Tomorrow, the FCC will at long last begin action to transform the existing inefficient and outdated system of universal service subsidies. The need for fundamental reform of these subsidy mechanisms is beyond dispute. For too long, consumers have borne the increasing burdens of a system that is riddled with inefficiency and waste, that ignores modern-day, competitive realities, that misallocates scarce funds, and that is utterly ill-suited to meet our 21st Century challenge of expanding broadband access to all Americans.
Today’s speech by FCC Chairman Genachowski outlining a framework for universal service is welcome sign that the FCC is serious about reform. While we all await the specifics of new rules, the guiding principles outlined today establish a framework that is appropriately premised on the necessity of enacting current reforms to achieve our future goals. In that regard, NCTA welcomes the Commission’s renewed commitment to the following principles:
- Fiscal responsibility. As the Chairman recognized, the transition to a modern, broadband-focused mechanism must be accomplished without significant increases in the overall size of the program. The universal service fund is paid for by American consumers and we believe that any proposal that fails to include meaningful limits on the total size of the program would be a non-starter in the current economic and political climate.
- Targeted support. The key to achieving the Commission’s broadband goals in a fiscally responsible manner is appropriately targeting any new broadband support mechanisms. Unlike the current high-cost support mechanism, which supports multiple providers in some markets and supports incumbents in markets where competitors are providing service without support, any new broadband mechanism should support only a single provider and only in those areas where the market is shown to be ineffective. Focusing support in this manner ensures that funds are used wisely and companies that have invested private capital are not facing unfair competition from providers supported with government money.
- Accountability. One of the biggest problems with the current universal service high-cost mechanism is that the Commission distributes over $4 billion in support every year without establishing specific, measurable goals for the program or imposing any real obligations on the recipients. As the Chairman noted, any broadband support program must start with a clear goal – bringing service to unserved areas – and must include increased disclosures about the operating performance and financial condition of recipients that are designed to achieve the goal of providing broadband access.
The principles highlighted by the Chairman today mesh well with these goals and with the recommendations made almost one year ago in the National Broadband Plan. At that time, the Plan set out a blueprint for a public-private partnership that would rely on limited government funding to bring broadband to areas where the market would not do so, while recognizing that private investment would remain the key component to deploying broadband through the vast majority of the nation. NCTA supported these common sense proposals and we are encouraged to see that the FCC is now setting the stage to start implementing them later this year.
We recognize that USF reform will not be easy. It has proven to be notoriously difficult to implement in the past, and it would be a mistake to gloss over the significant challenges associated with modernizing a multi-billion dollar program that hundreds of incumbent phone companies have grown to depend on. Nevertheless, we remain convinced that reforming universal service support in a manner that remains faithful to these principles will promote access to broadband services across the nation without overburdening consumers that pay into the fund and without harming continued private investment in areas where government subsidies are unnecessary.
Tags: Julius Genachowski