Broadband Cable Association of Pennsylvania


October 28, 2011

The federal government is letting phone companies put yet another fee on Americans' monthly bills. But don't worry, officials say: It is just one small part of a plan that will help more people get high-speed Internet service.

Billions of dollars a year are getting reshuffled under the plan, approved Thursday in Washington. The main goal is to stop subsidizing telephone service, which nearly everyone in the U.S. already has, and start helping to spread access to broadband, which isn't available for some 18 million American households. The plan calls for about $4.5 billion a year raised by the Universal Service Fund—a line item buried in the fine print of most people's phone bills—to be redirected to the broadband effort from conventional phone service.

But there is a catch: Some phone companies, projecting they would end up losers under a revised system for interconnection fees they charge each other for delivering calls, wanted to make up the losses somehow. They persuaded regulators to allow a new consumer fee, which is separate from the Universal Service Fund charge. The new levy starts at up to 50 cents a month and could rise as high as $2.50 a month, or $30 a year, in five years. The existing fee is paid by both landline and wireless phone customers. The new fee will apply only to landline phones. The plan "puts us on the path to get broadband to every American by the end of the decade," said Julius Genachowski, chairman of the Federal Communications Commission, after Thursday's unanimous vote by the commission.

Consumer groups weren't happy. "We don't want the burden to be placed squarely on the backs of consumers, especially when many of these companies are hauling in big revenues," said Parul Desai, a lawyer for public-interest group Consumers Union. Phone companies don't have to charge the full 50 cents, and officials said they think the average increase in consumer phone bills will be closer to between 10 cents and 15 cents per month.

FCC officials also said the companies could save billions of dollars under a related program approved Thursday that changes the fees companies charge each other for carrying or delivering phone calls. If companies pass on the reduced costs, consumers could see a benefit outweighing the new fees, but the companies could also choose to pocket the savings.

The Universal Service Fund was created under a 1996 law and continued decades of efforts by the government to ensure that people in lightly populated areas can sign up for the same phone service their urban cousins enjoy. Regulators have tried for years to change the subsidy program, which ballooned to $8 billion last year from $4.6 billion in 2001. Those efforts failed because telecommunications companies successfully killed changes that would reduce their annual subsidies.

This time, reaction from phone and cable companies was cautiously positive, although they noted that the FCC still hasn't released many details about its plan. Verizon Communications Inc. said the agency's "overall approach" seems to put the subsidy fund "on a sustainable path and will enable millions of American households to connect to the high-speed broadband networks that are playing increasingly important roles in our nation's daily life."

The plan approved Thursday would phase out the phone-service subsidies over a period of years and would give telecommunications companies that are current recipients of funding first crack at getting money to provide broadband service in rural areas. The FCC would cap the size of the fund so consumers aren't stuck paying higher fees every year to support it.

The cable industry's trade group expressed disappointment on one point, saying its concerns that phone companies will get first shot at some of the funds weren't heeded. Wall Street Journal

With the GOP presidential field narrowing, speculation will soon turn to the No. 2 spot on the ticket. Could Gov. Corbett be on the short list for vice president?

Grover Norquist certainly thinks so. Norquist, the head of Americans for Tax Reform, best known for the no-new-taxes pledges he urges pols to sign, tweeted three weeks ago that Corbett could be a "possible VP now or prez in 2016, 2020." Corbett signed the pledge last year. Norquist yesterday told us his advocacy for Corbett is "completely unsolicited" and that the governor has not expressed an interest in running for veep.

He added that Corbett looks within striking distance of a win on an issue of deep importance to social conservatives: School-choice vouchers that would allow public-school money to be spent on private-school tuition. "When I talk to people, I certainly list him as one of the guys who would be a strong addition to the ticket," Norquist told us when we asked if he had mentioned Corbett to any presidential candidates.

There are at least three potential games afoot when the VP short list comes up. A presidential candidate could see Corbett, governor of a key swing-state, as critical to winning Pennsylvania's 20 Electoral College votes. Or Corbett's allies could be floating his name to see if any presidential candidates are interested. Or Corbett's friends could just be trying to boost his name on the national stage without any real hope or interest in a VP bid.

Brian Nutt, Corbett's campaign manager last year and still a political adviser, noted that Norquist was in Harrisburg three weeks ago to attend the annual Gridiron Dinner with Corbett. Nutt noted that Corbett has not endorsed any presidential candidate and that Norquist could lay the same VP talk on GOP governors of other key states - Florida, Ohio, Wisconsin. Charles Kopp, chairman of former Massachusetts Gov. Mitt Romney's presidential campaign and a fundraiser for Corbett's campaign last year, said Norquist probably hopes the governor goes "on to further heights" in politics. "But I don't think Corbett is looking for it," Kopp said. "However, I think Corbett would be an excellent candidate for vice president."

Conventional wisdom puts Romney at the front of the pack, after U.S. Rep. Michele Bachmann of Minnesota and Texas Gov. Rick Perry enjoyed all-too-brief campaign surges. Businessman Herman Cain of Georgia is currently enjoying such a surge, but problems with his campaign infrastructure and mismanaged messages threaten to derail him. Philadelphia Daily News

Jurors in Pennsylvania's nearly 5-week-old government corruption trial could begin deliberations early next week, lawyers said as testimony ended Thursday. Defense lawyers presented several additional witnesses before resting in a trial that involves an alleged scheme by leaders of the state House Republican caucus to illegally spend millions of dollars in public money for political purposes between 2000 and 2007. Lawyers are scheduled to make their closing arguments Monday.

The defendants are former Rep. Brett Feese of Lycoming County and his former aide, Jill Seaman of Dauphin, who deny any wrongdoing. The charges against them include theft, conspiracy, conflict of interest, and obstructing justice. Seven people formerly connected to the GOP caucus have pleaded guilty. They include former House Speaker John Perzel of Philadelphia, who prosecutors say was the architect of the illegal activities, and his longtime chief of staff, Brian Preski, who changed his plea to guilty. Perzel testified for the prosecution last week as part of his plea bargain. Associated Press