USF Should Be Capped, But Congress will Wait on FCC, Industry, Walden Says

The universal service high-cost fund should be capped and the contribution factor overhauled in the “near term,” but Congress is willing to let the FCC -- and industry -- take a run at reform first, House Communications Committee Chairman Greg Walden told telco officials in his native Oregon. “If appropriate reforms are not implemented in the near term, my committee stands ready to act,” said Walden, a Republican. He said he was “encouraged” by Commission Chairman Julius Genachowski’s efforts and also by the USTelecom-led “industry working group” trying to come up with an industry-endorsed reform package.

"The success of reform efforts depends on the industry coming together and making the necessary compromises to implement these principles,” Walden told the Oregon and Washington state telecom associations Tuesday. “I urge them to reach out to all segments of the industry and to redouble their efforts to reach agreement so the proposal can be filed with the FCC for public comment in the next few weeks. Any delay could imperil Chairman Genachowski’s push for reforms this August, paralyze the industry with uncertainty and further hinder deployment of high-speed broadband in rural America.”

Despite Walden’s endorsement of fund caps and a call for contribution reform, he was broadly supportive of Genachowski’s efforts. He also echoed comments of large carriers like AT&T when he said that the “intercarrier compensation system as we know it is not long for this Earth.” Wireless and voice over Internet protocol services are “eroding” the traditional system, he said. “What is more, these revenues are not sustainable in an increasingly broadband world where minutes won’t matter and voice will ride for free,” Walden said. “Absent serious reform, this system of implicit subsidies will collapse under its own weight, thus potentially bringing down rural telecommunications networks with it and hindering high-speed broadband deployment in rural America. This cannot be allowed to happen."

States shouldn’t wait for disaster -- or a federal rescue, Walden said, urging state regulators to emulate Oregon “by establishing state-level, high-cost funds to help ensure the continuing affordability of telecom services in rural America.” “We should learn our lesson from the past and recognize that additional state-level funding is crucial for reform -- the states know their citizens better than the feds do; and they are in the best position to ensure that rural entrepreneurs that thrive on broadband aren’t playing second fiddle to their urban brethren."

Walden said it’s “far too soon to judge the merits of this merger” of AT&T and T-Mobile and he “will wait for the record to be complete.” But Walden said he’s “interested in learning whether the merger promotes competition for consumers and encourages innovation. If not, it may lead the industry further into the watering hole of government regulation."

But Walden also said he was “concerned” about public interest conditions that might be placed on the deal. “Conditions placed on any merger should be limited to those conditions necessary to address risks to consumers that arise as a direct result of the merger,” Walden said. “Mergers should not be used to impose conditions that are best suited for generic proceedings where all industry and consumer groups have an equal opportunity to weigh in.” Walden said his committee will convene hearings into the proposed AT&T/T-Mobile deal soon.