Congress, FCC clash over net neutrality, USF structure

Three FCC commissioners found themselves on the Congressional hot seat yesterday as lawmakers pressed them about their net neutrality proposals and shifting the focus of the Universal Service Fund (USF) from subsidizing phone service to funding new broadband network investments.   

During yesterday's meeting, members of the Senate Commerce Committee probed the three FCC commissioners about FCC Chairman Julius Genachoswki's net neutrality plans. Genachowski was not present at the meeting.

Much like the debate that has raged on between the traditional service providers and cable companies (AT&T (NYSE: T), Comcast (NasdaqGS: CMCSA), and Verizon (NYSE:VZ)) and new Internet application companies (Google (NasdaqGS: GOOG) and Skype), Democratic and Republican leaders have remained divided on how the FCC should regulate how service providers manage their respective networks.

Sen. David Vitter (R-LA) argued that the FCC shouldn't "put regulations in place that would stifle innovation," while Sen. Byron Dorgan, (D- ND) argued that regulating Internet lines "is essential" and won't dampen new service provider broadband network investments.

Also on tap at yesterday's meeting was the revamping of the USF fund, an effort that has always been met with resistance from rural phone companies and other providers that get revenue from the fund. "The USF fund is in dire need of repair," said FCC Commissioner Mignon Clyburn during the meeting. "The current fund has not worked well for rural areas."

Although the FCC has not revealed any specific reform plans yet, one option the agency is considering is to place a USF fee on Internet service instead of long-distance voice service.  

For more:
- Wall Street Journal has this article (sub. req.)

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