Federal Communications Commission Caps Cell Phone Company USF Payments

"Any day now" became Thursday night for the Federal Communications Commission which agreed to temporarily cap the Universal Service Fund, a growing subsidy program that paid nearly $1.2 billion last year to cell phone companies that do business in rural areas. The cap will remain in place until the commission passes a comprehensive reform package, which is in the works. The move is bad news for rural cellular carriers who rely on such payments for a substantial part of their revenue, but it benefits big telephone companies like Verizon and AT&T, whose customers are the largest contributors to the fund. AT&T is also a major recipient of such wireless subsidies, but agreed to a cap as a condition of its acquisition of Dobson Communications Corp. last year. The top recipient of such subsidies, Alltel Corp., had also agreed to a cap as part of its buyout by a private investment group. Regulators hope the decision will slow the increase in fund charges on telephone bills and keep the program sustainable. FCC Commissioners Michael Copps and Jonathan Adelstein voted against the cap. They said the agency should have taken the opportunity to make more dramatic changes, including using the fund to promote broadband service. "As technology and the marketplace rapidly reshape the communications landscape, we face difficult questions about how our universal service policies should keep pace," commissioner Jonathan Adelstein said in a statement. FCC Chairman Kevin Martin said, "Today's decision is not an end in itself, but a step on the path towards comprehensive reform. I continue to believe the long-term answer for comprehensive reform of high-cost universal service support is to move to a reverse auction methodology and to require that high-cost support be based on a carrier's own costs. I'm supportive of these measures to contain the growth of universal service in order to preserve and advance the benefits of the Fund and protect the ability of people in rural areas to continue to be connected. "
http://www.newsobserver.com/1595/story/1057405.html

FCC votes to cap fund for rural phone subsidies
http://www.reuters.com/article/marketsNews/idUSN0148058020080501?feedTyp...

FCC Takes Action to Cap High Cost Support Under the Universal Service Fund (FCC)
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-281921A1.doc

FCC Order:
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-122A1.doc

FCC Chairman Martin Statement
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-122A2.doc

FCC Commissioner Copps Statement: "I dissent from today's decision... because it falls woefully short of the fundamental, comprehensive reforms needed to meet the overarching telecommunications challenge of the Twenty-first century. That challenge, both by statute and by necessity, is to encourage the deployment of basic and advanced telecommunications to all of our citizens and to ensure that the Universal Service system, which accomplished so much in the 20th Century, can do so again now."
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-122A3.doc

FCC Commissioner Adelstein Statement
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-122A4.doc

FCC Commissioner Tate Statement
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-122A5.doc

FCC Commissioner McDowell Statement
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-122A6.doc