News

Building Momentum for USF Reform

2/14/2011 12:01 AM Eastern

The Federal Communications
Commission has at long last begun
action to transform the existing
inefficient and outdated system
of universal service subsidies. For too long, consumers
have borne the increasing burdens
of a system that is riddled
with inefficiency and waste,
that ignores modern-day competitive
realities, that misallocates
scarce funds and that is
ill-suited to meet the challenge
of expanding broadband access
to all Americans.

Last week’s speech by FCC
chairman Julius Genachowski, outlining
a framework for universal service,
is a welcome sign that the FCC is serious
about reform. While we all await
the specifics of new rules, the guiding
principles outlined on Feb. 7 establish
a framework that is appropriately
premised on the necessity of enacting
current reforms to achieve our future
goals. In that regard, NCTA welcomes
the commission’s renewed commitment
to the following principles:

Fiscal responsibility: As the chairman
recognized, the transition to a
modern, broadband-focused mechanism
must be accomplished without
significant increases in the overall size
of the program. The Universal Service
Fund is paid for by American consumers
and we believe that any proposal
that fails to include meaningful limits
on the total size of the program would
be a non-starter in the current economic
and political climate.

Targeted support: The key to
achieving the commission’s broadband
goals in a fiscally responsible
manner is appropriately targeting any
new broadband support mechanisms.
Unlike the current high-cost support
mechanism, which supports
multiple providers in some markets
and supports incumbents in markets
where competitors are providing service
without support, any new broadband
mechanism should support only
a single provider and only
in those areas where the
market is shown to be ineffective.

Accountability: One of
the biggest problems with
the current universal service
high-cost mechanism
is that the commission
distributes over $4 billion
in support every year
without establishing specific, measurable goals for
the program or imposing any real obligations
on the recipients. As the chairman
noted, any broadband support
program must start with a clear goal —
bringing service to unserved areas —
and must include increased disclosures
about the operating performance and
financial condition of recipients that
are designed to achieve the goal of providing
broadband access.

We recognize that USF reform will
not be easy. It has proven to be notoriously
difficult to implement in the past,
and it would be a mistake to gloss over
the significant challenges associated
with modernizing a multibillion-dollar
program that hundreds of incumbent
phone companies have grown to
depend on. Nevertheless, we remain
convinced that reforming universal
service support in a manner that remains
faithful to these principles will
promote access to broadband services
across the nation without overburdening
consumers that pay into the fund
and without harming continued private
investment in areas where government
subsidies are unnecessary.


James Assey is executive vice president
of the National Cable & Telecommunications
Association.
September