USF Reform Hits House

Two U.S. lawmakers introduced legislation last week to extend Universal
Service Fund (USF) contributions to Voice over IP and
broadband services.

Currently, local and long distance telephone companies, wireless providers,
paging firms and pay phone companies are obligated to contribute to the
fund, which subsidizes phone service in under-served or rural areas. The USF,
through the E-rate program, also funds Internet connections in schools and

Payments into the fund are collected through consumers’ telephone bills. The
Universal Service Reform Act of 2006 would remove VoIP and broadband’s
exemption from USF contributions.

“Our measure will expand who pays into the fund, cap the growth of the fund
and modernize the fund by allowing its use for the deployment of high speed
broadband service,” Congressman Rick Boucher (D-Va.) said in a statement.

Boucher and bill co-sponsor Lee Terry (R-Neb.) said their bill would
encourage the deployment of broadband, especially in rural areas, by
allowing recipients to use universal service support to deploy broadband
within their service areas.

The legislation also requires recipients of universal service support to
deploy broadband with a download speed of at least 1 megabit per second
within 5 years of enactment.

“The commonsense approach embodied in this measure will assure that
Universal Service support remains available for the preservation of local
exchange and broadband service, particularly in rural and under-served areas,
far into the future,” bill co-sponsor Lee Terry (R-Neb.) said.

In November, Boucher and Terry floated a
draft version of the bill and sought comments from fellow lawmakers and the
telecom industry. The new legislation, they say, reflects the input.

“In November, Rick and I released a discussion draft of this bill,” Terry
said. “We received a number of useful responses, but most of the input
dealt with one or two areas that we have revised in our bill. I feel we
have established a balanced approach to reforming USF.”

Significantly for lawmakers, the bill controls the growth of the USF by
capping all high-cost support mechanisms of the USF.

Boucher added, “The legislation will control the spiraling growth of the
Universal Service Fund while ensuring that universal service support is
available to rural carriers which rely on it to provide service.”

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