Today Blair Levin and the FCC’s broadband team previewed their recommendations for universal service and intercarrier compensation reform. These will be a key part of the National Broadband Plan going to Congress in a few weeks. The recommendations are bold and practical. They appear to want to take these tough problems head on and provide a rational framework for repairing these broken systems.
Now, before your eyes glaze over, consider this: just about everyone with a phone pays into the universal service fund – a program that, among other things, helps get services out to rural areas. It is not an insignificant amount of money, close to $8 billion per year. In short: these are consumers’ dollars we are talking about, so we all should care about how much and where those dollars are spent.
For example, today most of the universal service fund is geared toward voice services. While the staff wants to stay within the limits of the current fund – and this is the right approach – they recommend changing the fund’s purpose from voice to broadband over time. And, they want to target support to places where there is no broadband today.
So much of our nation’s future – jobs, economic growth, global trade – is bound to broadband. Soon all services will run on high-speed IP platforms, and voice service will be just one among many applications that will ride over these networks. That’s why it makes sense to focus these limited USF resources on broadband rather than layering new support on top of existing voice subsidies. Consumers can’t afford a bigger universal service fund, and in the near future voice and data traffic over broadband connections will be indistinguishable anyway.
One caveat – we did not hear much on how the FCC will fix the broken contribution system (how the FCC collects the funding for the USF program). Today that system is based on interstate telecom revenues and virtually everyone in the industry agrees that this system is unsustainable. The contribution factor is rising every year – it will hit a whopping 15.3% next quarter – so we need to move to a different model sooner rather than later (we have suggested a numbers and/or connections based approach). We hope the FCC focuses its attention on this issue too in the coming months.
As we have said before, if we get the public policies right, the transformative power of broadband can make real improvements to health-care IT, energy conservation, education, and our national security. That’s why Verizon is investing billions in FiOS, the largest fiber-to-the-home network in the country, and we’ll be rolling out 4G technology, the next generation of wireless broadband, just as fast as we can.
We all know that reforming these programs will not be easy and it will take political will and focus to get these recommendations over the goal line. We all need to be a productive part of the process moving forward so we can help get these critical changes into place.