This summer, Washington boiled over as our government has tried to bring the national debt under control and establish greater fiscal responsibility with the public purse. While there has been a lot of partisan bickering, all sides accept that we must be disciplined in not allowing government programs to grow unrestrained. All regulatory agencies have been told to keep a cap on spending wherever they can.
The Universal Service Fund (USF) is not a direct expenditure by the government, but the FCC does determine how much money is collected and how it is distributed to further the goal of ubiquitous and affordable communications service. Like any other federal program, the Commission has a responsibility to ensure the Universal Service program does not balloon, but instead is prudently and effectively restrained.
For at least a decade, policymakers have agreed that our system of subsidizing the operation and maintenance of rural communications networks is in critical need of reform. Our current support mechanisms – USF and intercarrier compensation (ICC) – were first established decades ago to ensure that every American had access to basic telephone service. That national priority has long been met, but these programs still chug along propelled by past history rather than the facts of today’s reality – rewarding legacy telephone companies with financial support even where such companies face competitors who enjoy no such subsidies.
Chairman Genachowski deserves credit for identifying USF and ICC as ripe for reform and for setting an aggressive timeframe for transforming these programs into ones that can help accomplish our nation’s telecommunications goals of tomorrow while limiting further taxpayer exposure. When completed this initiative will be a tall achievement that deservedly will burnish his legacy, but only if the Commission is courageous enough to put this bloated program on a budget.
The People’s Money Should Be Spent Wisely
Limiting the growth of USF is important for one reason above all; consumers, not companies, ultimately pay for subsidizing this program. Hearty portions of a consumer’s monthly telecommunications bill are charges that go to support USF. Just pull out your next bill and take a look. If the Commission fails to meaningfully constrain the USF program, consumers will inevitably see their bills rise. In these depressed economic times, government should do everything it can to limit the economic burden of government programs on consumers, even programs that serve worthy goals, as does USF.
To his credit, Chairman Genachowski has committed that the Commission will reform USF without increasing the burden on consumers. We fully agree with his strategy to phase out the old, inefficient programs and introduce a regime that will be more carefully targeted to the few areas of the country where marketplace forces have been insufficient to attract investments in broadband. His three fellow Commissioners deserve credit for joining the Chairman to establish a “fiscally responsible path that provides incentives for efficient operations and accountability for every dollar spent” and “contains the size of the Universal Service Fund.” (Comments taken from this post from last month on the FCC blog.)
As the Commission moves toward a vote on USF reform later this year, we call on the Chairman and the Commissioners to maintain their pledge of fiscal discipline. In particular, as noted in a letter that NCTA and ACA recently submitted to the FCC, the Commission should establish constraints on the size of the high-cost program that are enforceable and not merely aspirational. The goal of universal broadband access can be achieved without placing additional burdens on American consumers, but achieving that result will only be possible if the Commission establishes clear, enforceable limits on how much money it will collect and distribute.