Boucher, Terry Introduce Long-Awaited USF Revamp Bill

Boucher said the USF bill is now on his “front burner,” and he hopes to pass it this year. “We have the month of September and we will make the best of it.” He and Terry have coordinated “very closely” with Commerce Chairman Henry Waxman, D-Calif., and Ranking Member Joe Barton, R-Texas, and some of their ideas were incorporated into the bill, Boucher said. Waxman and Barton haven’t endorsed the legislation, and they may suggest minor changes, Boucher said, but he expects their “full assistance and cooperation.” Another hearing may not be needed, but it could happen if other committee members want, Boucher said.

The path through the Senate is less clear, Boucher said. But if the House passes the bill with bipartisan backing and broad support from industry, the Senate may be encouraged to take it up, he said. Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., has shown interest in USF, but chose not to draft his own bill, Boucher said. There have been “quiet suggestions to us,” however, that the Senate may be receptive if the House passes a “very good bill,” he said. Rockefeller didn’t comment.

Boucher said he supports the FCC moving forward on the USF items it can handle, but legislation is needed to do some “basic things” like expanding the USF contribution base. The FCC and Congress are “in a collaborative process,” he added. There are “significant limitations” on what the FCC has power to do, he said. The FCC has long told the lawmakers it would like Congress to lead on revamping USF, said Terry.

The bill is backed by NCTA and major telephone associations, including USTelecom, the Independent Telephone & Telecommunications Alliance, the National Telecommunications Cooperative Association, the Western Telecommunications Alliance, and the Organization for the Promotion and Advancement of Small Telecommunications Companies. It’s also supported by AT&T, Verizon, Qwest, CenturyLink, Frontier, Vonage, and the American Public Communications Council.

Missing from the endorsement list are rural wireless companies that receive support as competitive eligible telecommunications carriers. That’s not a surprise, because the bill envisions competitive auctions to limit support to two wireless companies, said Boucher’s legislative counsel, Amy Levine. But Boucher and Terry are open to discussing the issue with them, she said. The “principal” wireless providers, AT&T and Verizon, are represented among supporters, noted Boucher.

The bill is based on a discussion draft circulated late last fall, said Boucher. Changes reflect a hearing held then and “deep consultation” afterward with the USF interests and with members of the subcommittee, he said. The bill is a “major departure” from the way USF is structured and run now, he said. Terry emphasized that the bill has bipartisan support. It took six years and was written by “two people that care” about ensuring “everyone in America is connected into the 21st century telecommunications world,” the Republican said.

One of the biggest changes since fall is that the bill would reduce or deny support to wireline incumbents in areas where at least 75 percent of households can receive voice and broadband from a competitive provider that doesn’t get USF support. An incumbent that has its support reduced could show the FCC how much per-line support it needs to maintain affordable service in non-competitive areas. The legislation also would tell the commission to create a USF cost model that includes broadband in figuring support levels. And the bill would direct the FCC to set up competitive bidding among wireless carriers for USF support. No more than two wireless CETCs could get support in any area under the bill.

The bill would allow carriers to use USF support for broadband. Carriers receiving support would within five years of the law’s effective date have to provide broadband throughout their service areas. If they didn’t, they would lose support. In places where it’s not practical to have terrestrial services, recipients would be expected to resell satellite-based broadband services. To pay for broadband support, the bill would expand the USF contribution base by requiring all broadband providers to pay in. The bill would also take intrastate revenue into the contribution calculation. Currently the calculation is based only on interstate and international revenue. The bill would direct the FCC to prevent “any unreasonable increases” in the contribution factor, Boucher said. And it would improve auditing of the fund, including auditors’ knowledge of telecom issues, he said.

The bill doesn’t specify a minimum speed for universal broadband. Instead it would direct the FCC to come up with a benchmark based on technology and affordability that would increase over time, said Boucher. The bill originally specified a figure, but the sponsors decided that the appropriate speed was increasing too fast to dictate in the law.

The bill also tackles phantom traffic and a “distasteful practice called traffic pumping,” said Boucher. The originator of telephone traffic would have to identify itself, and all intermediate carriers would have to pass the information on to the terminating carrier. That will ensure the terminating carrier knows who to charge for the call, he said. The legislation would tackle “traffic pumping” by disallowing financial alliances between carriers and recipients of the traffic, which are commonly free conference call providers.

Terry and Boucher “stuck to our principles and our core values on this,” and it was “difficult, time consuming to keep everyone on board here,” said Terry. The toughest hurdle was getting incumbents to agree to the provision denying support to incumbents in areas with competition, said Boucher.

The bill didn’t include language by Rep. Doris Matsui, D-Calif., that would have provided USF Lifeline funds to connect low-income people for broadband. Boucher likes the Matsui measure and has talked to her about setting up a “demonstration program,” he said. The subcommittee chairman expects Matsui to offer an amendment at markup, and Boucher plans to work with her and accept it, he said. However, Terry said Republicans may have concerns. Matsui said Thursday she believes “addressing this nation’s digital divide is a critical component to reform of the Universal Service Fund, and I look forward to continuing to work with Chairmen Waxman and Boucher to ensure that broadband adoption policies are included as part of a final Universal Service Reform package that benefits all Americans."

The bill also didn’t include an E-Rate update sought by Rep. Ed Markey, D-Mass. “I appreciate Chairman Boucher’s willingness to work with me on my E-Rate 2.0 bill in the context of his USF legislation,” said Markey. “We both determined that the decision to include my E-Rate 2.0 legislation would be best addressed at a later point in the legislative process."

EchoStar added its name to supporters. “We are encouraged by the technology-neutral approach and explicit reference to satellite broadband in this bill,” the company said. Free Conferencing Corp blasted the proposed ban of revenue-sharing agreements between telcos and free conference call companies. “This action would eliminate choice for consumers, such as the choice to pay for and make conference calls without paying a large premium,” said CEO Dave Erickson. “If this legislation passes, the large IXCs will once again have the market power to charge consumers 34 cents or more per minute (or whatever number they choose) for conferencing services in addition to the cost of the telephone plan that the consumer will be required to pay for.”