Boucher and Terry Declare USF Broken

WASHINGTON July 22, 2010-  Representatives Rick Boucher (D-VA) Chairmen of the Subcommittee on Communications, Technology, and the Internet, and Lee Terry (R-NE) introduced a new bill to update the Universal Service Fund. This update will include broadband as a mandatory serve, modify the contribution requirements and add new accountability measures.

“The Universal Service Fund is broken. Consumers currently pay more than thirteen percent of long distance revenues into the fund and have at times this year contributed over fifteen percent. Our legislation is a comprehensive and forward-looking measure, which will control the spiraling growth of the Universal Service Fund while ensuring that sufficient universal service support is available on a technology-neutral basis to the carriers which rely on it to provide service.  The measure will expand who pays into the Fund, control the growth of the Fund and modernize the Fund by allowing its use for the deployment of high-speed broadband service,” said Boucher and Terry

The National Broadband Plan had recommended the inclusion of broadband within the fund but also wanted to change the entire structure to include wireless broadband.

The bill declares broadband to be a universal service and that the fund should support the build out of broadband lines. It also requires fund recipients to offer high speed broadband service within five years of the bills enactment. The definition of “high speed” is to be determined by the Federal Communications Commission. This requirement may be waived by the FCC if they determine that offering the service would be too expensive.

The FCC will also be instructed to develop a new cost model which will incorporate broadband.

In order to manage the rising costs of the High Cost Fund the bill will decrease the number of eligible carriers by “eliminating high-cost support to incumbent carriers in areas where at least 75 percent of households can receive voice and high-speed broadband service from a competitive provider that does not receive universal service support”

Contributions will now be required of “Any provider of a service that uses telephone numbers, IP addresses or their functional equivalents to provide or enable real time voice communications and in which the voice component is the primary function (e.g., VoIP providers); and any provider that offers a network connection to the public (e.g., DSL, cable modem, WiMax and broadband over powerline providers).”

One of the largest criticisms of the USF is that it lacks accountability. In order to resolve this the bill directs the FCC to setup a set of performance goals and measures for each of the USF programs. The FCC will then be required to produce an annual report to Congress on the status of each program.

The bill has received support from American Public Communications Council, Inc., AT&T, CenturyLink, Frontier Communications, the Independent Telephone and Telecommunications Alliance, the National Cable and Telecommunications Association, the National Telecommunications Cooperative Association, OPASTCO, Qwest, USTelecom, Verizon, Vonage and the Western Telecommunications Alliance.

The National Cable & Telecommunications Associations released a statement in which they say in part “The Universal Service Reform Act of 2010 represents a sound first step in modernizing the USF program to bring it into the competitive era and refocus the program on broadband adoption and deployment where support is needed.  Building on a proposal that NCTA filed with the FCC last year, the bill would establish a permanent mechanism by which the Commission would reassess support levels in competitive areas and reduce or eliminate support where adequate competition exists. The bill also recognizes the importance of resolving the difficult, but very important, issues surrounding intercarrier compensation reform.”