FCC Takes First Step on Long Road to USF Reform

Carl Weinschenk

There is no reason to think that the vast changes in telecommunications during the past few years haven't radically changed the needs of rural residents. There also is no reason to think that the mechanisms worked out decades ago for aiding folks living in the middle of nowhere still are efficient and effective. For these reasons, the Federal Communications Commission is revamping the Universal Services Fund, the main vehicle for serving these areas.

Speaking Feb. 7 at The Information Technology & Innovation Foundation in Washington, D.C., FCC Chairman Julius Genachowski laid out the vision for the revamped fund. His remarks, as prepared for presentation, are posted at FierceMobileContent.

Ars Mobilitas has the highlights of the proposed changes. For decades, intercarrier rules governing the amount carriers pay each other to complete calls have been weighted to support rural carriers. The structure controlling how this is done will be changed. A long-term phase down of these payments will shift "any necessary recovery" to the USF, while USF funds that are being used inefficiently will be shifted to the broadband-geared Connect America Fund. The piece says that performance goals and reporting requirements on USF recipients will be increased.

Clearly, this is a hugely complex undertaking that will be the subject of debate and almost certainly litigation. Richard Bennett at the Innovation Policy Blog, which is posted by the Information Technology & Innovation Foundation, offers timely insight into how the system currently works and what the FCC is proposing to do.

Bennett, a research fellow at the ITIF, is a proponent of the FCC's initiative:

Policy analysts have been calling for wholesale reform of USF and ICC for a very long time now, and the FCC has had the issue on and off the table for years. Technology has not been sufficiently advanced until very recently for the Commission to push forward with a plan that replaces plain old telephone service with broadband and VoIP, but it is now. USF reform is therefore an idea whose time has come, and we applaud Chairman Genachowski's desire to push forward with this very constructive plan that may well become the centerpiece of his legacy.

On the other side of the issue is Shirley Bloomfield, the CEO of the National Telecommunications Cooperative Association. She offers less than a ringing endorsement at her blog:

While we have been engaged in frequent and what I thought had been, very productive discussions with the FCC over the past several months on how to best structure the reform proposals, we all clearly have far more work to do given the Chairman's focus in his remarks on a perceived "rural-rural divide" and his continued reference to a few extreme examples of high-cost support as justification for reform. Unfortunately, when the press or even Members of Congress hear those extreme cases, they easily fall prey to thinking that those extremely high costs are the norm and not outlier, unique situations.

The yin and yang of partisanship will follow, of course. Billions of dollars are at stake in an arcane landscape that relatively few people truly understand. The Notice of Proposed Rulemaking-a small first step on what will be a long road-was released the day after Genachowski's remarks. The bottom line is that this was a good week for rural broadband in the sense that the government clearly is paying attention to its needs. It also was a good week for D.C. attorneys.

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