Hill Reacts to USF Proposal

Sen. Rockefeller to hold Oct. 12 hearing on USF reform
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A parade of legislators joined those weighing in on FCC Chairman Julius Genachowski's speech Thursday outing the FCC's planned Universal Service Fund/Intercarrier compensation regime reforms.

Most of them were pitches for fiscal responsibility from Republicans long concerned about waste, fraud, and abuse of the $4.5 billion high-cost fund, which subsidizes phone service in areas too expensive to make financial sense for private companies.

They included the news from Sen. Jay Rockefeller (D- W. Va.), chairman of the Senate Commerce Committee, that he would hold an Oct. 12 hearing on USF reform, only two weeks before the FCC is scheduled to vote on an order already circulated by the Chairman Thursday spelling out just what those reforms will be.

"Chairman Genachowski has taken an important step forward today in bringing broadband-both wired and wireless-to all Americans," Rockefeller said in a statement. "I strongly support and applaud his efforts and look forward to working with him and his fellow Commissioners to reform the universal service system.  Next week, the Commerce Committee will hold a hearing on the need to move forward on these important proposals.  We have a real opportunity to close the digital divide in rural America if we get this right.  The time to act is now."

Central to the chairman's plan are migrating the fund from phone service subsidies to broadband and creating a fund to subsidize mobile broadband, where the online world appears to be moving if the chairman and statistics on tablet and smart phone sales are any indication.

That jives with Rockefeller as well. "[G]oing forward, it is important to refocus this [subsidy] policy on the communications challenges of the current digital age, including broadband and wireless services," he said in announcing the hearing.

Pushing the fiscal responsibility issue were 14 lawmakers led by Joe Barton (R-Tex.) and Marsha Blackburn (R-Tenn.) both prominent members of the House Communications Subcommittee. "Every dollar of USF support ultimately comes from consumers, and we do not support the current reality of consumers paying into a broken system," they wrote.

They appeared to be preaching to the choir, since the chairman said in a speech Thursday highlighting the order that the system was broken and that there needed to be more accountability for the dollars it spent, since the cost of the telecom contributions to the fund were passed along to consumers on their bills.

The Republican legislators advised the chairman to cap high-cost support and eliminate subsidies in areas served by unsubsidized competitors. They also put in a plug for competitive bidding for the funds, which the FCC is planning to do, though taking a phased-in approach that smaller cable operators argue cuts them out of some of that potential funding.

Also weighing in were Rep. Fred Upton (R- Mich.), chairman of the House Energy & Commerce Committee and Greg Walden (R-Ore.), chairman of the Communications Subcommittee. The urged the chairman to institute reforms that would "stringently control costs" while reducing arbitrage -- gaming the system to boost subsidies -- and increasing competition.

They also urged the commission to stick to its plan for an Oct. 27 vote, which the FCC signaled was at least officially penciled in with a notice that it was currently on the agenda for its public meeting on that date.

A letter from Florida House Republicans echoed the call for limiting the size of the funds, adopt a technology-neutral method for determining the subsidies (competitive bidding), and "prompt action" at the October meeting.

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