Modernizing and Streamlining the Universal Service Fund

Speaking at the Information Technology and Innovation Foundation, Federal Communications Commission Chairman Julius Genachowski outlined a proposal he and his fellow commissioner will vote on Feb 8 to modernize and reform the Universal Service Fund (USF).

Addressing the largest part of the USF program - the part focused on supporting communications service for rural Americans - the plan would modernize it to directly support fixed and mobile broadband, make it less wasteful, more efficient, more accountable, and more fiscally responsible. He said the USF is currently plagued with inefficiencies: approximately one hundred million dollars flow to companies each year to serve areas where competing providers, without a single dollar of government support, offer service to all households. And in many places, the existing system funds four or more phone companies to serve the same area.

The program lacks necessary accountability and some of the current rules are creating perverse incentives. For example, one rule intended to encourage new investment in networks is instead rewarding companies for losing customers. Believe it or not, as companies lose lines, they actually get more USF support. And meanwhile, the overall growth of USF is not constrained.

Building on the National Broadband Plan, the FCC's USF and intercarrier compensation (ICC) reform agenda rests on 4 pillars:

1. Modernizing the Programs To Support Broadband Networks
2. Ensuring Fiscal Responsibility
3. Demanding Accountability
4. Enacting Market-Driven and Incentive-Based Policies