Martin Pushes for Reverse Auctions, Rues USF Growth
FCC Chmn. Martin said Tues. he sees reverse auctions as a solution for stemming the “unsustainable” growth of the Universal Service Fund caused by increased competitive providers. Martin told the Federal State Joint Board on Universal Service that he never supported giving USF subsidies to multiple recipients in an area, and just what he feared has happened -- a sharp rise in USF subsidies caused by the increase in competitive rural carriers.
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Martin said he might look favorably on expanding USF to support broadband deployment. He said he likes an Alltel proposal for a pilot reverse auction that focused on broadband support, although he said he didn’t like another part of it: Alltel’s proposal to continue giving USF subsidies to carriers beyond the auction winner that matched its price and service commitments.
Martin made the comments as the joint board began a hearing on reverse auctions and other proposals to stem USF growth, during NARUC’s winter meeting in Washington. Martin is a member of the board, as are Comrs. Tate and Copps and 5 state officials. He said he was “hesitant” about the idea of multiple USF providers when he was a new FCC commissioner several years ago and “today I'm sad to say, the number of providers has ballooned,” creating pressure on the USF. Payments to competitive eligible telecom carriers (CETCs) last year accounted for $1 billion of the $4 billion high- cost USF fund and are expected to rise to more than $1.5 billion this year and close to $2 billion in 2008, he said.
The joint board began working on ways to ease USF growth in 2004 and “in that time, the high cost fund has grown by a third,” said W.Va. Consumer Advocate Billy Jack Gregg, a joint board member. The high-cost fund will rise to about $5.5 billion in 2009, he said. “As we sit here talking, the fund continues to grow.”
“Several parties have made helpful filings” proposing reverse auction plans, including Verizon, Martin said. Alltel’s broadband pilot is “intriguing,” he said, “but I don’t agree with Alltel that those ETCs that don’t win should continue to get [USF funding].” Martin said “another alternative, to reimburse CETCs for their actual cost, is worth considering,” as well. The bottom line is “a system focusing on subsidizing voice competition is not sustainable.”
Verizon’s USF plan would phase in competitive bidding, starting with caps on USF funding, then auctions for wireless rural carriers and finally separate auctions for wireline carriers in areas there’s at least one wireline competitor to the incumbent. Alltel’s plan would subject wireless and wireline carriers to auctions at the same time and would give all carriers, not just the auction winner, comparable per- line funding if they made the same service commitment.
Joint board members and industry panelists concentrated on 3 elements of the proposals: (1) Whether separate auctions should be held for wireless and wireline carriers. “It doesn’t make sense to have separate wireless and wireline auctions,” said CTIA official Paul Garnett. (2) Whether the auctions should be based on a “winner take all” concept as proposed by Verizon or should allow others to take advantage of the winning bid, as Alltel proposed. (3) Whether current USF payments should be capped. “I'm leaning to the idea of a cap for CETCs” support, said Vt. Public Service Board Comr. John Burke. “I'm not sure a cap on [incumbent] ETCs is necessary. It may be a cure for a disease that does not necessarily exist because the amount of support appears to be declining” for incumbent rural telcos.