Page 29 - PCCAJournal3rdQuarter2011

PCCA Journal|3 rd Quarter 2011 29

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CC Chairman Julius Genachowski on October 6 outlined a plan to reform and modernize the Univer-sal Service Fund (USF) and Intercarrier Compensation system (ICC). The following information is from an FCC news release.

Genachowski said the plan, if adopted by the commission later this month, will reform USF/ICC to unleash enormous benefits including expanded broadband infrastructure for millions of Ameri-cans. He said the plan would deliver more value for the money for wireless consumers, increase private investment, and spur near-term and long-term job creation. In addition, he said the plan will provide dedicated support to extend mobile broadband to large areas of the country that are currently shut out from the benefits of advanced mobile services. “Our plan would deliver tremendous benefits for consumers,” Genachowski said. “Accelerated broadband build-out and upgrades to networks mean that millions more consumers of all ages will be able to enjoy the economic and social benefits of broadband. And consumers overall will be treated more fairly, thanks to the elimination of deep inequalities ingrained in the current system, cuts in wasteful spending, and constraints on the growth of a fund that is paid for by consumers. We estimate that wireless consumers will see more than $1 bil-lion in annual benefits from ICC reform alone.”

“If adopted by the commission, the plan will spur broadband build-out to hundreds of thousands of homes and businesses beginning in 2012. It will help cut the number of Americans bypassed

by broadband by up to one half over the following five years, and it will put us on the path to universal broadband by the end of the decade. By connecting mil-lions of unserved Americans who are be-ing left out of the broadband revolution, this plan will bring enormous benefits to individual consumers, our national economy, and our global competitive-ness.”

Genachowski went on to detail the ways in which the current USF/ICC system is broken and in urgent need of reform, such as being outdated, waste-ful, inefficient, and unaccountable, thus putting increasing burdens on all consumers.

Despite spending $4.5 billion per year, USF is failing to get broadband to approximately 18 million Americans in rural areas, he said. The chairman then offered his plan to transition USF to a Connect America Fund. This fund would have two core goals:

1. Ensuring universal availability of ro-bust, scalable, affordable broadband to homes, businesses, and anchor institutions in unserved areas. The Connect America Fund would begin near-term build-out to hundreds of thousands of consumers in 2012 and would ultimately help get broadband to the 18 million Americans who can’t get it today.

2. Ensuring universal availability of af-fordable mobile broadband through a new Mobility Fund, which would be part of the Connect America Fund. Deployment of state-of-the-art mobile broadband would be extended to more than 100,000 road miles where Americans live, work, and travel. In addition to a one-time shot-in-the-

arm effort to accelerate deployment of 4G networks in 2012, this fund would provide significant ongoing support for rural mobile broadband. In addition, the growth of the Connect America Fund would be constrained, keeping hundreds of millions of dollars in consumers’ pockets over the coming years. To help achieve this, Genachowski introduced a competitive bidding process among providers for obtaining universal service support, which would transition over time to a fully competitive system for distributing Connect America Fund dollars. This would be the first time competitive bidding has ever been used in the universal service fund. On the ICC side, Genachowski said, “Like USF, the current ICC system is unfair to American consumers. It forces hundreds of millions of consumers across the country to pay higher bills to subsidize monthly local telephone bills as low as $8 for other consumers. Our reforms would result in major consumer benefits.

“By eliminating billions of dollars in hidden subsidies that are currently built in to wireless and long-distance bills, consumers can expect reduced costs, better value for their money, or both. We estimate that wireless consumers alone would see more than $1 billion in annual benefits from ICC reform.”

The proposed ICC reforms include three main elements:

1. Immediately close loopholes, like phantom traffic and traffic pump-ing, and other arbitrage schemes like CMRS-in-the-middle, where some carriers divert wireline traffic to wire-less networks to avoid paying ICC.

News Briefs continued on page 30

FCC Chairman Unveils Connect America Fund Proposal