TelePacific Urges FCC to Overturn USAC Decision on Broadband Offering

TelePacific Communications has asked the FCC to review and stay an action taken by the administrator of the Federal Universal Service Fund (“USF”).

In its ruling, the Universal Service Administrative Company (“USAC”) ordered TelePacific to treat its broadband Internet access services as telecommunications subject to USF where TelePacific delivers the service to the end user over a T-1 circuit.

“TelePacific supports universal service and broadband access and is already a significant USF contributor”, said TelePacific’s CEO Dick Jalkut. “The USAC’s decision, by discriminating against carriers that use certain wireline transmission technologies to deliver their service to customers, violates the bedrock principle that USF contributions must be assessed on a competitively neutral basis.”

Under USAC’s decision, Internet providers using T-1s must pay USF while Internet providers using DSL, fiber, and coaxial cable are not subject to the same USF fees (currently 14.1%). TelePacific asks the FCC to stay the USAC decision while it evaluates the appeal on its merits.

TelePacific argues that USAC’s decision is based on a fundamental misreading of the Commission’s 2005 Wireline Broadband Order. USAC refuses to decide the threshold question of whether the finished product TelePacific provides to the end user is an information service; ignores the critical modifier “stand-alone,” which the FCC used to distinguish between basic transmission services (subject to USF) and wireline broadband Internet access (not subject to USF); and impermissibly singles out T-1-based services for contribution at the same time it awaits FCC guidance on ATM and frame relay services (which both USAC and the FCC recognize are analogous).

TelePacific has requested FCC action on the stay by February 8, but no later than March 31, 2010. TelePacific expects the FCC to request comment on its request for review and stay of USAC’s action.