FCC Weighs Reverse Auctions As Part of USF Overhaul
The FCC will consider reverse auctions as part of its overhaul of the universal service fund, two commission officials confirmed. The FCC is already structuring a pilot program that would allow reverse auctions for the mobility fund, but Chairman Julius Genachowksi’s proposed rulemaking notice sets up a separate set of reverse auctions, the officials said.
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The rulemaking notice, some 250 pages long with 1,300 footnotes, is broadly phrased and covers many general topics, but it hones in on phantom traffic and so-called traffic pumping, the FCC officials told us. The notice asks questions not just on curbing the schemes today, but also how the commission could attack it in the future. Among the questions asked is what signaling mechanisms the FCC could put into place to monitor arbitrage among Internet providers, the officials said.
As with the net neutrality order (CD Dec 1 p1), the USF-intercarrier compensation rulemaking notice relies on Sec. 254(b), which describes universal service as “evolving” and asks the commission to “take into account advances” in technology and information. The commission is hoping that the statute is significantly ambiguous to allow it to press forward with universal service support for broadband, the officials said. Genachowski’s staff is also banking on Sec. 706(a) and (b), one FCC official told us. That section gives the FCC broad authority if it finds that advanced technology isn’t being deployed rapidly or in a timely fashion, they said.
On the question of intercarrier compensation, Genachowski’s staff is struggling to reconcile inter- versus intra-state matters, the officials said. The rulemaking notice points out that the commission is trying to reform a bifurcated system when most states haven’t finished their own reforms, the sources said.
Genachowski is trying to balance telco and public interests carefully, hoping to have as much unity as possible for his USF/intercarrier compensation changes, the officials said. It’s likely to be a difficult needle to thread: the rulemaking notice makes clear that it wants to keep the fund stable and maximize “efficiency,” but the plain fact is someone will have to lose money, the FCC and industry officials told us. Genachowski’s staff has slowly been briefing industry officials, but have asked them not “to get ahead of the chairman."
A FCC spokesman said the rulemaking notice represents “a holistic plan to modernize the universal service fund and the intercarrier compensation system.” It'll contain “immediate and fundamental changes to intercarrier compensation that work hand-in-hand with proposed USF reforms,” the spokesman said in an e-mail. “The goal is to spur economic growth and prosperity through these comprehensive reforms,” he said. “As with every complex issue, commission staff are meeting with interested stakeholders regarding the serious challenges facing the current USF and ICC systems.”