FCC Proposing Moving Fund That Supports Universal Telephone Service to Broadband

Money Would Be Moved In Three Stages By 2020

Mike Reynolds -- Multichannel News, 3/5/2010 2:19:22 PM

The Federal Communications Commission is proposing transitioning the fund that supports primarily universal telephone service to a universal broadband fund in three stages by 2020, and to do so without increasing the size of the fund -- now between $8 billion and $9 billion.
That will be part of the national broadband plan presented to Congress March 16, according to the FCC's broadband team, which outlined some of the Universal Service Fund (USF) reform plan to reporterson March 5.
It will do so primarily through the high-cost portion of the fund ($4.6 billion), which telecom companies, phone and cable pay into to underwrite service to areas too expensive to attract private investment.
It has proposed to create two funds, a Connect America fund that the high-cost fund will morph into over time, and a mobility fund to underwrite wireless broadband, which the commission has said will become increasingly important.
While broadband plan top advisor Blair Levin said the plan has been structured to migrate the fund to broadband without any additional congressional outlay, the FCC will also suggest to Congress that a one-time, $9 billion infusion to the new Connect America fund over three years would speed up the process.
The goal is to get more than 99% of American's connected by 2020. It is also to end fund support for voice-only service by that date.
The Connect America fund will be technology- and provider-neutral, which means the fund may underwrite fiber, or satellite or wireless, whichever is the most cost-effective.
Connect America fund will focus on areas "where there is no private-sector business case," and only one network in each area. The mobility fund will focus on extending coverage for mobile.
The FCC will put funds first into areas where it will be the cheapest to provide broadband access, or what they called the low-hanging fruit.  If that money attracts more than one potential provider, the broadband team said they would employ an as yet undetermined "market mechanism," to pick a winner.
It will also concentrate on build-out in the first phase of the plan and ongoing support afterwards.
The mobility fund is intended to get 3G wireless to areas that lag the national average for availability.
The FCC is proposing phasing out per-minute charges for inter-carrier compensation, calling it "irrational and inefficient."
Levin conceded that migrating the fund required some hard calls in terms of shifting money from current recipients, but pointed out as he has before that the FCC is not playing Santa Claus, but dealing in the real world.
One area where they will be shifting some of that fund support to broadband will be from Competitive Eligible Telecommunications Carriers.  That's mostly wireless phone providers, where there could be cases in which wired service and wireless service for a parent, and plans for the kids, could all be getting USF support
"There has always been something suspect about the CETC process, "said Federal-State Joint Board on Universal Service Commissioner John Burke in a statement.  "The current approach to funding multiple carriers to provide service where ostensibly there is not [an] economic business case to support even one has never made much sense.
The National Association of Regulatory Utility Commissioners commented that Congress had expected the FCC to have to make some hard calls and that it looked like a "solid framework."