Wireless High-Cost Universal Service Support Reform

Description

On August 31, 2010, 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.

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.

Read the NPRM

Issues

The FCC seeks comment on modifying its rules to better enable the Commission to reclaim certain high-cost support, and to use that support to help fund broadband universal service programs, consistent with the recommendations of the National Broadband Plan.

First, the FCC seeks comment on amending the interim cap rule so that a state’s interim cap amount would be adjusted if a competitive ETC serving the state relinquishes its ETC status. The FCC proposes amending the interim cap rule so that, if a competitive ETC relinquishes its ETC status in a state, the cap amount for that state is reduced by the amount of support that the competitive ETC was eligible to receive in its final month of eligibility, annualized.

The goal of the Interim Cap Order was to rein in high-cost universal service disbursements, and additional support would not necessarily result in future deployment of expanded service. Reducing the total amount of support available to competitive ETCs in a state when a competitive ETC relinquishes its ETC status in that state will not reduce support flowing to any individual competitive ETC. Reducing the pool of support in a state also would enable excess funds from the legacy high-cost program to be used more effectively to advance universal service broadband programs, as recommended by the National Broadband Plan.

Second, the FCC seeks comment on amending a rule to permit the FCC to provide the Universal Service Administrative Company alternate instructions for implementing prior period adjustments. Amending the rule as proposed would enable the FCC to direct USAC to reserve reclaimed funds as it considers broadband universal service reform. In addition, it would enable the FCC to provide USAC with alternate instructions regarding future excess funds in other situations without having to adopt a rule waiver.

The FCC seeks comment on how to develop a streamlined, administratively workable process for providing such instruction to USAC. The Commission seeks comment regarding the form that the instructions must take, including whether the instructions must be provided in an order, public notice, or other form. The FCC also seeks comment on a process by which the Wireline Competition Bureau or Office of the Managing Director would issue a public notice providing instruction to USAC that would become effective absent action by the Commission within fourteen days.

The FCC notes that, for the purpose of calculating the contribution factor, the Commission already has the authority to set demand and administrative expenses at levels other than those shown in USAC’s quarterly demand projections. The modification the FCC now proposes would permit the Commission, or the Wireline Competition Bureau or Office of the Managing Director on delegated authority, to instruct USAC to modify the prior period adjustments in the quarterly demand projections.

Comment due date: 10/07/2010

Comment reply due date: 09/21/2010