How to Reform Universal Service Fund to Support Broadband

Speed Matters has long supported reform of the Universal Service Fund (USF) to promote broadband build-out and affordability. The FCC's National Broadband Plan highlights a transition plan to move USF support from telephony to broadband. Members of Congress, FCC Commissioners, service providers, and consumer advocates all agree. So the question is no longer whether to shift USF subsidies to support broadband deployment and adoption, but how.

Two recent events — one at the FCC, the other before the Senate Energy and Commerce Committee — focused on that critical question. Speed Matters is pleased to see this discussion moving forward. USF reform is a critical component to close the digital divide and build world-class high-speed Internet.

On June 23rd, the Federal Communications Commission's Wireline Competition Bureau hosted a roundtable discussion on the design of pilot programs to provide USF subsidies for broadband access to low-income consumers. Specifically, participants were asked how extend the Universal Service Fund's Lifeline and Link-Up programs for broadband. Those programs currently support subsidies for telephony monthly charges (Lifeline) and initial connections (Link-Up). The issues involved in reforming these programs are many. They range from finding a consensus about the specific goals of the programs, who exactly will be eligible, which technology types and companies should be funding the program and a need to clean up the inefficiencies that currently burden the execution of the programs.

The next day, the FCC Commissioners on the Federal-State Joint Board on Universal Service went up to Capitol Hill for a Senate hearing on reforming the High Cost program of the Universal Service Fund. (This included Commissioner Michael J. Copps, Commissioner Mignon Clyburn and Commissioner Meredith Attwell Baker). The current high-cost USF program provides subsidies to reduce the cost of voice telephony in rural areas.

While all three Commissioners agreed that USF reform is critical to the success of a national broadband strategy, the discussion drifted over and over toward the Title I/Title II reclassification debate. While Commissioner Copps said he believes the Commission still has the legal authority to use Universal Service Fund without reclassification of broadband service, all three Commissioners agreed that the best way to eliminate uncertainty moving forward is through Congressional action. Speed Matters also agrees.

In light of uncertainties raised by the Comcast decision, it is essential for Congress to move quickly to clarify that the FCC has authority to use USF to support broadband.

We cannot afford to delay. The United States has dropped internationally from 1st to 15th place in internet penetration. There are huge gaps between rural subscribers compared to their non-urban counterparts, and between low and high-income Americans. Only 50% of adults in rural areas subscribe to broadband compared to 68% in non-rural areas, and 93% of households earning over $75,000/year subscribe to broadband as opposed to 40% of Americans earning under $20,000/year.

The intent of the High Cost program was to subsidize building out telephone service to rural areas where market incentives alone were inadequate. The same issue regarding building broadband out to those areas still exists today. Transitioning this program as outlined in the National Broadband Plan, along with adequate safeguards to ensure rural carriers can adjust to the transition, is critical to get high-speed internet to the hardest to reach areas of our nation quickly. Senator Klobuchar mentioned that in a new USF model, broadband providers need to be not only a recipient of funds, but a contributor as well. Speed Matters supports the Senator, and recognizes the need to expand the USF contribution base with assessments based on connections and usage for businesses. Further, Speed Matters recommends that a carrier receiving USF funds must commit to carrier of last resort obligations.

Speed Matters applauds the efforts of the FCC and Congress to move forward to ensure equal and adequate access to broadband internet to every American. As Commissioner Copps said at the hearing: "America's future town square will be paved with broadband bricks."

National Broadband Plan (Broadband.gov)

U.S. Lags OECD Peers in Key Broadband Indicators (Speed Matters)