USF-Deficit Kerfuffle Shows ‘There are Limited Means,’ AT&T’s Hultquist Says
The controversy over the GOP’s efforts to use the Universal Service Fund to pay down the nation’s deficit ought to remind the telecom industry that the money is “finite,” AT&T Vice President Hulk Hultquist said Tuesday. Last week, the industry went into uproar when it emerged that House Republicans were considering using $1 billion from the fund to help close the budget gap (CD July 14 p1). Telcos small and large, which had disagreed over how to fix universal service, united in their condemnation. “There are definitely legal issues with that … that aren’t well understood,” Hultquist said at a Broadband Breakfast in Washington: “You know, there are limited means to do what we want to accomplish.”
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Arguments over expanding broadband ought to center, “frankly,” on “what’s affordable,” Hultquist said. “I'm not going to pretend I know what that answer is,” he said. “Policymakers have to balance those things. Industry needs to be prepared to say, okay, yes or no.” He reiterated his argument that universal service ought to move from a “public utility” model to a “procurement” model because modern technology is too dynamic to be congealed under permanent rules.
Some telco lobbyists are worried that even if they successfully beat back this attempt to raid universal service, it'll be a recurring funding battle, two lobbyists told us. There are now efforts underway to “educate” Congress so that USF doesn’t become something like the Corporation for Public Broadcasting -- a recurring target in budget wars, the lobbyists said.
The furor over using USF for the deficit demonstrates that there is a “disconnect" in Congress, NTCA Director of Policy Josh Seidemann said at Tuesday’s panel. “Using USF for deficit reduction is more [like] reaching into an envelope that was never from tax dollars,” Seidemann said.
Turning to the current efforts to remake the universal service system, Seidemann said: “I'm glad Hank spoke to the very difficult political questions that arise, because that leaves it to me to talk about the fairly simple legal questions.” Section 254 of the 1996 Telecom Act only covers telecom, Seidemann said. Trying to squeeze broadband subsidies in as an “advanced service” may not survive a court challenge.
But Wilkinson, Barker telecom lawyer Russ Hanser said section 254 could be read both ways. “That seems to me to be the textbook case of ambiguity, in which the expert agency gets deference,” Hanser said. In any case, Section 706 requires the FCC to ensure that advanced technology is being deployed timely and reasonably. A 706 defense of a broadband subsidy is “probably much stronger with respect to universal service than with respect to the open Internet order,” Hanser said. The key to reform, Hanser said, is to understand that “no government program we will ever have will ever funnel as much money into broadband as the private market will."
The E-rate program already functions on the procurement model, said ICF International Specialist Michael Spead. The hazard is that consumers will get too much choice under a new Universal Service Fund, and thus the size of the fund will increase, Spead said.