Martha Buyer
Martha Buyer is an attorney whose practice is limited to the practice of telecommunications law. In this capacity, she has...
Read Full Bio >>

Martha Buyer | July 25, 2012 |


Wireless Funds Can Be Used to Subsidized Broadband, Court Rules

Wireless Funds Can Be Used to Subsidized Broadband, Court Rules The issue involved the Universal Service Fund, which aims to spread broadband deployment.

The issue involved the Universal Service Fund, which aims to spread broadband deployment.

In the most recent case regarding Universal Service, the D.C. Circuit Court ruled this month that USF contributions originating from wireless carriers can go into funds that support wireline broadband--a potentially significant precedent in the area of cross-subsidization.

The issue before the court involved the redirection of contributions collected from wireless customers under the High-Cost Universal Service Support Program, which subsidizes costly broadband access to residents of rural and geographically isolated regions of the U.S. Rural wireless carriers, in particular, brought suit to prevent funds generated from their customers from being directed to other service providers offering broadband in rural and other high-cost areas. The wireless carriers naturally would prefer that those high cost dollars be reallocated right back where they came from--supporting (often) non-broadband wireless infrastructure.

The case arose from Verizon Wireless's wave of 2010 wireless acquisitions, including those of Alltel, Clearwire and a portion of Sprint Nextel. Particularly with its purchase of Clearwire, Verizon Wireless had agreed to waive its right to receive Universal Service support as a condition of the merger. Thus, the Rural Cellular Association argued that any Universal Service funds that would have gone to Verizon Wireless and/or its acquisitions--which now were being waived as a condition of the merger--should be put back into a general pool of funds raised by the USF assessment (and not accessible to the broadband providers), used to offset the high cost of providing such services in rural and high cost areas.

But more critical than this specific situation was the underlying principle: Whether funds raised "on the back" of one technology (in this case wireless) can be used to offset the high cost of deployment of another technology (broadband).

Such cross subsidies involving state and federal regulators were created in the Communications Act of 1934. At that time, both the FCC and state telephone regulators designed an implicit plan of cross-subsidies by setting rates in rural areas below cost and setting rates in urban areas above cost. This arrangement worked until the newer, more truly competitive environment created by the Telecom Act of 1996 made this model unsustainable.

The Telecom Act of 1996 created a new model: Congress directed the FCC to replace the prior system of implicit subsidies with explicit ones, euphemistically referred to as "specific, predictable, and sufficient...mechanisms to preserve and advance universal service.” 47 U.S.C. § 254(b)(5)." In order to fund the new explicit subsidies, Congress required "every telecommunications carrier that provides interstate telecommunication services" to "contribute, on an equitable and nondiscriminatory basis" to those mechanisms [47 U.S.C. § 254(d)]--and thus, the USF line item on the phone bill was born. As most end users are aware, this line item can add as much as 25% to a telecom bill, because in addition to the quarterly amount determined by the Universal Service Administrative Company (USAC), amounts collected as USF funds are subject to the additional insult of sales tax.

The next section of the Telecom Act of 1996 (Section 254(e)) stipulates that universal service support (meaning the funds raised by that previously mentioned line item) may be disbursed only to an "eligible telecommunications carrier." So the this most recent case centered on how the phrase "eligible telecommunications carrier" should be defined.

A lot of money is at stake. Once designated as an "eligible telecommunications carrier" by either the FCC or a state regulator, incumbent local exchange carriers (ILECs) as well as new market entrants may receive universal service support. According to the court's decision, the amount of this support increased from $2.6 billion in 2001 to $4.3 billion in 2007. No wonder those concerned went to court!!

The bottom line is that the court defined "eligible telecommunications carrier" such that funds raised from one technology can be allocated to support another when all other appropriate criteria are met.

The case was Rural Cellular Association and Universal Service for America Coalition v. Federal Communications Commission, No. 11-1094 (see

As an important final note, funds raised through the Universal Service mechanism have historically been used to support four separate initiatives, of which the "high cost" portion is only one. The other three are Schools and Libraries, Lifeline and Rural Health Care. With the advent of the Connect America and Mobility Funds, which are part of the new Universal Service plan, these existing categories are on the verge of morphing into new forms, but for the purpose of the current case, it's important to understand the context of the High Cost funding process.


March 7, 2018

Video collaboration is experiencing significant change and innovation-how can your enterprise take advantage? In this webinar, leading industry analyst Ira Weinstein will present detailed analysis

February 21, 2018

Business agility has become the strongest driver for enterprises to begin migrating their communications to the cloud-and its a benefit that enterprises are already realizing. To gain this benefit

February 7, 2018

Enterprises are starting to grasp the critical importance of security and compliance in their team collaboration deployments. And once the risks are mitigated, your enterprise can integrate these n

