Reforming Universal Service For 21st Century Communications

Today, regardless of where individuals live, they have access to telephone service. Congress asked the FCC to create a plan to achieve the same result for broadband service. The draft National Broadband Plan creates a path to ensure that, regardless of where individuals live, they will have access to broadband service by 2020. Doing so requires a transition away from the 20th century programs designed to promote universal voice service to a new, reformed program that is designed to promote universal access to broadband.

A key tool that the FCC has to promote universal broadband is the same tool the agency has used to promote universal voice service: the Universal Service Fund, which will distribute more than $8 billion in support in 2010. But the Universal Service Fund today includes a web of complicated rules designed to support voice service. Funding today is not targeted toward the areas that lack broadband, and there's currently no way to track progress in extending broadband to the unserved. Tinkering with the existing programs and increasing the size of the Fund is not the answer and would not accomplish the goal of ensuring everyone has access to broadband. It is time for comprehensive reform.

The Plan sets forth the following recommendations, which, if implemented, will provide access to broadband for more than 99% of American homes by 2020:

• Transition to a new Connect America Fund to extend broadband where it is not available now and to support ongoing service in those areas where it is uneconomic to provide service without governmental support - meaning that the total costs to deploy and provide broadband service exceed the total revenues derived from that broadband-capable network. Funding will be provided on a technology-neutral basis and open to any entity that can satisfy the thresholds established by the FCC.
• Create a new, targeted Mobility Fund to ensure that everyone in the country has access to 3G wireless services. Some states are significantly lagging behind the national average for 3G coverage. The Mobility Fund would provide a targeted subsidy in such areas to bring those states up to the national average.
• Reform intercarrier compensation to gradually phase out per-minute charges, while providing carriers with the opportunity for adequate cost recovery from customers, and, where necessary, from the Connect America Fund. Adopt interim rules to address arbitrage.