Telecoms Team on USF Reform

A coalition of six telecom companies Friday submitted their plan for reforming the FCC's Universal Service Fund and intercarrier compensation regime (in which they compensate each other for carrying, originating or terminating telecom traffic).

The goal is to migrate the fund's support for phone service in high-cost, particularly rural, areas to broadband deployment, the new must-have telecom service, and to reform subsidies to reflect the move of voice to IP delivery.

The goal is also to provide a "glide path" for that migration given that the switch-over will take time.

The plan comes in response to the FCC's request for input on its goal of migrating support to broadband as a way to spur universal deployment.

Signing on to the plan are AT&T, CenturyLink, FairPoint, Frontier, Verizon and Windstream, with the support of smaller, rural carrier represented by the National Telecommunications Cooperative Association, the Organization for the Promotion and Advancement of Small Telecommunications Companies and Western Telecommunications Alliance.

Among other things, America's Broadband Connectivity Plan, hose goals track with the FCC's National Broadband Plan Recommendations, would "connect virtually all Americans to broadband access within five years, do so without growing the $4.5 billion high-cost USF fund, and target support to broadband deployment in areas where there is no business case for companies to provide service."

One of the keys to reform for incumbents is to prevent subsidies where service is already being provided, the same issue many telecoms had with the broadband stimulus funding. The plan defines broadband service as 4 megs downstream, 768k upstream, the FCC's current benchmark for whether someone has access to broadband.

"We worked hard to reach consensus on a workable framework, and each of our companies was dedicated to producing a sound proposal that will benefit consumers and the industry," said Verizon SVP Kathleen Grillo in a statement. "We are hopeful that this framework will gain even more industry support.  Our goal was a strong, detailed and thoughtful plan, and we are confident that we deliver that today."

In a press conference with reporters about the agreement, which was five months in the making, said the plan would spread regulation more evenly across competitors.

The plan is focused on the wired world, but does include $300 million per year to subsidize wireless and satellite broadband.

The National Cable & Telecommunications Association, whose members include broadband suppliers and phone service providers, was preparing a response at press time but was not part of the coalition that worked on the plan.

Mike Rhoda, SVP of Windstream, who was also on the press call, said the telecoms had been talking with cable folks.

He said there were a lot of good things in the plan "for all areas" and said he hoped cable company support for the plan would be coming soon, though he was not speculating when.

Reaction was swift from some quarters. Some top House Republicans said it should be a conversation starter at least.

"We are encouraged by the growing consensus among stakeholders as developed in the ‘America's Broadband Connectivity Plan' filed with the Federal Communications Commission today, and we hope that consensus will continue to grow," said Greg Walden (R-Ore.) and Terry Lee (R-Neb.), chair and vice chair, respectively, of the House Communications Subcommittee. "The Universal Service Fund and the intercarrier compensation regime are broken in many ways and both need to be fixed. We urge the FCC to use the momentum this proposal has created to complete the reform process this fall."

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.