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Industry Sends FCC a ‘Compromise’ Plan for Phone Subsidies Industry Sends FCC a ‘Compromise’ Plan for Phone Subsidies

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Industry Sends FCC a ‘Compromise’ Plan for Phone Subsidies


Walden:Compromise plan on universal service fund (Mandel Ngan/AFP/Getty Images)

Phone factions normally at odds came together on a plan for overhauling an outdated, $8 billion government-collected phone fund and sent it to the Federal Communications Commission on Friday, stressing the historic level of agreement on the notoriously divisive telecom issue.

Rural phone companies joined Verizon and AT&T in supporting a set of proposals negotiated over weeks. The blueprint would guide the fund's transition from one that pays for voice service in rural areas to one that supports broadband.


The plan would bring broadband to 4 million additional Americans in rural areas and reform the rules governing payments between phone carriers.

The support for reform may help the FCC in its goal of overhauling the fund this year, a challenging proposition in light of repeated failures to pass reform under previous chairmen. Significantly, the three largest rural phone groups -- which receive large subsidies under the current system and have a stake in the status quo -- have signed on.

“It’s a big step,” Randy Tyree, vice president of legislative policy at the Organization for the Promotion and Advancement of Small Telecommunications Companies, a rural phone group, said in a phone interview.


Tyree said it was “unprecedented” in his eight years at the association to see this much agreement, noting that everyone had to compromise. Two other rural phone groups, the Western Telecommunications Alliance and the National Telecommunications Cooperative Association, also endorsed the plan.

An FCC official said in a phone interview that the agency will put out a public notice in the coming days to gather input on the reform proposals. The industry framework will be treated as input, but the official said the agency will ultimately issue its own rules with the public interest as the priority. The official said the FCC wants to ensure that traditional voice customers will continue to have access to those services.

“The [FCC] chairman challenged stakeholders to find common ground on specific proposals consistent with those principles as inputs to the commission's decision-making process. We’re pleased that many have taken up that challenge, and we will consider those proposals as we finalize reforms,” the official said.

Despite the consensus, wrangling over the FCC’s path may escalate as additional factions with stark interests weigh in, including tech companies that offer voice service over the Internet and fear they could face new regulations and fees. Large and small cable companies issued positive statements about the need for reform on Friday, but they stopped short of endorsing the phone industry plan.


Lawmakers praised the industry proposal for building support around what they see as the overdue goal of reform.

“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,” House Energy and Commerce Chairman Communications Subcommittee Chairman Greg Walden, R-Ore.; and Rep. Lee Terry, R-Neb., said in a statement on Friday.

Senate Commerce Chairman Jay Rockefeller, D-W.Va., also had positive remarks.

“I am pleased that the FCC has taken up the task of reform.  I look forward to reviewing the new industry reform plan and taking a hard look at what it means for the consumers who ultimately must be the real beneficiaries of our universal service policies,” Rockefeller said.

But the coalition for state regulators, the National Association of Regulatory Utility Commissioners, was not entirely happy.

“It is always tempting to favor a plan that is unlikely to be opposed in court by major industry players. Although we applaud the industry for its efforts, albeit through closed-door discussions, it is the FCC’s job is to assure that all interests, most importantly consumers, are well served by any effort to reform Universal Service and Intercarrier Compensation,” said NARUC President Tony Clark of North Dakota and Vermont's John Burke, NARUC Telecommunications Committee chairman.

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