USF Debate Shifts With New Proposals

The already-obscure politics of the Universal Service Fund have taken a new turn as interested parties reply to the FCC's unexpected release of four proposals related to the $6.5 billion fund for universal telephone service. The four FCC proposals were offered by state USF commissioners and staff from Iowa, Michigan, Oregon and West Virginia. Robert Rowe, a senior partner of Balhoff & Rowe, a consultancy seeking economically efficient ways to reform and sustain the USF, said the ideas "are all coming from state joint board members obviously concerned about the growth in the fund and about the narrow contribution base" currently limited to long-distance calls. "They seem to be part of the general theme concerned about the lack of discipline in the [current] regime, and they suggest the possibility of going to an all-[inclusive] approach to USF, rather than separating out an intrastate and interstate" revenue system, Rowe said. The proposals suggest various ways that state utility commissions could be funded through federal grants. They also would calculate costs at the state level. The proposals come after recent legislative pushes to reform USF in ways both small and large. On July 29, Oregon Republican Sen. Gordon Smith introduced, S. 1583, to extend USF to fund high-speed Internet service. But a less-noticed aspect the bill would extend USF fees to local, intrastate telephone calls, not just its current base of interstate, long-distance calls. To do so would essentially "federalize" the national and state funds into an even larger money pool. Even more sweeping legislative proposals are in the works by Sen. Conrad Burns, R-Mont., and by Reps. Rick Boucher, D-Va., and Lee Terry, R-Neb., according to industry sources. Burns' bill would extend the base for USF contributions beyond the fee imposed on interstate calls, and it would tighten eligibility standards for carriers seeking to tap into the fund.
[SOURCE: Technology Daily, AUTHOR: Drew Clark]