Martin Uncertain on Subsidies for Broadband Deployment
FCC Chmn. Martin backs “exploring” inclusion of broadband in the high-cost Universal Service Fund (USF), he said in a letter to House Telecom Subcommittee Chmn. Markey (D-Mass.). Martin declined to answer Markey’s April 2 query (CD April 3 p7) as to whether Martin favors using USF subsidies for broadband -- a strategy explored in several legislative proposals on Capital Hill.
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“Encouraging the deployment of affordable broadband services is a top priority,” Martin wrote Markey. Broadband should be made more accessible not just for high-cost areas but for all regions, Martin said, responding to a Markey question about why low-income customers can’t get support through the Lifeline and Link-Up programs. Markey demanded a tally what would happen to the USF contribution base if all broadband Internet access services had to contribute, whether designated information services or not.
Martin said the Commission lacks historical data on cable modem providers, which haven’t had to contribute to the USF. Phone providers paid about $123 million a quarter into the fund for DSL Internet access services, but as of Aug. 2006 no longer were required to contribute, he said: “This change… had no impact on the 2% rise in the contribution factor in the second quarter of 2007.” Martin told Markey that the USF system “requires fundamental reform” to stabilize fund growth.
Though the FCC moved to broaden the contribution base to include VoIP carriers and raise the wireless safe harbor to 37.1%, “I support modifying the current contribution system and moving to a more competitively neutral system based on telephone numbers,” Martin said. A June 2006 Commission DSL order is on appeal, and the FCC will consider further steps after the case is decided, he said.
Martin condemned as “government-managed competition” subsidizing multiple carriers in high-cost areas. Reverse auctions could be a better “technologically and competitively neutral means of controlling fund growth and ensuring a move to efficient technology over time,” Martin said. If the FCC used a reverse auction and limited the number of lines but still allowed multiple carriers to get support, it could stem growth, he said. If the Commission didn’t limit the number of lines and allowed more than one winner to get support, “I am concerned it would not stem the growth of the fund,” Martin said: “Indeed, it could undermine the incentive for anyone to bid to provide service for less support since they would otherwise be entitled to receive the higher support of another bidder.”
Markey asked Martin if he would ask the Joint Board to cap or freeze the high-cost fund. Martin said he backs use of a cap on any carrier unwilling to get support based on its own costs. Markey asked whether capping the high-cost fund would be competitively neutral. The system isn’t competitively neutral, with some carriers required to file their costs and receive support based only on them, while some need not do so, Martin said: “I supported applying a cap to any carrier who does not want to receive support based on its own costs.”
Martin favors imposition of a primary line restriction if Congress allows it, he said. The Commission hasn’t asked OMB to reinterpret the Anti-Deficiency Act (ADA) to exempt universal service because it believes the program can operate without violating ADA, he said.