FCC to lay out USF reform plans

The FCC is meeting today to discuss how it can realign the current $8 billion Universal Service Fund (USF) to fund current and future broadband network rollouts.

During today's meeting, the FCC will ask for comments on where it should go next with the USF, which currently is used to subsidized PTSN lines in rural areas and for lower-income residents in addition to providing discount priced Internet connections for schools and libraries.

Funded through a $1 to $2 monthly charge on consumer wireline voice bills, the USF has grown from $2.3 billion in distributions in 1998 to $7.9 billion in 2010.

"While the world has changed around it, USF--in too many ways--has stood still, and even moved backwards," FCC Chairman Julius Genachowski is expected to say in a speech Monday, according to an advance copy provided by FCC staff.

Under Genachowski's proposal, the USF funds would be redirected towards building out new broadband service networks that would also be used for phone service. In addition, the FCC wants to limit the number of service providers in a rural area that could get access to federal subsidies.

Getting there won't be easy. While former FCC Chairman Kevin Martin tried to reform USF in 2008, he came up against strong opposition from rural phone companies that depend on the funding.

The National Telecommunications Cooperative Association (NTCA) joined by the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), the Rural Broadband Alliance (RBA), the Rural Independent Competitive Alliance (RICA) and the Western Telecommunications Alliance (WTA), issued a joint press release welcoming the latest reform drive.

While the groups said they have used the USF and Intercarrier Compensation (ICC) funds to not only support voice, but also deploy DSL-based broadband and even higher fiber-based broadband speeds to over 92 percent of their respective customer bases, they believe any reform effort needs to "retain many effective elements of current programs that continue to play a vital role in promoting the availability and affordability of broadband services for rural consumers."  

Shirley Bloomfield, NTCA's CEO, added in the release that "While NTCA, regulators and other stakeholders will need to discuss and debate further how best to achieve specific reforms, and while we may not agree in every instance on how to translate certain principles into policy, we all share the ultimate goal of creating a fiscally strong and sustainable framework that promotes investment in, enables continued availability of, and encourages consumer adoption of reliable broadband-capable networks in rural America."

For more:
- Wall Street Journal has this article (sub. req.)
- see the NTCA's response

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