DeMint Bill Adopts PFF Ideas on USF Reform
A bill introduced by Sen. DeMint (R-S.C.) that would give the FCC authority to define what constitutes fair competition for consumers is based largely on ideas from the Progress & Freedom Foundation’s project on telecom reform. The bill, which has no co-sponsors, includes a substantial section on universal service fund (USF) reform -- the first major Senate telecom bill to address the matter. The provisions are based on research by experts PFF convened from universities, law firms and research groups (CD Dec 9 p3). DeMint’s bill would require the FCC to adopt within 6 months after enactment a new contribution mechanism based on phone numbers; place a $3.6 billion cap on distribution, in the form of performance-based block grants to states.
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“This puts on the playing field a bill that can reorient the debate,” said PFF’s Randolph May: “It focuses on marketplace realities and not trying to regulate services by various technical characteristics.” He said the bill would make the FCC’s role more like the Federal Trade Commission’s: Its authority would be based on market-oriented competition analysis.
Telcos generally praised the bill’s competition-based approach to regulation, although some were concerned about the USF provisions. “This bill would bring consumers the choices they crave, sooner rather than later, especially new and innovative video services that AT&T is planning to offer to consumers,” an AT&T spokesman said. Verizon also welcomed the bill: “We applaud Senator DeMint for introducing legislation that recognizes the rights of consumers and will ultimately drive the marketplace. It stands in stark contrast to the outmoded model that delays the rollout of new products.” BellSouth Vp-Govt. Affairs Herschel Abbott said he liked the bill’s focus on “clarifying the role that state commissions should play in regulating the industry.”
The bill would give providers the right to build networks over public easements and rights of way as long as they don’t damage their value or safety. Right of way owners must be compensated, but the bill doesn’t specify how much. The bill would prohibit new franchise agreements but grandfather existing ones up to 4 years.
USTelecom was concerned about the bill’s USF provisions, which would “reduce and cap the fund and abdicate responsibility for this important program to the states,” said Ed Merlis, USTelecom senior vp. “In arbitrarily cutting universal service, this bill would unfairly single out some Americans to bear the brunt of those reductions to the benefit of a few large companies that currently contribute to the fund. If enacted as introduced, this bill would negatively impact investment in telecommunications infrastructure and, ultimately, threaten dramatic increases in consumers’ phone bills,” a rural industry source said.