AT&T: FCC Needs To Fix Universal Service Fund

Fund's base continues to shrink as more people drop landline for wireless and Internet phone service

By John Eggerton -- Broadcasting & Cable, 6/15/2009 2:31:08 PM

AT&T says that the FCC cannot get serious about a national broadband plan until it fixes the Universal Service Fund.
 
That is the industry fund that underwrites telecommunications service in hard-to-reach or uneconomical-to-reach areas.
 
That came in response to the FCC's announcement Monday of the latest USF contribution percentage, which is now at 12.9%, up from 9.5% at the beinning of the year, says AT&T, aa whopping 36% increase.
 
The fund's base continues to shrink as more people drop landline for wireless and Internet phone service.
 
“The universal service fund is in a death spiral, driven by growing demands on the fund, the decline of the wireline model and consumer migration to other platforms and services," said AT&T in a statement. "These factors cause the government to ask for more money from a shrinking base of phone customers to support the goals of universal service. This vicious cycle leads to higher and higher USF fees.... In order to begin a discussion on a National Broadband Plan, the Commission must address comprehensive universal service reform."
 
Most companies and government agencies concede the fund needs fixing. One proposal has been to expand it beyond phone service to include broadband, which would both broaden the base of payers and start underwriting broadband deployment, which is a national priority of Congress, the administration and the FCC.
 
Currently, the fund goes to subsidize telephone service, but if the Democrats now in control of Congress have their way, it will be extended to underwriting the broadband build-out as well. That would be in addition to the $7.2 billion in the economic stimulus package going toward that same goal.
 
Subcommittee Chairman Rick Boucher (D-VA), who has previously proposed reforming the fund, has said he and his past partner in that effort, Lee Terry (R-Neb.), would be reintroducing a bill to expand the revenue base for the fund.