USF Further Notice Meant to Tackle Inconsistencies in Contribution Calculations
The FCC’s upcoming further notice of proposed rulemaking on USF contribution reform, expected to be voted on at the April 27 commission meeting (CD April 5 p1), will tackle the inconsistency over how different providers define how their contribution base is calculated, agency officials said. Because of outdated rules that haven’t kept up with changes in technology and how services are being sold, some providers can pass a lower USF charge on to customers, and that can lead to unfairness, a commission official said. The further notice will try to “avoid market distortions by closing loopholes and ensuring similar services face similar service obligations,” the official said.
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For example, contribution rules approved in 2001 gave telecom providers of bundled services fairly open-ended guidelines regarding how to determine the contribution base for the voice part of the service, the official noted. One option gave providers of bundled services the option to charge based on the unbundled price of the phone service, and another option let providers determine the contribution factor based on the total package bundle price. A third option gave providers the ability to determine price based on “reasonable” factors, without going into more detail.
The end result, the FCC official said, was a lack of transparency that led to unfairness in the system and an inability of consumers to appreciate the reason behind cost differentials between different kinds of services. The upcoming rulemaking notice will attempt to tackle this issue.
The further notice will also attempt to address the increasing cost of compliance with contribution requirements, prevent arbitrage and ensure a stable contribution base by accounting for changes in the market, the FCC official said. It will also try to safeguard core commission goals such as the promotion of broadband investment and adoption, and ensure reasonable transition periods, the official said.