CWA: Transform Universal Service Fund for Broadband

It is long past time for the FCC to update the Universal Service Fund to support broadband, CWA said in comments filed at the FCC. CWA supports the FCC's proposal to create a unified, broadband-focused Connect America Fund.

This rulemaking — along with a related effort to modernize the FCC's Lifeline program of low-income subsidies — provides the FCC with an opportunity to address many of our nation's broadband gaps. An estimated 12-24 million Americans cannot access broadband networks from their homes; 100 million Americans do not subscribe to broadband due to high cost or lack of digital literacy; and U.S. Internet networks rank 25th in the world in broadband speed.

Currently, the $4.2 billion Universal Service high-cost fund provides subsidies to rural carriers to support affordable voice service in hard-to-serve areas. CWA urged the FCC to require all USF recipients to provide broadband access, and to adopt immediate reforms that would free as much as $2 billion to support broadband build-out to unserved areas.

CWA also urged the FCC to use $500 million to expand the E-Rate program which supports high-speed Internet service in schools, libraries, and rural health facilities. The FCC should add an additional $50 million to the Lifeline program of low-income support for broadband access and digital literacy.

The FCC must address the current rural-rural divide, the result of inequitable USF policies that disadvantage some rural residents based on the type of carrier that provides their service. About half of households without broadband access are located in the territories of large carriers, such as AT&T, CenturyLink (formerly Qwest), and Verizon, with another 15 percent in areas served by mid-sized rural carriers. Yet, these companies receive only a small fraction of high-cost support.

The USF should eliminate duplicative subsidies, and support only one carrier in a geographic area, which would free up around $1.2 billion.

In allocating broadband-focused subsidies, CWA urged the FCC to use a two-step process. In step one, the FCC would give right-of-first refusal to current USF recipients. This would protect consumers by building on current networks, minimizing stranded investment, and ensuring that the current carrier that is obliged to serve all customers has the resources needed to meet that obligation. If the existing carrier is not interested in receiving USF support, then the FCC in step two would implement a competitive bidding process. Criteria for competitive bidding should include not only cost, but also service quality and willingness to expand broadband speeds.

In addition to USF reform, the FCC proposes to reform the system of intercarrier compensation. These are payments that carriers make to move traffic across another providers' network. These charges have served to keep local and rural rates affordable. Yet, the current system is riddled with opportunities to game the system.

Therefore, CWA supports the FCC's proposal to replace today's USF high-cost fund and inter-carrier compensation system with a unified broadband-focused Connect America Fund. During the transition, the FCC should create a Transition Recovery Mechanism to allow carriers to continue invest in their networks and protect consumers from steep rate hikes.

The FCC deadline for Reply Comments in this important proceeding is May 23. To read other comments, click here. In the box "Proceeding Number" type 96-45.

Comments of the Communications Workers of America

Letter by the Leadership Council on Civil and Human Rights

Other Comments on Universal Service Fund and Intercarrier Compensation Reform