McDowell Announces Support for High Cost USF Cap
FCC Commissioner Robert McDowell announced Monday that he had cast an electronic vote supporting a cap on the high- cost Universal Service Fund. He became convinced that a cap is needed because the contribution factor - the proportion of long-distance revenue that carriers must contribute to the fund -- is again on the rise after declining last year. McDowell’s support gives Chairman Kevin Martin the deciding third vote in favor of a cap (CD April 28 p1). Commissioner Michael Copps previously voted against the cap. All the commissioners but Jonathan Adelstein have voted, sources said.
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McDowell said in an interview that he remains committed to thoroughgoing change. “I hope this does nothing to preclude the commission from approving comprehensive reform,” he said. “I will take the chairman at his word that he would like to accomplish comprehensive reform this year.”
“Since becoming a commissioner, I have maintained that controlling the growth of the fund should be the Commission’s first priority,” McDowell said in a written statement. “Like an unabated fever, expenditures from this fund continue to spike out of control.” The factor fell to 10.2 percent for Q1 2008 but then shot up to 11.3 percent for Q2, he noted. Since funding for competitive eligible telecommunications carriers is increasing about $150 million yearly, the CETC funding level could reach $1.4 billion by 2009 “if left unchecked,” he said. “Ultimately, it is consumers who pay for these unbridled escalations,” McDowell said. “While the Commission works toward broader and permanent reform, it is our duty to enact a temporary measure to instill fiscal discipline.”
“Consumers will be happy to hear the FCC is taking control of the fund’s growth,” Tom Tauke, Verizon’s executive vice president of public affairs, policy and communications, said in a written statement. “This is a responsible first step. The next step is comprehensive reform of the universal service high-cost fund to make it more efficient and useful for consumers who need it.” USTelecom called the cap needed. “We have seen tremendous growth in the fund and it’s critical that the FCC move forward as quickly as possible on comprehensive reform,” the group said.
“Hopefully now the commission can turn its attention to two other pressing universal service issues: Adopting a telephone numbers-based assessment mechanism and finally engaging in comprehensive reform of the universal service distribution mechanism,” said Robert Quinn, AT&T’s senior vice president for federal regulatory. AT&T, like Verizon, backs a cap.
“It’s not surprising,” said a wireless-industry lawyer. “This is very unfortunate, and it really shows that the commission is ready to turn its back on what consumers in rural America really need -- high functioning, ubiquitous wireless service.” A cap cuts changes of a fundamental revamp, the source added. “It’s unfortunate that all they can come up is locking in revenues streams for the incumbents.”
“To rein in the spiraling costs of the fund, Chairman Martin proposed an interim cap six months ago,” an FCC spokesman said. “We certainly welcome the support of the other commissioners.”