Wednesday, October 26, 2011

FCC Transforms USF/ICC Into "Connect America Fund"

The FCC voted unanimously to approve significant reforms to the Universal Service fund and Inter Carrier Compensation (ICC), while creating a new "Connect America Fund" aimed at extending broadband to rural areas of the country.

FCC Chairman Julius Genachowski described the vote as " a once-in-a-generation overhaul of universal service, keeping faith with the nation's long commitment to connecting all Americans to communications services."

The FCC estimates that approximately 500,000 jobs will be created over the next six years by expanding high-speed Internet access to over 7 million Americans living in rural areas. For the first time, the FCC also made mobile broadband into an independent universal service objective.

Some highlights of the reforms:

Puts the country on the path to universal broadband within a decade.

The Mobility Fund will expand advanced mobile broadband access to tens of thousands of road miles, including dedicated support for Tribal areas.

Intercarrier compensation reform aims to eliminate hidden costs in consumer bills, providing economic benefits to long distance and wireless consumers across the nation of $2.2 billion annually in the form of lower prices, better value for the money, or both.

The FCC estimates consumers may pay, on average, an additional 10 to 15 cents a month on their bills. No additional charges can be imposed on consumer phone bills that are at or above $30 a month (inclusive of most fees consumers pay on their bills), nor can such charges be imposed on low income consumers served by the FCC's Lifeline program.

The budget for the Connect America Fund is set at $4.5 billion per year. Market-based mechanisms, including
competitive bidding, will be used to distribute money more efficiently.

Intercarrier Compensation Reform includes new rules to address "phantom traffic," i.e., calls for which identifying information is missing or masked in ways that frustrate intercarrier billing. Specifically, the new rules require telecommunications carriers and providers of interconnected VoIP service to include the calling party's telephone number in all call signaling, and require intermediate carriers to pass this signaling information.

The initial ICC reforms focus on reducing terminating switched access rates, which are the principal source of arbitrage problems today. The approach seeks to promote migration to all-IP networks while minimizing the burden on consumers and staying within the universal service budget.
unaltered, to the next provider in a call path.