The 2007 edition of a report on the future of the Universal Service Fund (USF) was released today at a conference of the New York State Bar Association. The study finds that the telecommunications infrastructure that connects rural America could deteriorate if the USF is not reformed to account for the explosive growth of payments to competitive eligible telecommunications carriers (CETCs), most of which are wireless companies.
The USF was created to ensure that all Americans have access to affordable telecommunications services. As part of this mission, the fund supports the development of telecommunications infrastructure in rural and high-cost areas. The future of the USF program has recently been called into question as payments to CETCs have skyrocketed, growing by more than 1000 percent in the past six years. Support to CETCs is expected to exceed $1 billion in 2007 and is projected to reach $2.5 billion by 2009.
The latest edition of the report, Universal Service: Rural Infrastructure at Risk, was authored and sponsored by McLean & Brown, a telecommunications research and consulting company. The report concludes: The current developments in universal service fund growth and CETC designations render the existing system unsustainable, and if changes are not made soon, then the universal service system as we have known it will suffer irreparable damage. Consumers in the most rural and high-cost areas of the nation will face the very real possibility of having no telecommunications carrier capable of connecting them to the telephone and information networks. The report goes on to describe how the current method of distributing USF support to wireless carriers results in grave inefficiencies and the lack of accountability.
In an effort to avert the potential crisis created by the rapidly rising payments to wireless companies, the Federal-State Joint Board on Universal Service (Joint Board) earlier this year recommended that the Federal Communications Commission (FCC) implement a temporary cap on such payments. A similar cap has been enforced on support that is provided to incumbent wireline carriers for well over a decade.
The Coalition to Keep America Connected, which includes four leading rural telecommunications associations and more than 800 rural incumbent wireline telecommunications providers, strongly supports the temporary cap as a means of ensuring consumers maintain access to critical telecommunications services and as a matter of competitive neutrality between incumbent and competitive carriers.
Kelly Worthington, executive vice president of the Western Telecommunications Alliance and a member of the executive committee of the Coalition, commented, This paper confirms again that the explosive growth of funding to CETCs threatens the viability of the Universal Service Fund and imperils the nation s commitment to connecting rural America. The FCC should immediately implement the recommendation of the Joint Board and institute a temporary cap on USF payments to CETCs.
