in 2006 . The regulations covered by the guidance are known more generally as “repair regs.”

In comments we filed in response to the 2006 proposed regulations, USTelecom made numerous recommendations for changes, and we’re pleased to report that the new proposal reflects many of USTelecom’s suggestions from that comment cycle. Yesterday’s submission both praises the IRS for adopting those changes and offers a few more refinements. On June 24, the IRS will hold a public hearing on these regulations, where Mike Mancini of Verizon will present testimony on behalf of USTelecom’s position.

Walter McCormick before the House Telecom Subcommittee May 6th, 2008

In testimony before the House Telecom Subcommittee of the Committee on Energy and Commerce, USTelecom President and CEO Walter B. McCormick Jr. urged Congress to take the time to gather the facts on broadband deployment before enacting premature legislation that could impede investment and innovation in broadband that helps protect the environment and delivers better health care and education services to consumers. Hear the testimony; read the news release or listen to the testimony.

USTelecom Vidcast: David Cohen on USF Reform April 28th, 2008

Last week, we sat down with USTelecom’s Vice President for Policy David Cohen to talk about the current FCC proceeding on universal service reform.

Be sure to also check out this post by David Cohen, which talks more about the ongoing proceedings and USTelecom’s recent filing on the issue.

Comments on Pole Attachments Call for Rate Parity April 24th, 2008

Ever looked at the telephone poles that run down your street or alley?  To the untrained eye it may just look like a jumble of cables, wires, and boxes strapped onto a utility pole.  But it actually reflects the intense - and growing - competition between the cable, telephone, and CLEC companies who deliver bundled voice, video and broadband services to consumers.

Yet despite delivering nearly identical bundled services, cable, telephone and CLEC providers each pay vastly different rates to the pole owners, usually the local electric company. For example, ILEC’s can pay more than 1,400% more for pole attachments than their cable counterparts; the disparity between ILEC and CLEC rates is also high, in some instances near 900%.

But that disparity is coming under increasing scrutiny.  The FCC has initiated a rulemaking proceeding to determine whether broadband attachments by all classes of providers should be subject to one uniform rate.  From a policy perspective, this makes sense.  Why should providers of fundamentally identical services attaching fundamentally similar devices to the poles be charged remarkably different rates?The current rate disparity between ILECs, CLECs, and cable companies puts ILECs at a substantial competitive disadvantage with regard to the prices they can offer consumers.  A broad internal survey of USTelecom members, which we cited in our initial comments in the pole attachment proceeding, highlighted the significant, consistent and widespread disparity in rates charged to various providers.

Yesterday USTelecom filed reply comments in the FCC’s ongoing proceeding on pole attachments, calling for parity in rates among the providers of similar services; as the first round of comments in the proceeding showed, there’s widespread support for rate parity.  Specifically, we write:

The initial comments in this docket clearly demonstrate widespread enthusiasm and support among diverse groups for a uniform, reasonable rate formula for broadband attachments. Representatives from [ILECs], cable providers, wireless providers, [CLECs] and utilities expressed their support for such an approach.

We also noted in the comments that the FCC has ample statutory authority to establish a rate formula to cover broadband attachments for all manner of providers, including ILECs; we certainly hope that the Commission acts on that authority to level the playing field between broadband providers, regardless of platform.

USTelecom Files USF Reform Comments April 23rd, 2008

Reforming the high-cost portion of the Universal Service Fund is critical in order to meet the program’s goal of bringing service to rural and remote communities at prices comparable to urban or suburban areas. While support for incumbent telephone companies has remained flat since 2003, the price tag for support to wireless CETCs has risen exponentially in recent years-from about $15 million annually in 2000 to almost $1 billion in 2006 .

Often those CETC allocations go to carriers that are operating in areas where there is already sufficient competition from unsubsidized providers. That means that in addition to putting unsustainable pressure on the fund, it’s far from clear that the money is actually supporting the objectives of the program.

FCC proceedings on USF reform have been ongoing, and late last week, USTelecom filed comments on three proposals the Commission was seeking comment on: the Joint Board’s proposal for separate mobility, broadband, and provider-of-last-resort funds; the FCC’s NPRM on getting rid of the identical support rule; and the FCC’s NPRM on using reverse auctions.

In the comments filed with the Commission, USTelecom laid out the following proposal for phasing-in reforms to the universal service system:

• cap the growth of high cost support for competitive ETCs;
• gradually remove access support from support provided to competitive ETCs;
• phase out support for multiple wireless competitive ETC lines per household;
• consider end user rates in the calculation of high cost support for fixed line ETCs;
• implement competitive processes such as reverse auctions to reduce the number of wireless competitive ETCs to one per geographic area and to determine their level of support; and
• gradually shift support for wireless CETCs to a project basis to extend wireless coverage.

You can see a press release that we issued about the filing on our website, and USTelecom members can read an in-depth analysis of the issues at hand in last Friday’s edition of our members-only newsletter, Crossroads Express.

USTelecom Files Testimony on RUS Broadband Programs March 24th, 2008

Last week Congress began soliciting the views of folks interested in how much money is going to be provided to the Rural Utilities Service (RUS), a relatively small agency in the U.S. Dept. of Agriculture. USTelecom President and CEO Walter McCormick submitted testimony to both the House and Senate supporting the RUS telecom programs and offering suggestions as to how to make RUS more effective.

RUS can be a key contributor to America’s broadband future, and USTelecom would like Congress to ensure that the funding provided for the build out of telecom facilities, especially including broadband, is sufficient and well spent. Years ago there were those who contended that the job of RUS was done, that everyone had single party phone service (for those of you who can remember party lines), and that the agency should fade quietly into oblivion. Well, thank goodness that it did not, since policy makers have now rightfully decided that it would be a good idea for everyone, including rural Americans, to have modern communications facilities and service, including broadband Internet access.

Broadband communications vastly reduces the handicap of distance in rural areas, enabling services such as distance learning and telemedicine, and even just helping rural school kids access the same resources as city kids to do their homework. But for many high cost rural areas with low population density, it is just too darn expensive to build out the facilities needed to provide broadband service. That is where RUS comes in. It provides low interest loans and (a small amount of) grants to providers to construct those needed facilities. So USTelecom supports providing sufficient funding for those facilities to be built as an investment in the infrastructure, economic growth and people of rural America.

But there has been a big problem with the broadband portion of the RUS telecom program… (more…)

USTelecom Calls for Pole Attachment Parity March 7th, 2008

Today, USTelecom filed comments in the FCC’s pole attachments proceeding. In terms of leveling the playing field among broadband providers and making the market for broadband more competitive, getting parity in pole attachment rates would be a giant step forward. As we discuss in the comments, a recent survey of USTelecom’s membership shows that incumbent local exchange carriers (LECs) pay more than eight times what cable providers pay per attachment and almost six times the rate paid by competitive LECs. That’s a pretty substantial disparity between companies that are selling nearly identical bundles of services. But more importantly, it results in a substantial disparity in what consumers ultimately pay; in essence, it’s a tax on ILEC broadband consumers.

My colleague Robert Mayer talked a bit about pole attachments in his recent USTelecom vidcast. If you haven’t caught it yet, you can see it here.