FCC TO CONSIDER ADDING INTRASTATE REVENUE TO USF
The Federal-State Joint Board on Universal Service is likely to consider the FCC’s ability to assess contributions based on intrastate revenue in addition to the interstate, Matthew Brill, senior legal adviser to FCC Comr. Abernathy said at a “Webinar” sponsored by the USTA Wed. “This limited authority of the FCC is one of the reasons why the contribution rate based on interstate revenue is that high” (1.9%.) He said if the contributions were assessed based on total carrier revenue, the rate would be 2.7%, and “obviously, it would spread the burden out and put less hardship on consumers.”
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The board intends to make recommendations to Sen. Burns (R-Mont.) and the Senate Commerce Committee on possible legislative changes in universal service and will start a discussion on possible changes as soon as next week, Brill said: “It would be interesting to explore whether the Congress wants to consider broadening the contribution authority because that would enable a number of approaches that now would impose a legal risk.” He said the board also would discuss whether states needed to conduct a more rigorous investigation on how the universal service money was being used: “Tightening of the ETC [eligible telecom carriers] restrictions would be a big part of the discussion of the Joint Board, even if there is no statutory amendment… We are going to proceed and have a dialog with Senator Burns about statutory amendments.”
Brill said the Joint Board generally agreed “the time hasn’t yet arrived for supporting broadband.” He said while broadband was an “emerging service and [would] get a future, its not there yet in terms of the need to provide direct support for broadband Internet services.” He said the reasons for that were: (1) Support was being provided for the underlying network facilities, and “carriers do use universal service support to upgrade their loops to be capable to provide DSL services.” (2) Broadband didn’t meet the required criteria for use of the universal service fund (USF) money at this point: “It’s clear [broadband] is not subscribed yet by substantial majority of consumers,” with a take rate of 15%.
(3) Broadband services weren’t yet “essential” for education and public safety as “all those resources can be accessed through other means, including dial-up access or voice telephone service.” (4) The cost of supporting both broadband Internet services and underlying network facilities “may be prohibitive at this point.” (5) Some rural carriers weren’t yet equipped to provide broadband, and since all ETCs had to provide all the supported services, “that could jeopardize their ability to receive universal services.”
“There is a very mixed bag when it comes to” the way states address granting ETC status, Brill said: “Some of the state commissions have been very rigorous… and very diligent in policing whether the funds provided are used to support the network, and some states have been less rigorous in this process.” He said the Joint Board was looking at whether federal guidelines for the processing of ETC applications were required and might address measuring the service area.
In spite of numerous challenges, the USF “overall is a very successful program,” Brill said. He said its fundamental goal, “to ensure the affordable service is available throughout the country,” had been “largely accomplished.” For example, he said 95% of the population subscribed to telecom services. Other programs such as for schools and libraries, “despite a need for continuing oversight, have been extremely successful.” He said 87% of classrooms were wired and connected to the Internet.
However, Bruce Degn, Assoc./International Sales & Services manager, said some questions still needed to be answered when deciding on the contribution methodology: (1) Which contribution approach is consistent with Sec. 254, which mandates collecting contributions from all interstate telecom providers. (2) Whether a revenue-based approach can take into account bundled offerings. (3) Whether broadband revenue from not only telecom, but also from cable modem services, will be included. (4) Whether any of the particular plans will be sustainable in light of the demands of the program. He said one of the major concerns was whether wireless carriers could get ETC status. However, Brill said there wasn’t any legitimate way to exclude them from accessing the USF unless there were some public interest concerns.
Attorney Greg Vogt said that when making any decisions on ETC, the focus should be on: (1) How the FCC would balance the dual purpose of the act that guaranteed cheap, affordable service in all areas and the goal that the USF program be sustainable. (2) Whether states awarded ETC status too often and whether additional rules should be adopted at either state or federal level. (3) How ETCs should receive support. (4) Whether 2nd lines should receive support from the USF.