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Technology / TELECOMMUNICATIONS

Landry Bill Would Dial Back FCC’s Universal Service Reforms

photo of Adam  Mazmanian
September 25, 2012

Rural telecoms are pushing forward on their effort to derail reforms to the Universal Service Fund by the Federal Communcations Commission, but their chances of success may be greater in the courts than in Congress. 

The FCC's changes are part of a broad plan to support the government’s goal of universal broadband availability. They include capping the annual budget for underwriting universal service at $4.5 billion and making payments to telecoms based on a model that weighs the size and scope of the service provided by rural telecoms. This is measured by a complicated regression formula that critics say has a high rate of inaccuracy. Prior to the change, the FCC did not set limits on subsidies for servicing remote telephone customers. Under the new rules, there is a cap of $250 per line per month. The USF is funded by consumers, through fees that appear on telephone bills. 

The reform is one of the signature achievements of the tenure of FCC Chairman Julius Genachowski. He touted the reform in a speech on Tuesday, saying the FCC "took an outdated inefficient program for delivering plain old telephone service and created the Connect America Fund, the largest U.S. broadband infrastructure program ever established ... while for the first time putting universal service spending on a budget." 

 

Rep. Jeffrey Landry, R-La., introduced a bill on Friday to overhaul the way the FCC subsidizes telecommunications providers for delivering service to far-flung customers. The Restore Effective Statistics to the Calculation of USF Expenditures Act, known as the Rescue Act, was cheered by the rural telecom industry, which has been highly critical of changes to the high-cost portion of the Universal Service Fund ordered by the FCC.

The entire FCC order, a 750-page behemoth that brought sweeping changes to the agency’s programs for supporting the goal of universal service, is the subject of a massive federal lawsuit with 29 petitioners, including several state utility commissions, telecommunications cooperatives, tribally owned carriers, and regional and national telecom providers. The USF funding formula is a major source of complaints, but the lawsuit, which appeals the FCC order and is expected to move ahead this fall, would not be derailed in the event that Landry’s bill becomes law.

Shirley Bloomfield, head of the National Telecommunications Cooperative Association, said Landry's bill "highlights three of the most significant shortcomings of the commission’s new statistical caps on universal service support: their disregard for statutory mandates requiring that federal universal service support be predictable; their alarming inaccuracy; and their retroactive nature that penalizes prior commitments made in good faith by job creators all over this country.”

Landry’s bill gets rid of this modeling, saying it creates “unacceptably low levels of predicted accuracy, leading to inequitable redistributions of high-cost support.” The FCC would have 120 days to come up with an alternative methodology.

"The FCC’s USF reforms will cause small businesses across the country to close their doors, lay off workers, and sacrifice service for many residents,” Landry told National Journal in an e-mailed statement. “We face these dire consequences because the FCC has implemented reforms using a model that is flawed by its own admission.”

While the USF reforms have drawn heat from companies that are having their subsidies changed, they were achieved with bipartisan support among the FCC commissioners, and it doesn't appear likely that they will be rescinded by new law. Bloomfield said that she hoped the bill would be "a catalyst for measured and thoughtful debate over universal service policy." 

 

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