March 12, 2018
An effective E-911 implementation doesn't just happen; it takes a solid strategy. Tune in for tips from IT expert Irwin Lazar, of Nemertes Research.
March 9, 2018
IT consultant Steve Leaden lays out the whys and how-tos of getting the green light for your convergence strategy.
March 7, 2018
In advance of his speech tech tutorial at EC18, communications analyst Jon Arnold explores what voice means in a post-PBX world.
February 28, 2018
Voice engagement isn't about a simple phone call any longer, but rather a conversational experience that crosses from one channel to the next, as Daniel Hong, a VP and research director with Forrester....
February 16, 2018
What trends and technologies should you be up on for your contact center? Sheila McGee-Smith, Contact Center & Customer Experience track chair for Enterprise Connect 2018, gives us the lowdown.
February 9, 2018
Melanie Turek, VP of connected work research at Frost & Sullivan, walks us through key components -- and sticking points -- of customer-oriented digital transformation projects.
February 2, 2018
UC consultant Marty Parker has crunched lots of numbers evaluating UC options; tune in for what he's learned and tips for your own analysis.
January 26, 2018
Don't miss out on the fun! Organizer Alan Quayle shares details of his pre-Enterprise Connect hackathon, TADHack-mini '18, showcasing programmable communications.
December 20, 2017
Kevin Kieller, partner with enableUC, provides advice on how to move forward with your Skype for Business and Teams deployments.
December 20, 2017
Zeus Kerravala, principal analyst with ZK Research, shares his perspective on artificial intelligence and the future of team collaboration.
December 20, 2017
Delanda Coleman, Microsoft senior marketing manager, explains the Teams vision and shares use case examples.
November 30, 2017
With a ruling on the FCC's proposed order to dismantle the Open Internet Order expected this month, communications technology attorney Martha Buyer walks us through what's at stake.
October 23, 2017
Wondering which Office 365 collaboration tool to use when? Get quick pointers from CBT Nuggets instructor Simona Millham.
September 22, 2017
In this podcast, we explore the future of work with Robert Brown, AVP of the Cognizant Center for the Future of Work, who helps us answer the question, "What do we do when machines do everything?"
September 8, 2017
Greg Collins, a technology analyst and strategist with Exact Ventures, delivers a status report on 5G implementation plans and tells enterprises why they shouldn't wait to move ahead on potential use ....
August 25, 2017
Find out what business considerations are driving the SIP trunking market today, and learn a bit about how satisfied enterprises are with their providers. We talk with John Malone, president of The Ea....
August 16, 2017
World Vision U.S. is finding lots of goodness in RingCentral's cloud communications service, but as Randy Boyd, infrastructure architect at the global humanitarian nonprofit, tells us, he and his team....
August 11, 2017
Alicia Gee, director of unified communications at Sutter Physician Services, oversees the technical team supporting a 1,000-agent contact center running on Genesys PureConnect. She catches us up on th....
August 4, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, has lately been working on integrating enterprise communications into Internet of Things ecosystems. He shares examples and off....
July 27, 2017
Industry watcher Elka Popova, a Frost & Sullivan program director, shares her perspective on this acquisition, discussing Mitel's market positioning, why the move makes sense, and more.
July 14, 2017
Lantre Barr, founder and CEO of Blacc Spot Media, urges any enterprise that's been on the fence about integrating real-time communications into business workflows to jump off and get started. Tune and....
June 28, 2017
Communications expert Tsahi Levent-Levi, author of the popular blog, keeps a running tally and comprehensive overview of communications platform-as-a-service offerings in his "Choosing a W....
June 9, 2017
If you think telecom expense management applies to nothing more than business phone lines, think again. Hyoun Park, founder and principal investigator with technology advisory Amalgam Insights, tells ....
June 2, 2017
Enterprises strategizing on mobility today, including for internal collaboration, don't have the luxury of learning as they go. Tony Rizzo, enterprise mobility specialist with Blue Hill Research, expl....
May 24, 2017
Mark Winther, head of IDC's global telecom consulting practice, gives us his take on how CPaaS providers evolve beyond the basic building blocks and address maturing enterprise needs.
May 18, 2017
Diane Myers, senior research director at IHS Markit, walks us through her 2017 UC-as-a-service report... and shares what might be to come in 2018.
April 28, 2017
Change isn't easy, but it is necessary. Tune in for advice and perspective from Zeus Kerravala, co-author of a "Digital Transformation for Dummies" special edition.
April 20, 2017
Robin Gareiss, president of Nemertes Research, shares insight gleaned from the firm's 12th annual UCC Total Cost of Operations study.
March 23, 2017
Tim Banting, of Current Analysis, gives us a peek into what the next three years will bring in advance of his Enterprise Connect session exploring the question: Will there be a new model for enterpris....
March 15, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, discusses the evolving role of the all-important session border controller.
March 9, 2017
Organizer Alan Quayle gives us the lowdown on programmable communications and all you need to know about participating in this pre-Enterprise Connect hackathon.
March 3, 2017
From protecting against new vulnerabilities to keeping security assessments up to date, security consultant Mark Collier shares tips on how best to protect your UC systems.
February 24, 2017
UC analyst Blair Pleasant sorts through the myriad cloud architectural models underlying UCaaS and CCaaS offerings, and explains why knowing the differences matter.
February 17, 2017
From the most basics of basics to the hidden gotchas, UC consultant Melissa Swartz helps demystify the complex world of SIP trunking.
February 7, 2017
UC&C consultant Kevin Kieller, a partner at enableUC, shares pointers for making the right architectural choices for your Skype for Business deployment.
February 1, 2017
Elka Popova, a Frost & Sullivan program director, shares a status report on the UCaaS market today and offers her perspective on what large enterprises need before committing to UC in the cloud.
January 26, 2017
Andrew Davis, co-founder of Wainhouse Research and chair of the Video track at Enterprise Connect 2017, sorts through the myriad cloud video service options and shares how to tell if your choice is en....
January 23, 2017
Sheila McGee-Smith, Contact Center/Customer Experience track chair for Enterprise Connect 2017, tells us what we need to know about the role cloud software is playing in contact centers today.