Reverse USF Auctions Scrutinized

REVERSE USF AUCTIONS SCRUTINIZED
[SOURCE: Technology Daily 2/27, AUTHOR: David Hatch]
Revamping the universal service fund with so-called "reverse auctions" has the backing of Republican FCC Chairman Kevin Martin, but critics include Sen. Ted Stevens (R-Alaska). The multibillion-dollar fund, a perennial focus of telecommunications legislation, lowers the costs of telecom services and connections in rural and impoverished areas. But it has become stretched thin as its contributor base shrinks and more companies tap into it. Now there are efforts to change the way carriers receive money from the $4 billion high-cost portion, which subsidizes phone providers serving rural, sparsely populated regions. Under the existing system, multiple wireline and wireless carriers often qualify for USF support in an area. Under a reverse auction, the carrier agreeing to receive the lowest subsidy wins. The approach would reduce the number of companies drawing from the fund. On Feb. 20, the agency's Federal-State Joint Board on Universal Service held a public hearing on reverse-auction proposals, and it eventually will make recommendations to the commission. The devil is in the details as dueling auction proposals emerge.
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