Big Telecom Users want USF Reform, too

The AdHoc Telecommunications Users Committee -- made up of substantial purchasers of telecommunications services, and are considered "enterprise customers" within the telecommunications industry -- tells the Federal Communications Commission that reforming the High Cost component of the Universal Service Fund (USF), the USF contribution assessment methodology and intercarrier compensation mechanisms are important components of a multi-faceted program to facilitate deployment and adoption of high speed Internet access service (broadband). The high cost component of the USF has experienced unsustainable growth. It has grown from $1.7 billion in 1999 to probably over $4.6 billion in 2008. Although some of the growth is attributable to rule changes, significant growth seems to be linked to use of embedded costs to calculate USF disbursements to Rural Local Exchange Carriers (RLECs) and inadequate oversight of the RLECs. As the RLECs' costs grow, more USF money comes their way. The Commission, however, seems disinclined to review rigorously RLEC costs and cost allocations. Accordingly, AdHoc supports use of reverse auctions as a mechanism to control growth of the high cost component of the USF. The Commission must gain control over the growth of the high cost component of the USF if it plans to use the USF to support the deployment of broadband. The Commission should replace the current revenue-based USF contribution assessment methodology with a numbers-based assessment model. A numbers-based assessment methodology, unlike the revenue-based approach, will be sustainable.