FCC Order on Universal Service Reform

On Sept 3, the Federal Communications Commission undertook steps for fiscally responsible universal service fund reform. Verizon Wireless and Sprint Nextel, in separate transactions in 2008, each committed to surrender their high-cost universal service support over five years, but those commitments have yet to be implemented. Corr Wireless has asked that any support reclaimed from Verizon Wireless and Sprint Nextel be redistributed to other competitive eligible telecommunications carriers (ETCs).

In this Order, the FCC a) provides clear instructions for implementing Verizon Wireless's and Sprint Nextel's commitments; b) holds that the surrendered support need not be redistributed to other competitive ETCs in all cases; and c) directs that the surrendered support be reserved as a potential down payment on proposed broadband universal service reforms as recommended by the National Broadband Plan, including to index the E-rate funding cap to inflation to enhance broadband opportunities for children, teachers, schools, and libraries; support a Mobility Fund to provide wireless broadband service in areas that lack coverage; improve utilization of the Rural Health Care program to advance telemedicine in rural areas across the country, including Tribal lands; and, in the long term, directly support broadband Internet services for all Americans.

In addition to accelerating universal access to broadband, this approach to implementing Verizon Wireless's and Sprint Nextel's commitments also reduces payments that support potentially duplicative legacy voice services and stabilizes consumer contributions to the universal service fund.

In the NPRM that accompanies this order, the FCC seeks comment on permanently amending its rules to facilitate efficient use of reclaimed excess high-cost support. In addition, the FCC seeks comment on a proposal to modify its rules to reclaim legacy support surrendered by a competitive ETC when it relinquishes ETC status in a particular state.

FCC Chairman Julius Genachowski said: "Today's decision ensures that USF support for mobile voice that Verizon Wireless and Sprint had previously agreed to relinquish will be used as a down payment on broadband universal service reform. Transformation of USF won't be easy, but it's underway, with important enhancements of USF's E-rate program scheduled for a vote later this month. This will expand broadband opportunities for schools and libraries, providing more access and flexibility for these anchor institutions to empower teachers, and serve children and their communities. Our rural Health Connect initiative will improve patient care and reduce medical costs through greater broadband investment for medically underserved communities. Our Mobility Fund will fill in gaps in 3G and 4G wireless coverage. Reformed Lifeline and Link-Up programs will more efficiently connect more Americans to broadband. And our Connect America Fund will catalyze private investment in broadband in rural areas of the country."

FCC Commissioner Michael Copps expressed concerns about holding on to ratepayers' contributions when those funds could and should be distributed immediately for services. "I am concerned about how and when the remainder of the surrendered funding will be distributed. These funds are needed in circulation now. Wireless broadband deployment hinges on more funding. So do jobs. Yet Universal Service reform is still, at best, many months off. We still need to create the CAF and a Mobility Fund for wireless and also expand the Rural Health Care program. Right now we lack the needed mechanisms for the timely and efficient deployment of these newly-available funds," Commissioner Copps said.