Importance Of Compromise May 1 FCC Interim USF CETC Cap Order May Be Surpassed By An FCC Press Release Issued The Next Day

The FCC's May 1 decision to cap the competitive ETC USF fund has been widely reported in the trade press and the popular press - but, there has been little coverage or analysis of how Chairman Martin obtained the "third vote" for the cap in the face of the significant Congressional opposition mounted by the wireless industry and its national association, the CTIA. (See, "US Congress Stays Silent On USF Interim Cap" on page 1 of this week's Report.)

The day after the issuance of the USF cap order, the FCC took an unusual (in fact, we think, unique) action in the form of a press release titled "INTERIM CAP CLEARS PATH FOR COMPREHENSIVE REFORM." While the press release has not received significant attention in the press, the release may be more significant than the cap. This press release indicates the intent of the Chairman to move forward on twelve long-pending proceedings including intercarrier compensation. Of special interest to rural incumbent LECs is the Commission's recognition in this press release that reductions in rural carrier access charges will inevitably require "offsetting support payments" from the USF.

The FCC press release explains that the implementation of the cap was a necessary step to take prior to access reform because in the absence of the cap (and the continuation of ETC USF based on 'idnetical support'), "universal service support to competitive ETCs would increase dramatically in the event intercarrier compensation rates declined."

Click here to view the full text of this FCC press release.