Tuesday, April 20, 2010

FCC Launches its USF Reform Effort

The Federal Communications Commission (FCC) took its first step toward Universal Service Fund (USF) reform by issuing a Notice of Inquiry (NOI) and Notice of Proposed Rulemaking (NPRM) that seeks public comment on its plan to create a Connect America Fund (CAF) that directly supports broadband without increasing the size of the Universal Service Fund over the current baseline projection.

The NOI asks for public comment on the use of an economic model to precisely target support for
areas where there is no private-sector business case for carriers to provide broadband and voice services.
The economic model developed in the Plan estimates the gap between the cost of deploying broadband
services to Americans living in unserved areas and the potential additional revenue generated from the
broadband investment. The NOI seeks comment on how that model could be adapted to determine
efficient levels of universal service support to provide all Americans with broadband access.
The NOI also seeks comment on how to quickly provide consumers in unserved areas with
broadband access while the Commission is considering final rules to implement fully the new CAF
funding mechanism.

The NPRM seeks comments on a number of proposals to cut legacy universal service spending in
high-cost areas and to shift support to broadband communications. These proposals include capping the
overall size of the high-cost program at 2010 levels; re-examining the current regulatory framework for
smaller carriers in light of competition and growth in unregulated revenues; and phasing out support for
multiple competitors in areas where the market cannot support even one provider.

See also