Bipartisan Solutions for Universal Service

The week of Feb 15, I circulated an Order to modernize universal support for rate-of-return carriers. The item now on the floor is the result of months of arduous efforts by Commissioners O’Rielly and Clyburn and their staffs. All three of us agreed on two principles: the need for reform in the program to assure the funds went to the delivery of service, and a focus on maintaining existing service and bringing broadband to unserved areas. All three of us had different ideas about how to achieve those goals. None of us got all we wanted in this item, but the public will get what it needs: broadband to rural areas and program reform.

The proposed Order sets forth a package of reforms to address rate-of-return issues that are fundamentally intertwined—the need to modernize the program to provide support for stand-alone broadband service; the need to improve incentives for broadband investment to connect unserved rural Americans; and the need to strengthen the rate-of-return system to provide certainty and stability for years to come. The proposed Order would create an entirely voluntary path for rate-of-return carriers that prefer the predictability of defined support amounts over a ten-year term. Similar to the approach that has successfully spurred deployment by larger “price-cap” carriers, this model-based support comes with defined milestones for efficient, accountable deployment. This model-based option has been actively sought by some rate-of-return carriers, and reflects significant updates and carrier-submitted data from the rate-of-return community. For carriers who choose to continue receiving support based on traditional rate-of-return principles, the proposed Order would provide more certainty for carriers, increase fiscally responsible management of the fund, and ensure that a reasonable portion of support is spent on new buildout to connect those that remain unserved. To better meet the needs of consumers, for the first time, we would provide support for stand-alone broadband without a voice service subscription, building on the framework of our longstanding rules.

Joan Engebretson for telecompetitor noted that, "Surprisingly, [Chairman] Wheeler’s post does not mention the words “Connect America Fund” – although virtually all other FCC discussion about reforming the Universal Service program has referenced transitioning that program to a broadband-focused Connect America Fund. Perhaps this was just an oversight and not a deliberate choice on the chairman’s part." She continued, "[Chairman]Wheeler’s post also sidesteps another controversial issue- whether or not the order calls for the CAF program to continue to have a program focused on wireless service, as the current USF program does. [Commissioner] O’Rielly previously warned carriers to not to expect a wireless program, but [Commissioenr] Clyburn recently expressed a different point of view. At the January FCC meeting she argued that rural Americans need both fixed and mobile broadband."