rural broadbandAs the FCC transitions today’s voice-centric Universal Service program into a broadband program, the focus of those efforts is about to shift to the contribution side: How should money be collected from the telecom industry to fund the program?

Back in April the FCC gave stakeholders a couple of months to respond to this question and respond they did. Among those commenting were the American Cable AssociationComptel, the Independent Telephone & Telecommunications Alliance, and USTelecom. In addition, several rural telecom carrier groups – including the National Telecommunications Cooperative Association, the Organization for the Promotion and Advancement of Small Telecommunications Companies and the Western Telecommunications Alliance – filed comments jointly.

Contributions to today’s voice-focused Universal Service Fund are assessed as a percentage of service providers’ voice revenues – and several respondents suggested that a logical approach to the broadband Connect America Fund would be to base contributions on broadband revenues.

Others, including the ITTA, suggested a “hybrid” approach that would assess a flat monthly fee for each working residential and business number and a tiered flat monthly charge for each connection to all other assessable services. The ITTA argued in a press release that this approach would decrease arbitrage opportunities by eliminating the self-classification of services by providers.

Some commenters – including Comptel and the rural telco groups – suggested that enterprise broadband revenues be included in the revenue base used for calculating contributions.

USTelecom, an organization representing most of the nation’s largest telcos, suggested a broader re-thinking of how one portion of the Universal Service program is funded. The group urged the FCC to ask federal legislators to enact legislation that would use general revenues to fund USF programs that target low-income households.

“Fundling Lifeline services in this manner would be consistent with other federal programs that help low-income individuals or families afford what are considered life’s necessities,” USTelecom wrote in its filing.

Two comment filers – including the ITTA and USTelecom – outlined key principles they believe the FCC should follow in determining how to collect funding for the Connect America Fund. Principles cited by the ITTA included competitive neutrality, flexibility, predictability, regulatory parity, scalability, administrative ease, simplicity and accountability.

USTelecom kept its principles to four – including stability and predictability; competitive and technological neutrality; consistency with the public interest benefits of USF; and administrative efficiency.

At the time the FCC requested comment on the Connect America Fund contribution side, FCC Commissioners Robert McDowell said the commission hoped to resolve the issue by this fall.


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3 thoughts on “Stakeholders Seek Diverse Options for Funding Broadband

  1. Isn't this a rather empty D.C. discussion? It's every single bill-paying customer that gets hit for USF/CAF payments. What is it, 14%, 15% of my phone bill gets sucked into a $4 + billion pot of money *per year* that ends up mostly in the pockets of Verizon & AT&T?

    1. Craig, you are right. While some of the USF actually directly benefits needy individuals (lifeline), the beneficiaries of the biggest portion of the USF (the aptly named "high cost" funds) are primarily the richest landline incumbent companies. And USTA's position is an obvious attempt to shield the landline incumbent fund from the rigors of Congressional appropriations while subjecting the fund that benefits individuals who largely elect wireless service to those rigors. No surprise, USTA is the association of landline monopolists.

  2. As with many government programs, the Universal Service Fund had many good and noble goals; however, many opportunist saw a chance to jump on the bandwagon without having equal operating parameters. We must remember that the largest receipent of USF is the schools and libraries, and with the last far reaching audits, the largest misuse of governmental funds (in the $MMs) was awarded to these same culprits.
    In recent times, I listened to a large school district's I.T. director stating that his USF (E-Rate) payments were in the $25MM to $30MM range each year, and he said his storage of new computers necessitated a new warehouse. He thought it was great to have such a rich disposable capital source to buy new each year.
    The problem with telco/wireless USF falls into the F.C.C.'s wanting to start at ground zero for the current voice recipients many of whom have begun a technological broadband migration from copper to fiber optics and TDM to IP.
    By the way, does anyone remember the Telecom Act of 1996? In my observation, it was scary at first, but I think it turned out to be a good piece of legislation over the long haul.

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