USTelecom Confronts Festering Problems with USF Contributions

USTelecom’s vice president of policy David Cohen filed a letter to the Federal Communications Commission on March 28, 2012 outlining extensive problems with the current Universal Service Fund (USF) contributions methodology and recommending several near-term administrative reforms to clean up the system.

USTelecom argues that the current system is “rife with outdated methods and procedures that create waste, inefficiency and destabilizing competitive discrepancies.” USTelecom does not believe that the problems will be fixed simply by broadening the contributions base—rather; the FCC should immediately consider some housekeeping and clarification measures for the underlying contributions rules and procedures.

USTelecom identifies three categories of pervasive problems with the current system:

• First, the service classifications are not reflective of the actual marketplace: “With the rapid introduction of…new broadband IP-based services into the market, the dividing line between telecommunications services on one hand, and information services on the other, is becoming increasingly blurred.” The FCC has failed to keep the USF contributions methodology on track with market momentum, which USTelecom believes has slowed down the deployment of IP services.
• Second, USTelecom believes that jurisdictional distinctions like state boundaries “are simply irrelevant to how consumers select and buy communications services.”
• Lastly, the resale/wholesale distinction is “burdensome and ineffective;” and “turns wholesale providers into enforcement agents of the Commission, requiring them to collect certifications from reseller customers attesting to USF contributions.