The FCC made the right decision by putting off a fight over contribution reform to focus on reforming the high-cost Universal Service Fund distribution system, said National Broadband Plan architect Blair Levin. There are “too many moving parts” in the debate over contribution factor, so the commission focused on “low-hanging fruit” in its recent rulemaking notice, Levin said on a panel Wednesday sponsored by the Congressional Internet Caucus Advisory Committee. He was having an exchange with fellow panelist National Telecommunications Cooperative Association CEO Shirley Bloomfield. She said she “would have liked to see the FCC wrestle with contribution.” NTCA members are seeing up to 10 percent of their bandwidth gobbled by companies like Netflix and the situation is critical, she said.
Federal Universal Service Fund
The FCC's Universal Service Fund (USF) was created by the Telecommunications Act of 1996 to fund programs designed to provide universal telecommunications access to all U.S. citizens. All telecommunications providers are required to contribute a percentage of their end-user revenues to the Fund, which the FCC allocates for four core programs: 1. Connect America Fund, which subsidizes telecom providers for the increased costs of offering services to customers in rural and remote areas 2. Lifeline, which directly subsidizes low-income households to help pay for the cost of phone and internet service 3. Rural Health Care, which subsidizes health care providers to offer broadband telehealth services that can connect rural patients and providers with specialists located farther away 4. E-Rate, which subsidizes rural and low-income schools and libraries for internet and telecommunications costs The Universal Service Administrative Company (USAC) administers the USF on behalf of the FCC, but requires Congressional approval for its actions. Many states also operate their own universal service funds, which operate independently from the federal program.
Good oversight doesn’t include “wholesale attacks against agencies … for political purposes,” House Communications Subcommittee Ranking Member Anna Eshoo, D-Calif., told reporters Thursday. She rejected amendments to the Continuing Resolution -- debated Thursday -- that would affect FCC operations. Eshoo said at a media briefing that her priorities for this Congress include spectrum reform, overhaul of the Universal Service Fund and building a public safety wireless broadband network.
A broad state role is critical to modernize and streamline Universal Service and Intercarrier Compensation policies, state members of the Federal-State USF Joint Board told an FCC workshop Thursday. Speakers debated proposed changes in fund size.
House Republicans will try to use the Continuing Resolution to stop the FCC from acting on its net neutrality order. In a speech Tuesday, House Communications Subcommittee Chairman Greg Walden, R-Ore., said he filed an amendment prohibiting the FCC from spending any money to implement the rule. Also at the NARUC meeting, Walden said he’s considering legislation to overhaul FCC process. He questioned the White House’s FY 2012 budget estimate for money that could be raised by voluntary incentive spectrum auctions.
The time may finally be right for an overhaul of the Universal Service Fund and of intercarrier compensation, said FCC Commissioner Michael Copps. He’s hopeful a “method” will be found to turn things like the rulemaking notice, approved by commissioners at last week’s monthly meeting, into “momentum” for making fixes to update the rules for the broadband age, he told us in a Q-and-A after his FCBA luncheon speech. “I think we've teed up an item that really raises all the issues,” he said, saying the regulator should hold stakeholder hearings on the issue. Copps used the speech to defend public broadcasting against Republican legislators’ efforts to cut funding and to urge the FCC and Chairman Julius Genachowski to do more to promote media diversity.
The FCC will structure reverse auctions carefully so all carriers will have a shot at federal funding for broadband, Wireline Bureau Chief Sharon Gillett assured state regulators at the NARUC meeting Tuesday. “The intent is to be neutral,” she said. The commission’s recent rulemaking on the Universal Service Fund and intercarrier compensation asks broad questions about reverse auctions but is essentially neutral about implementation -- focusing on census blocs, for instance, instead of geographic alignment, Gillett said.
The FCC’s failure to deal with VoIP endangers the commission’s broader Universal Service Fund and intercarrier compensation regime reforms, said Windstream Vice President for Federal Government Affairs Eric Einhorn Monday. The commission’s rulemaking notice isn’t definitive about VoIP traffic, he said at the National Association of Regulatory Utility Commissioners’ winter meeting, and without clarity nagging questions “could unravel the system before we even get to intercarrier compensation reform.” Einhorn was part of a panel on USF/intercarrier comp reform.
Congress has “an obligation to get involved” in overhauling the Universal Service Fund, House Communications Subcommittee Chairman Greg Walden, R-Ore., said after a subcommittee hearing Thursday. (See separate report in this issue.) He said he wants to ensure that USF money goes to places that really need it and that the fund is managed properly. “We've had some very productive discussions with some of our committee members and developed some principles and are working on some further principles,” Walden said. He said Rep. Lee Terry, D-Neb., who last year introduced a USF revamp bill with former Rep. Rick Boucher, D-Va., will play a key role in the discussion. Walden again said there’s no specific date for introducing the Republicans’ planned resolution of disapproval against the FCC net neutrality order, but it will happen after the order appears in the Federal Register.
States aren’t expected to be squeezed out of the Universal Service Fund system anytime soon and they'll actively engage in the FCC’s USF and Intercarrier Compensation proceeding, Tony Clark, president of the National Association of Regulatory Utilities Commission, said in an interview. The FCC voted Tuesday to issue a broadly worded rulemaking notice to reshape the USF and ICC system (CD Feb 9 p1). The notice has an entire section on the role of states, an FCC official told us.
FCC Chairman Julius Genachowski abandoned trying to use Title II authority in the net neutrality order, but his proposed overhaul of the Universal Service Fund may revive the reclassification debate, an industry official and a former Obama administration adviser each told us. Genachowski wants to refocus the fund to support high-speed broadband, and his staff has drafted a notice of proposed rulemaking that the commission is expected to vote on next week. Congress is poised to jump into the universal service deliberations (CD Jan 28 p4).