Support grows for USF reform

Six of the nation's leading telecom companies unveiled a plan Friday that would shift the focus of the Federal Communications Commission's Universal Service Fund to supporting broadband deployment nationwide.

The plan comes one day after a bipartisan group of lawmakers called for reforming the $8 billion fund, which subsidizes phone service for low-income and rural residents. The FCC proposed reforming the $4.5 billion high-cost portion to focus on broadband deployment in the National Broadband Plan.

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The FCC, which has sought input from both the industry and private stakeholders in the reform process, said it welcomes the proposal put forth by the telecom industry.

“Earlier this year, the commission laid out core principles for reforming USF and ICC to eliminate inefficiencies and accelerate broadband build-out to the more than 20 million Americans who still lack broadband," said an FCC spokesman.

"The chairman challenged stakeholders to find common ground on specific proposals consistent with those principles as inputs to the commission's decision-making process. We’re pleased that many have taken up that challenge, and we will consider those proposals as we finalize reforms.”

Members of the House Energy and Commerce Committee released FCC data Thursday on the fund's high-cost and low-income programs showing the program often subsidizes multiple carriers to offer service to the same area, a practice ranking member Henry Waxman (D-Calif.) criticized.

“Ultimately, the American consumer is paying for an inefficient and outdated Universal Service Program,” Waxman said.

“I am encouraged that the FCC is serious about implementing reforms and urge all stakeholders to work towards consensus. The survival of the program requires new thinking and compromise, and I hope the FCC will act quickly and boldly.”

“These data confirm what many already knew — that the Universal Service Fund is in trouble,” said Chairman Fred Upton (R-Mich).

“After years of uncontrolled growth, the $8.4 billion fund subsidizes incumbents even where unsubsidized competitors can and do offer cheaper service. It supports the build-out of telephone lines where others have already built them, and it imposes few if any cost controls on recipients of its subsidies."

Upton called for industry and the FCC to come together to adopt market-based reform that would target support "to the high-cost consumers who need it most."

The plan unveiled a day later by the telecom firms, including AT&T, Verizon and CenturyLink, attempts to achieve those ends by re-directing the high-cost USF funds to deploy broadband access where there is currently no business case for carriers to provide service. 

"This plan recommends significant federal regulatory reforms to achieve the goal of connecting more Americans to broadband," said Melissa Newman, vice president of CenturyLink Federal Regulatory Affairs.

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"The policy changes offered in this proposal also are necessary for bringing long-term stability and predictability to the nation’s universal service program."

The plan prevents subsidies where service is already available, and defines broadband using the FCC's current benchmarks. The carriers also called for revamping the commission's intercarrier compensation regime, through which the firms pay on another for originating or carrying telecom traffic. 

"Today’s industry-wide proposal takes an important step in providing solutions to reform universal service and intercarrier compensation, in an effort to ensure every American has access to broadband," said Kathleen Abernathy, chief legal officer and executive vice president of regulatory and government affairs at Frontier Communications.

"This proposal reflects a careful balancing of the need to embrace our nation’s broadband future while ensuring that carriers serving high-cost rural markets continue to receive adequate support for essential communications services."

Senate Commerce Chairman Jay Rockefeller (D-W.Va.) welcomed the industry plan in a statement issued Friday afternoon. Likewise, several groups including the National Cable and Telecommunications Association expressed optimism but held off on endorsing the deal.

"Universal service is a cherished principle. In years past, it has meant that this nation connects every community with basic phone service. But in the years ahead, it must mean that we connect our communities with advanced broadband and wireless service, too," Rockefeller said.