NCTA: Time To Reform Wasteful USF

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The National Cable & Telecommunications Association gave a shout-out to the Federal Communications Commission's plan to vote on a Universal Service Reform regime at its Feb. 8 meeting, saying it was high time it reformed a system riddled with waste and inefficiency.

Cable operators are principally concerned about billions in subsidies they argue are currently going to underwrite existing competition.

In a blog posting, NCTA executive vice president James Assey said FCC chairman Julius Genachowski's speech Monday outlining some of that plan was "a welcome sign that the FCC is serious about reform."

The fund subsidizes primarily phone service to areas where the cost is too high to make it cost-effective to private industry, but the FCC is migrating that support from traditional phone to the new communications lifeline,broadband.

NCTA was particularly happy with Genachowski's pledge of greater fiscal responsibility, and the suggestion that future support would go to a single provider and only in markets where a marketplace solution has not materialized.

Assey also applauded Genachowski's pledge of greater accountability. "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," said Assey.

Genachowski outlined the FCC's planned Universal Service Reforms in a speech at the Information Technology and Innovation Foundation in Washington Monday.

Broadband infrastructure deployment is not where it needs to be, said the chairman, a race the country can't afford to fall behind in. "Moving forward slowly in these areas is moving backward in our global economy," he said.

The FCC made USF reform part of the national broadband plan. The chairman said Monday that would come in
two stages. The first will be making changes to intercarrier compensation rules (for payments between companies for interconnection) and gradually reducing those payments while moving funds to support broadband connection in "unserved" areas.

He said the Notice of Proposed Rulemaking the FCC will vote on will including cost-controls and limit to annual expenditures, reporting requirements and performance goals.
The second stage would be to consolidate existing support mechanisms into the new, Connect America broadband support fund.

The chairman signaled the FCC is not ready to tackle the the issue of who contributes to the fund and how much.
The chairman invoked a Republican, rather than Democrat, when talking about Capitol Hill support for reforming the USF fund. He pointed out in his speech that Lee Terry (R-Neb.), who is chairman of the House Energy & Commerce Oversight Subcommittee, and has been a critic of the FCC in other areas, has said that the USF system is broken.

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