U.S. Representative Jeff Landry (R-La.) has introduced legislation aimed at curtailing FCC efforts to cut back on payments to rural rate-of-return telcos through the Universal Service program. The official name of the bill is the “Restore Effective Statistics to the Calculation of USF Expenditures (RESCUE) Act of 2012.”

According to Shirley Bloomfield, CEO of the National Telecommunications Cooperative Association, the bill takes aim at “three of the most significant shortcomings of the commission’s new statistical caps on universal service support.”

In a statement, Bloomfield highlighted those “shortcomings,” including the caps’:

  • disregard for statutory mandates requiring that federal universal service support be predictable;
  • alarming inaccuracy, and
  • retroactive nature that penalizes prior commitments made in good faith by job creators all over this country

The statistical caps that Bloomfield referenced were adopted back in April, when the FCC launched a plan to use regression analysis to limit the amount of high-cost loop support any individual small rural telco could receive.

At that time, the FCC estimated that about 100 of the nation’s small telcos initially would see their high-cost loop support decrease as a result of the caps. Which carriers will see their high-cost loop support decrease in future rounds depends on how their costs compare to other telcos – a methodology the small telcos say is unpredictable and which, according to the Landry bill, conflicts with statutory mandates.

Rural telcos argue that the caps are unfair because they have been imposed on money that has already been spent.

Included with the order adopting the new caps was a listing of each of the nation’s small rate-of-return carriers, indicating the high-cost loop cap imposed by the regression model. Some small carriers say they have found inaccuracies in the numbers that were calculated.

The FCC has invited telcos who believe their caps are incorrect to use a waiver process – and at least one small telco already has filed for and received a waiver.

Landry’s legislation is just one avenue rural telcos have pursued to put a halt to the caps on high-cost loop support. Other avenues have included filing a petition for reconsideration about the cost model and protesting the retroactive nature of the caps as part of the Connect America Fund order appeal process.

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4 thoughts on “Landry Legislation Takes Aim at Universal Service Caps

  1. Sorry Mr. Landry but it's way past time to end the blank check called USF.

    Just take a look at how the USF surcharge rate has increased over time. Are you seriously telling me that it should just go on increasing, unchecked, forever? Kinda like our national debt?

    Sorry but count me out. It's time to put the genie back in the bottle..

    1. It amazes me that some people are so quick to cut something off when they clearly have no understanding of how it works. I fully agree that nothing should go unchecked and if there are those that abuse the system then they should be reprimanded or cut off. USF is necessary in the rural areas to keep communications services affordable in high cost rural areas. USF also helps many urban schools and libraries. All Mr. Landry is doing is trying to keep a flawed regression analysis that a group of bureaucrats has developed from putting a large number of companies out of business.

  2. Let's call this what it really is… another socialist type government handout for the so-called underprivileged.

    Americans need to learn to be a little more self sufficient and stop relying on big government for everything.

  3. A Republican calling for the expansion of big government in a Tea Party dominated state…while boasting on his web site that he has "signed a pledge that he will never raise taxes." The long-distance carriers pay taxes to fund the USF which they pass on in every phone bill. I actually do think the USF provides critical funding to connect rural communities – just like they provide security, roads and power lines funded mostly by big city tax payers – a full 70% of the electorate.

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