Some members of Congress may be wary of spending additional money on broadband, said Republican aides at a Broadband Breakfast event Tuesday morning. The FCC’s National Broadband Plan asks Congress for $16 billion for a national public-safety network and $9 billion for a new Universal Service Fund emphasizing high-speed access. Aides from both parties called the plan a step toward broadband for all.
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.
Wireless carriers may get less in the FCC’s National Broadband Plan than meets the eye, commission officials indicated Monday. Although the plan recommends that 300 MHz of spectrum be made available for wireless broadband over the next five years and 500 MHz total over 10 years, FCC officials made clear Monday that not all will be dedicated to licensed use. The plan also provides substantial detail in its recommendations for the Universal Service Fund, including a phase-out of the high-cost fund. The plan will be presented to FCC commissioners Tuesday. They won’t vote on the plan, only on a mission statement setting out goals for U.S. broadband policy.
The Wireless Bureau must play an equal role with the Wireline Bureau in FCC Universal Service Fund “reform” efforts, Rural Carrier Association CEO Steve Berry wrote Chairman Julius Genachowski. “The fact that the wireless industry is underrepresented on USAC’s Board of Directors and on the Universal Service Federal-State Joint Board further underscores the challenges that rural and regional wireless carriers face in having their concerns addressed,” RCA said. “While RCA applauds the FCC’s efforts to overhaul the USF, RCA is greatly concerned that the interests of rural and regional wireless carriers are not adequately represented in the Commission’s deliberative process,” Berry said.
Proposals to overhaul the Universal Service Fund mechanism including eliminating funding for voice-only networks will involve 10 years of transforming the high-cost fund into the Connect America Fund, the FCC said Friday. That’s intended to extend broadband service and provide ongoing support in certain areas without increasing the overall USF $8 billion cap, the agency officials told reporters. The proposed change is an attempt to transition from supporting voice telephone services to using funds to deliver broadband networks, said Omnibus Broadband Initiative Executive Director Blair Levin.
SAN FRANCISCO -- The FCC is making “the hard decision” with the National Broadband Plan to shift universal service money toward broadband from current “less productive” uses, instead of creating a new fund at consumers’ expense as the industry would prefer, said Blair Levin, who runs the commission’s staff work on the plan. Most of the lines that don’t support broadband belong to AT&T, Qwest and Verizon, and under the high-cost USF system, “they have no incentive to upgrade,” he said late Wednesday at a Goldman Sachs conference.
The keys to running a successful state universal service fund are clarity of purpose and clarity of process, said panelists at the winter meeting of the National Association of Regulatory Utility Commissioners. In a Tuesday session, consultants Peter Bluhm of Rolka, Loube, Salzer Associates and Eric Seguin, vice president corporate development with contract fund administrator Solix, joined Elizabeth Barnes, a lawyer with the Pennsylvania Public Utility Commission, in parsing the best methods for managing a fund.
Rep. Ed Markey, D-Mass., introduced a bill Tuesday that would update the Universal Service Fund E-Rate program to increase broadband adoption. After the FCC releases its National Broadband Plan next month, it’s expected the House will take a close look at the Markey legislation, a bill on broadband affordability (HR-3646) by Rep. Doris Matsui, D-Calif., and a long-gestating USF revamp bill by Communications Subcommittee Chairman Rick Boucher, D-Va., and Rep. Lee Terry, R-Neb., as possible ways to overhaul USF, said a House source. Markey’s E-Rate 2.0 Act (HR-4619), co-sponsored by Matsui and Rep. Lois Capps, D-Calif., would direct the FCC to start three E-rate pilot programs. One would distribute vouchers to low-income students to buy residential broadband services, Markey said in the House Tuesday as he introduced the bill. The second would open a competitive grant program to provide funding for broadband equipment and services to “selected community colleges and head start facilities that best demonstrate need and incorporation of broadband use in their educational mission,” Markey said. The third would allow certain E-rate applicants serving “particularly low-income students to apply for significantly discounted services and technologies for the use of e-books,” he said. The bill would also increase the current $2.25 billion cap on E-Rate to adjust for inflation, and streamline the application process. NCTA President Kyle McSlarrow praised the bill as “proposing pragmatic steps that will enable students participating in the federal school lunch program to utilize broadband to improve their educational experience.”
Federal universal service support for wireless carriers should be limited to one connection per household to help support broadband deployment to unserved areas, Qwest said in an ex parte filing. Fifty-two percent of wireless lines are in family plan packages and on average there are 2.8 handsets per wireless family plan, the telco said. Based on 2007 wireless market data, “Qwest’s calculations reflect an estimated Universal Service Fund savings of $463 million if USF high-cost support were limited to one handset per wireless family plan.” To perform its calculations, Qwest assumed that all competitive eligible telecommunications carriers receiving high-cost support are wireless providers.
An FCC decision to maintain non-rural rules should not result in increased costs for Universal Service Fund high- cost support, some telecom companies and trade associations told the FCC in comments on a remand order by the 10th U.S. Appeals Court by April 16. In 2005, the court called the commission’s rules unlawful and said they affect high-cost area carriers that are considered non-rural because they have too many lines. Some groups backed the interim proceedings as a way to avoid increased high-cost support.
Applicants for RUS broadband money who lost in the first funding round should try again in the second, RUS Administrator Jonathan Adelstein said at the winter conference of the Organization for the Promotion and Advancement of Small Telecommunications Companies. Adelstein announced $309 million in broadband grants, including one to OPASTCO member TDS Telecom’s Butler Telephone Co. He assured attendees that the RUS will soon spell out completely who succeeded and who fell short in the first round. Industry officials have expressed concern about the RUS’ and the NTIA’s slow pace in making awards (CD Jan 22 p1).