Opponents of capped USF gain more backers

Opposition to a federal-state panel’s recommendation to cap universal service fund support in rural areas mounted last week, with a key senator and agriculture groups joining the mobile phone industry in urging the Federal Communications Commission against penalizing wireless technology. Supporters say wireless holds great promise for bringing everyday communications and next-generation broadband service to sparsely populated regions of the United States.
Sen. Olympia Snowe (R-Maine) urged FCC Chairman Kevin Martin to reject the wireless cap recommendation of the Federal-State Joint Board on high-cost USF, saying such a move would prevent improvement to spotty cellphone service in her state and hinder consumers’ growing dependence on mobile phones to make 911 calls. At the same time, Snowe said she appreciates the need to update the USF.
“As an author of USF legislation in each of the last three Congresses, I am keenly aware of the financial strains the fund is experiencing and the need for a solution to provide it long-term stability. The Joint Board’s recommendation, proffered as a short-term solution, is also short-sighted,” stated Snowe in a letter to Martin last week. “If implemented, investment in wireless infrastructure so desperately needed in rural America will almost certainly be curtailed. If belt-tightening is truly warranted, it should be done in a manner that equally affects all segments of the industry and regions of the country, not imposed solely on wireless carriers who service rural customers.”
The proposed emergency cap on high-cost USF disbursements to wireless carriers has strong support from Martin. The intent is to control growth of a fund based on a distribution-contribution formula that has become unfair, unsustainable and outdated by technological changes and major shifts in the telecom landscape since its creation in the 1996 telecom act. The fund accounts for $4 billion of the $7 billion total high-cost USF, which policymakers and industry agree needs to be overhauled.
Martin largely blames the ballooning high-cost USF on subsidy payments to “competitive eligible telecommunications carriers,” most of whom are mobile phone operators. Martin said it does not make sense to fund multiple wireless carriers in the same area and to base CETC funding on costlier support given to incumbent rural landline telephone companies. Martin is not alone in his latter complaint, but that is where wireless industry backing ends. Martin has proposed as an alternative a reverse auction mechanism whereby the low bidder would receive high-cost USF support. The cellular industry believes high-cost USF subsidies can be distributed to multiple providers on a scaled basis.
Mobile phone carriers argue incumbent rural telephone companies account for the lion’s share of the high-cost USF, and questions have been raised about whether the government has been sufficiently diligent in accounting for how rural wireline carriers spend universal service fund dollars.
Meanwhile, a coalition fighting the proposed wireless USF cap said eight agriculture organizations have joined the campaign. They are the American Agriculture Movement, American Corn Growers Association, Federation of Southern Cooperatives, National Association of Farmer Elected Committees, National Family Farm Coalition, National Grange, Rural Coalition and Women Involved in Farm Economics.
“As the nation’s oldest general farm and rural public interest organization, the National Grange and its affiliated 2,800 local Grange chapters across rural America are proud to join Wireless Across America,” said National Grange President William Steel. “Grange members believe that universal access to reliable and competitive wireless telecommunications technologies must be available to all rural communities at affordable costs in the 21st century.”