Legislation to modify the universal service fund (USF) received N...

(R-Ariz.). S-1380, introduced by Sen. Smith (R-Ore.), would adjust distribution of USF payments to Bells and other large ILECs for rural services. The pot of about $230 million, called the “non-rural” fund because it goes to bigger carriers, is calculated statewide and goes mostly to Ala., Miss. and W. Va. “The FCC’s statewide averaging approach excludes more than 40 states and most tribal lands from eligibility for high-cost support,” NITI said. S-1380, and its House counterpart (HR-1582) from Rep. Terry (R-Neb.), would calculate based on the wire center. “This represents a more equitable approach given that one wire center typically covers a more homogeneous service area and reflects service costs more accurately,” the NITI letter said. NCAI said the legislation was needed, as many Native American communities don’t even have basic telecom services. “In recent years, numerous experts have reported that Native Americans face an urgent situation in which their telecommunications infrastructure is falling far behind the rest of the Unites States,” NCAI said. The bill has 22 co-sponsors, including McCain, but hasn’t been scheduled for hearing or markup. While urging its passage, NITI said it had concerns: (1) A cap on funding to any one state could result in “truly needy wire centers” from receiving funding. (2) The value of phone exchanges could rise as a result of USF funding changes, making it more difficult for tribes to purchase the exchanges in their areas. “This possible side effect does not outweigh the arguments in favor of the bill, as most tribes will be better served by greater service investments by incumbents than by attempting to take over service themselves,” the NITI letter said. “However, for tribes that have determined that purchase of the local exchange is the only way to ensure adequate service to its people, this effect must be considered.”