The Universal Service Fund for schools and libraries is under the lens of a congressional inquiry into programs prone to payment errors, according to GAO reports and congressional correspondence. The inquiry comes as the FCC must choose a contractor to run the “E-rate” program. The Universal Service Administrative Company, which recently solicited bids for a five-year contract to run the program, sent its recommendation to the FCC last week, a company spokesman told us.
Federal Universal Service Fund
The FCC's Universal Service Fund (USF) was created by the Telecommunications Act of 1996 to fund programs designed to provide universal telecommunications access to all U.S. citizens. All telecommunications providers are required to contribute a percentage of their end-user revenues to the Fund, which the FCC allocates for four core programs: 1. Connect America Fund, which subsidizes telecom providers for the increased costs of offering services to customers in rural and remote areas 2. Lifeline, which directly subsidizes low-income households to help pay for the cost of phone and internet service 3. Rural Health Care, which subsidizes health care providers to offer broadband telehealth services that can connect rural patients and providers with specialists located farther away 4. E-Rate, which subsidizes rural and low-income schools and libraries for internet and telecommunications costs The Universal Service Administrative Company (USAC) administers the USF on behalf of the FCC, but requires Congressional approval for its actions. Many states also operate their own universal service funds, which operate independently from the federal program.
Sen. John McCain, R-Ariz., has accomplished little on communications, ex-FCC chairman William Kennard said Wednesday in a debate hosted by the Media Access Project. Kennard spoke for Sen. Barack Obama, D-Ill., while former NTIA official John Kneuer backed McCain. Obama has a significantly more detailed technology policy, despite a shorter resume, Kennard said. McCain is opposed to Washington “micromanagement” of the industry, and has been dealing with communications issues for years, Kneuer said. The industry has a “stark, stark choice,” Kennard said.
Democratic FCC commissioners said Monday that a study on broadband deployment in North Carolina illustrates the need for federal government involvement in a national broadband strategy. At a New America Foundation forum, Commissioners Michael Copps and Jonathan Adelstein said such a plan should be based on a partnership between the public and private sectors.
LAS VEGAS -- FCC Commissioner Jonathan Adelstein believes reforming universal service in 2008 is “worth trying,” aide Scott Bergmann said Tuesday in a Wiley Rein panel on USF at NXTCOMM. Officials from Sprint, Embarq, Cisco and Verizon agreed reform is needed, but disagreed on the details.
The FCC, as expected, approved a cap on payments to competitive eligible telecommunications carriers under the high-cost Universal Service Fund program. Also as expected, wireless carriers voiced deep concern about the cap exerting a chilling effect on their efforts to participate in the USF program. Wireless attorneys said some carriers may challenge the order in federal court. An accompanying FCC statement issued Friday said the cap clears a path for further reform.
Affordable voice service for those in need, not financial support for carriers, would be the “paramount” aim of the universal service program, according to draft legislation released Monday at a Free State Foundation panel discussion. Proposed by House Commerce Committee ranking member Joe Barton of Texas, the bill drew panelists’ praise as embodying proposals with widespread support.
FCC Commissioner Robert McDowell announced Monday that he had cast an electronic vote supporting a cap on the high- cost Universal Service Fund. He became convinced that a cap is needed because the contribution factor - the proportion of long-distance revenue that carriers must contribute to the fund -- is again on the rise after declining last year. McDowell’s support gives Chairman Kevin Martin the deciding third vote in favor of a cap (CD April 28 p1). Commissioner Michael Copps previously voted against the cap. All the commissioners but Jonathan Adelstein have voted, sources said.
FCC Chairman Kevin Martin circulated late Friday changes in an order approving a Universal Service Fund cap that likely mean approval of a cap within days, we've learned. Counting Commissioner Robert McDowell’s support, Martin has three votes for the high-cost fund cap. Commissioner Deborah Tate backed the cap while Commissioner Michael Copps cast a no vote.
U.S. Cellular met with members of the Federal-State Joint Board on Universal Service to argue against a cap on the fund, which is now before FCC commissioners, it said. The carrier said in an FCC filing that it stated at the meeting that “there is no crisis in USF funding,” with the fund down 16 percent last year. It called the cap “the wrong move at the wrong time,” institutionalizing discrimination that exists in the fund. U.S. Cellular pointed out that Mississippi now gets $140 million from the high-cost fund, compared to $2 million in Missouri and $100,000 in Illinois. “Since 1999, Wireless has drawn $3 billion and wireline has drawn $25 billion,” the carrier said.
Subsidy caps and reverse auctions proposed to rein in a rapidly growing Universal Service Fund split wireline carriers by geography, in comments to the FCC. While Verizon urged a high-cost cap and auctions, rural groups said the reforms would undermine broadband deployment efforts. Meanwhile, wireline groups didn’t contest a proposal to kill the identical support rule. Wireline groups also expressed mixed feelings on a Universal Service Joint Board proposal to expand high-cost support to broadband and wireless.