USF Reform Proposed In House

One more element has been added to the full-court governmental press aimed at extending broadband to as many people as possible: a bill recently introduced in the House would reform the 13-year-old, multi-billion dollar Universal Service Fund (USF).

The proposal would (among other things) explicitly declare high-speed broadband to be a "universal service" and, therefore, eligible for subsidization from the USF -- thus freeing up boatloads of big bucks for broadband build-out in the boondocks. Dubbed the "Universal Service Reform Act of 2010", the bill is a bipartisan effort sponsored by Reps. Rick Boucher (D-VA) and Lee Terry (R-NE). The Boucher-Terry bill focuses primarily on the USF program for delivering telecom services to "high cost" areas. The existing patchwork of USF "high cost" programs is in many ways irrational, overly complex, and inefficient. For example, eligibility for certain types of support is based on company size or regulatory classification rather than on the costs of serving the area. Furthermore, the USF now supports carriers generally on the basis of their actual costs of providing service, whether or not they or someone else could have done it for less. Although many aspects of USF are ripe for reform, its most egregious shortcoming, in the eyes of many, is clearly its failure keep up with technology - i.e., to fund broadband. (The current "high cost" program supports only voice service.)

Significantly, in this post-Comcast regulatory environment, the Boucher-Terry bill would address that conundrum by giving the FCC express authority to direct USF funds to broadband services. Would consumers have to pay more for the proposed changes? The bill mandates that any reforms will not "unreasonably" increase the contribution burden on consumers (i.e., the line item charge for USF that appears on your phone bill). To make this mandate mathematically possible, the bill would reduce support to certain carriers, expand the contribution base, and perform other feats of legislative legerdemain designed to balance the fund with the greatest of ease. Nonetheless, consumers may not feel entirely reassured by the guarantee that rate hikes will not be "unreasonable."