FCC Chairman Martin Seeking To Revamp Universal Service Fund

[SOURCE: CongressDaily, AUTHOR: Drew Clark]
FCC Chairman Kevin Martin said that his agency soon would require Internet telephone providers and cable companies to pay into the universal service fund ­ which is designed to provide all Americans with modern telecommunications services. Chairman Martin said, "The Commission needs to revise the way in which it collects the universal service fund. The current interstate revenue base method is outdated. It simply does not reflect the competitive and dynamic communications market that exists today." Because of the changing nature of communications technology, the revenue base supporting the USF has been shrinking in recent years. Shoring up the fund is also expected to be a major focus when Congress -- likely next year -- takes up legislation to overhaul the Telecom Act. Currently, the nearly $7 billion annual fund is primarily collected from an approximately 10 percent surcharge on the revenues of interstate long-distance services. Cable companies' modems and Internet telephone services currently are exempt from paying into the pot. Revenue from telecommunications companies' high-speed digital subscriber lines are accessed, although that will end in May. Chairman Martin wants to change the way the program raises money by imposing a fee based upon each telephone number. Through this formula, cable and Internet companies offering telephone services would have to contribute to the USF as well. Martin said the current system "doesn't account for the increase in bundled service offerings, the increasing migration to wireless and voice-over-[Internet protocol] services, or the shrinking long distance market." Although he did not insist that a number-only approach be deployed, he said he strongly preferred that option. "I do believe that we can't wait that much longer," he said. "Whatever we do to ensure the sufficiency and sustainability of the USF, it is critical that people in rural- and high-cost areas continue to receive at affordable rates."
http://www.njtelecomupdate.com/lenya/telco/live/tb-HUMF1130368592515.html

* Chairman Martin's Remarks to USTA:
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-261868A1.doc