House Universal Subcommittee on Communications Considers Universal Service Reform Act

On Sept 16, the House Subcommittee on Communications, Technology, and the Internet held a legislative hearing on H.R. 5828, the "Universal Service Reform Act of 2010", a bill sponsored by subcommittee Chairman Rick Boucher (D-VA). There's a consensus in Washington that the multibillion dollar annual fund needs reform, but rather than fully overhaul the program, the bill targets the high cost fund, the method of fund collection and the inclusion of funds for the support of broadband.

House Commerce Committee Chairman Henry Waxman (D-CA) said he had some concerns about costs, and just what some of the savings might be from proposed changes in the bill. He was also concerned about some of the broad waivers in the bill and their impact on the goal of deployment of broadband to "all Americans".

Addressing the former concern, Chairman Boucher asked Kathleen Grillo, senior VP of Verizon, what she estimated the savings to the fund would be from the bill's provision requiring competitive bidding for wireless carrier support. She said anywhere from $200 million to $500 million. "That is pretty substantial savings," said Boucher. He also pointed to the bill's cutting off of funds to voice-based wireline phone service in areas with competition and looking at net revenues from all supported services when determining the level of support as ways to keep costs down.

Walter McCormick, president and CEO of USTelecom, told the panel that his organization endorsed the legislation. "By addressing intercarrier compensation as well as universal service, the bill takes a comprehensive approach to addressing the financial fundamentals that will help spur private investment in broadband facilities," he said. The National Cable & Telecommunications Association, Verizon, and Qwest Corporation also expressed support for the bill.

Most of the criticism of the bill came from committee Republicans concerned about the lack of a cap on the fund or a way to offset potential increase, led by ranking member Cliff Stearns (R-FL). Rep Stearns cited the FCC's input that the fund could increase without a cap, and said the bill should not proceed without "strong statutory assurances" that that was going to happen.