1 / 13

The Reform of Universal Service

The Reform of Universal Service. NARUC Accounting and Finance Sub-Committee Spring Meeting April 1, 2008 New Orleans, Louisiana. Current Issues in Universal Service Reform. Universal Service Contribution Reform How the FCC/industry pays for the costs of Universal Service policy.

baeddan-williams
Download Presentation

The Reform of Universal Service

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Reform of Universal Service NARUC Accounting and Finance Sub-Committee Spring Meeting April 1, 2008 New Orleans, Louisiana

  2. Current Issues in Universal Service Reform • Universal Service Contribution Reform • How the FCC/industry pays for the costs of Universal Service policy. • Universal Service High Cost Reform • How the FCC ensures affordable communications to rural areas.

  3. Contribution Reform - Background • The USF contribution factor is set quarterly by the FCC. • The current USF contribution factor is 11.3%. • General methodology for calculation: • USF Program Costs ÷ Assessable Revenues = Contribution Factor • The factor has grown steadily over time and is currently equal to its 2nd highest level ever.

  4. Contribution Reform – The Factor since 2000 Source: USF Contribution Factor Public Notices, available at: http://www.fcc.gov/omd/contribution-factor.html

  5. Contribution Reform – The Revenues Base • Assessable revenues are those revenues associated with interstate (and international) telecommunications end-user revenues, as well as those associated with Interconnected VoIP. • Price competition, service substitution to disparately regulated services, and growth of bundled services has caused the contribution base to decline. • Despite recent attempts to bolster the assessable revenues base, it is not keeping pace with the growth of the Universal Service Fund.

  6. Contribution Reform – Base v. Fund Size Contribution Base v. Fund Size, Since the Year 2000 $7.7B in 2008 $4.9B in 2000 Source: USF Contribution Factor Public Notices, available at: http://www.fcc.gov/omd/contribution-factor.html

  7. Contribution Reform – Problems with Revenues • Reform of the revenues-based contribution methodology is long overdue. • It is confusing to customers. • It is discriminatory against more “traditional” customers • It is completely reliant on arcane definitions of categories of service, and thus unsustainable in the long term. • It lacks bright-line clarity about assessable services. • It does not adequately address service bundles or new technologies. • It is extremely costly for service providers to administer.

  8. TNs based on estimates Contribution Reform – Trend Comparison

  9. Contribution Reform – Numbers-Based • The FCC should adopt a contribution mechanism based on telephone numbers. • It is easier for customers to understand. • Most residential consumers will see a decrease in their USF line item charges. (Others will see little/no change.) • Substitutable services (and competing service providers) are treated equally. • It ensures that the Universal Service Fund remains stable. • It can be significantly more efficient for service providers to administer.

  10. Universal Service High Cost Reform • High Cost reform is also long overdue. • Interim Cap NPRM, Auctions NPRM, and the Joint Board Recommended Decision are significant opportunities for reform. • FCC should not discriminate against rural customers based on the size of the carrier that serves them. • FCC should support broadband and wireless deployment in currently unserved areas.

  11. High Cost Reform – Interim Cap • The FCC should adopt an interim cap to abate the runaway growth of the fund associated with ETC funding. • Wireless CETC funding will continue to grow by approximately $150M/year, exceeding $1.5B by 2009 • While AT&T and AllTel have agreed to funding caps, approximately 51% of CETC funding remains uncapped. • Maintaining the status quo only promises more growth. • Approximately 90 ETC applications (60 companies) are pending with the FCC and state commissions. (As of Feb 2008) • 76 of these applications are associated with carriers not subject to a cap.

  12. High Cost Reform - Broadband • On July 16, 2007, AT&T proposed that the FCC create a Broadband USF Pilot program. • Clearly, extending broadband services is a critical national telecommunications policy goal. • FCC should adopt project-based broadband funding • It should not simply add broadband to the universal service definition • FCC should focus on providing support for broadband services to unserved areas

  13. High Cost Reform - Auctions • AT&T supports the FCC’s considerations of pro-market solutions to universal service high-cost reform. • However, there are a significant number of details to work through before conducting an auction, including: • What is being auctioned? (ETC/COLR Obligations?) • How many winners? • Whether/How to set a reserve price? • How to determine an auction winner? (e.g. Price alone?) • How to transition to post-auction? • Auctions shouldn’t just be used in currently supported geographic areas.

More Related