Barton USF Bill Goes Back to Basics

The bill would cap the entire fund. Total support couldn’t exceed the amount collected the previous year. It would use a reverse auction for the high cost fund, each winner enjoying the privileges of a carrier of last resort. Reserves couldn’t exceed the total of support the year before. After an initial reverse auction, the agency could hold periodic auctions with reserves no higher than the previous winning bid for each area.

“This is just to get the discussion started,” said Neil Fried, the House Commerce Committee’s senior minority counsel for telecom policy. “From Mr. Barton’s perspective we've largely accomplished the goals of the universal service program,” he said, adding that something isn’t working, because the cost of the program is rising. “We are hopeful that the FCC’s recent smoke signals suggest we are going to have an interim cap,” he said, “but that’s just the first step. We need to move to comprehensive reform once we have the cap.”

The draft is “helpful to the debate… it offers a clear articulation of principles,” said Colin Crowell, chief telecom aide to House Telecom Subcommittee Chairman Ed Markey, D-Mass. Congress will keep overseeing the FCC’s handling of universal service, he said. The subcommittee plans a summer hearing that will take a comprehensive look at the programs with a core focus on consumer welfare.

“Instead of focusing on the core equity to consumers, we often get into the debate about the equity between different companies or industries in how the money is divvied up,” Crowell said. “That jockeying, that tug of war can break down and lose sight of what the overarching mission is.”

But emphasis on broadband is “once again focusing on the core mission of universal service,” Crowell said. Commission abandonment of its portability rule is one reason program cost rose rather than falling, as the 1996 Telecom Act envisioned. The commission changed the rules so that if incumbent carriers lost out to other providers, they kept getting USF funding. “If you won you won, if you lost you won,” Crowell said. The result was rising subsidies “for the same consumers in the same geographic area.”

Barton’s draft wouldn’t extend broadband deployment, said John Rose, president of the Organization for the Promotion and Advancement of Small Telecommunications Companies. The draft has merit, but a provision allowing only one eligible telecommunications carrier per service area to get USF support would limit the spread of broadband, he said.

The Barton draft “didn’t play favorites” on reverse auctions, said Mark Rubin, Alltel vice president of federal government affairs. Alltel backs reverse auctions, but not to choose a single “eligible telecommunications carrier” or restrict consumers’ choice of providers.

“We need to think about what it is we want this program to do,” said James Assey, NCTA vice president and former telecom counsel for the Senate Commerce Committee. It should fill gaps unserved by the market, and more simply calculate carrier contributions, he said. And the program should be competitively neutral, not favoring one technology over another, to avoid distorting the market, Assey said.

The USF system is “broken and it’s going to die, I just can’t tell you when,” said Joel Lubin, AT&T vice president of policy. The program is based on outdated assumptions about how people get voice communications, he said, noting that the infrastructure for delivering voice is the largely the same as for broadband. No pressure to extend broadband services will arise without a change, he said. But it’s up to policymakers to decide “what should or should not be done.”

“What makes it difficult is various factions warring with each other,” Lubin said. “We need a more efficient system… we need a rational definition of what a rural customer is.”

Barton’s draft would require the Universal Service Administrative Co. board to include “professional public administrators with at least a master’s degree in public administration, 5 years of post-graduate professional experience and no financial interest or affiliation with any organization or company that may receive universal service support.” It calls for naming to the Joint Board three additional members who are “economists with a doctorate degree and at least 5 years of post-grad experience as a professional economist.”