FCC takes first step towards Universal Service Fund reform

The Federal Communications Commission issued a notice of proposed rulemaking — taking the first step towards transitioning the Universal Service Fund from funding for telephones to broadband.

Created in 1996, the Universal Service Fund (USF) has been instrumental in ensuring that every American can afford landline telephone service in his or her residence. The National Broadband Plan proposed transitioning the USF to the 21st century, using federal telephone taxes to expand universal high-speed Internet service.

Through the creation of a Connect America Fund (CAF), the FCC hopes to directly support broadband adoption and expansion programs without increasing the size of the USF.

The FCC's notice of inquiry asks for public comment on the use of funding in areas where there is currently no private-sector broadband provider. The Connect America Fund will be designed based on the public's feedback during the comment period.

The proposed CAF rules could include capping the overall size of the USF program, phasing out support for multiple competitors, and re-examining the current regulatory framework for smaller carriers in light of growth in unregulated revenues (such as Internet services).

By ensuring the cost of expanding broadband service does not outweigh the benefit of increased connectivity and infrastructure, the FCC can guarantee a sustainable and viable national broadband expansion plan. Public comments on the proposal should provide insight on what options the FCC has in piloting this revolutionary program.

FCC kicks off Universal Service Reform (FCC)

Bringing Universal Service into the 21st century (Speedmatters)

National Broadband Plan — Chapter 8: Availability (Broadband.gov)