A Broadband Universal Service Fund (USF) is on the horizon. The FCC is proposing to overhaul the USF; a press release was issued by FCC on October 6, 2011 entitled "FCC Chairman Genachowski Unveils 'Connect America Fund' Proposal to Reform and Modernize the Universal Service Fund & Intercarrier Compensation System." This outlines the new USF plan.
As I noted in my previous post, "Broadband Universal Service Fund: Is It Now Time?" the USF "was created by the Federal Communications Commission (FCC) to subsidize rural telephone services. The fund collects and distributes about $4.8 billion every year. Additionally, another $1.2 billion is collected for the low income fund and $2.7 billion for schools and libraries E-rate fund, for a grand total of $8.7 billion. This is effectively a tax that does not benefit broadband services, only basic telephony." This form of taxation has risen from 7% in 2001 to 15% in 2011. It is likely that the tax will increase in the future. This is an outdated and poor use of the USF.
In a recent speech Genachowski declared that broadband services have become necessary rather than a luxury and he wants the economy and society to benefit from broadband access. "This plan will bring enormous benefits to individual consumers, our national economy and our global competitiveness."
In an address to the Chamber of Commerce on October 12, 2011, Genachowski stated:
"Right now, 18 million Americans live in areas with no broadband infrastructure. Our plan to reform the Universal Service Fund and intercarrier compensation system would bring broadband to millions of unserved consumers, helping them find jobs, save money, access educational opportunity and better health care....
"And the immense consumer benefits of this reform are not limited to helping the unserved. The reform will save landline and mobile phone subscribers money on their long-distance bills, with wireless consumers alone receiving benefits of more than $1 billion every year. The reform will keep hundreds of millions more dollars in the pockets of telephone consumers everywhere over the next several years by constraining the growth of the Universal Service Fund, which consumers pay for.... "The goal of deploying broadband networks to every American is vital. So is empowering every American who has access to broadband to adopt it. Right now, 100 million Americans including the 18 million Americans I mentioned aren't adopting high-speed Internet at home. That's one-third of our population, a 67 percent adoption rate. Compare that to South Korea and Singapore where adoption rates top 90 percent. The digital divide is more troubling than ever because the costs of digital exclusion are rising." The plan is designed to provide broadband services to many homes and businesses in 2012. The goal is to reduce the number of Americans that cannot access broadband service by 50% by 2017. The fund that now subsidizes residential rural telephone service would be instead go to the Connect America Fund. This fund would include supporting wired and wireless Internet access. This means that the rural telephone subsidies will be phased out with the assumption that Internet telephone services like Skype would be the alternative to PSTN service. The USF would also be modified to follow an annual budget. Today the USF is spent freely. Competition will now be required to receive subsidies. Funding will be established for a Mobility Fund that would extend mobile access along and around highways that do not have service at present. The plan will be voted on by the FCC on October 27, 2011. Expect a number of comments from consumer groups when the final plan is published.
"And the immense consumer benefits of this reform are not limited to helping the unserved. The reform will save landline and mobile phone subscribers money on their long-distance bills, with wireless consumers alone receiving benefits of more than $1 billion every year. The reform will keep hundreds of millions more dollars in the pockets of telephone consumers everywhere over the next several years by constraining the growth of the Universal Service Fund, which consumers pay for....
"The goal of deploying broadband networks to every American is vital. So is empowering every American who has access to broadband to adopt it. Right now, 100 million Americans including the 18 million Americans I mentioned aren't adopting high-speed Internet at home. That's one-third of our population, a 67 percent adoption rate. Compare that to South Korea and Singapore where adoption rates top 90 percent. The digital divide is more troubling than ever because the costs of digital exclusion are rising."
The plan is designed to provide broadband services to many homes and businesses in 2012. The goal is to reduce the number of Americans that cannot access broadband service by 50% by 2017. The fund that now subsidizes residential rural telephone service would be instead go to the Connect America Fund. This fund would include supporting wired and wireless Internet access. This means that the rural telephone subsidies will be phased out with the assumption that Internet telephone services like Skype would be the alternative to PSTN service.
The USF would also be modified to follow an annual budget. Today the USF is spent freely. Competition will now be required to receive subsidies. Funding will be established for a Mobility Fund that would extend mobile access along and around highways that do not have service at present. The plan will be voted on by the FCC on October 27, 2011. Expect a number of comments from consumer groups when the final plan is published.
