USF problems snowball toward 2009

Universal Service Fund reform is looking like an even bigger issue for the next iteration of the Federal Communications Commission to deal with, along with a White House administration and Congress that already seem poised to make telecom issues a high priority--well, after the economy and that other stuff, of course.

The USF already was one of the targets of recent reform proposals by Federal Communications Commission Chairman Kevin Martin, but fellow FCC commissioners and legislators convinced Martin to postpone discussion on the reforms that had been planned for early last month-on Election Day to be precise. More fuel was added to the fire last week when the FCC declared that carriers benefiting from the USF's High-Cost Fund were collectively over-paid more than $970 million between July 2006 and June 2007, according to a report at Ars Technica. That particular fund's payouts-about $4.3 billion last year--accounted for about 62 percent of the total money the USF paid out last year.

The amount is staggering and higher than previous estimates of over-payments, but it may not come as a total surprise, as the administration of USF payments has long been believed to be fraught with errors. The FCC has discussed USF reform for years, and it has been a recurring topic in agency meetings over the last year in particular. FCC commissioners narrowly approved a cap on USF funding earlier this year, but issues such as payment errors have remained an open wound.

Last month, it seemed like Martin was poised to try to sew up potential solutions, but fellow commissioners and legislators acted as though they were blind-sided by the move and a related proposal for intercarrier compensation reform. For a moment there, it actually looked like Martin-FierceTelecom's 2007 Person of the Year, by the way-might culminate his reign as FCC chairman with a bang, a shot heard 'round the U.S. telecom industry. The FCC essentially postponed the reform discussion until their next meeting, coming up Dec. 18, but Martin is probably astute in his public doubting that anything will come of that discussion but another delay.

It is not known yet who the next FCC chairman will be, but all the candidates for that job would do well to read up on the troubled 12-year history of the USF.

For more:
- Ars Technica has the overview

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Martin's reform proposals were postponed last month
Many in Congress urged the FCC to delay the matter
Speculation has begun regarding the next FCC chief

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