The Universal Service Fund (USF) has grown more than 50% since 20...

in the past 6 years and could more than double again in the next few years, “depending on the outcome of various legislative and regulatory changes that are under discussion,” CBO said in a report on “Factors that May Increase Future Spending from the Universal Service Fund.” The report was released Tues., a day before CBO Acting Dir. Donald Marron was to testify at a House Telecom Subcommittee hearing on universal service reform. USF outlays grew from $4 billion to $6.3 billion between 2000 and 2005, while revenue grew from $4.5 billion to $7 billion, CBO said. Revenues are a better gauge of the USF’s impact on the economy “since they take into account commitments that have been made but not yet paid for,” the report said. The report attributed much of the growth in the high-cost program to the advent of “cell phone companies that are new competitive entrants to rural markets.” CBO said demands for USF outlays could continue to rise depending on how policymakers treat the increase of competitors in rural areas, intercarrier compensation (ICC) reform and demands for the use of USF money to support broadband connections. The first 2 factors -- a growth in payments to wireless competitors and ICC changes -- could raise outlays by as much as $4 billion a year, CBO said. Increased spending for broadband can’t be measured, the report said, because it probably would result from legislative action “which CBO has no basis for predicting.” Raising the USF contributions fee could drive consumers to services that aren’t subject to USF fees, such as e-mail and instant messaging, the report said. On the other hand, there are several options for curtailing growth of USF spending such as limiting USF support in high-cost areas to one connection per household and basing support on each carrier’s own costs rather than the incumbent’s cost, moves that rural telephone companies have pushed. ICC reform could be structured in a way that would ease the pressure on the USF, the CBO said. Finally, budget pressures caused by speeding the deployment of broadband in rural areas could be eased by funding the new service outside the USF as “part of discretionary spending,” the study said.