Universal Service Fund

The Universal Service Fund (USF) was created by the Federal Communications Commission in 1997 to meet the goals of Universal Service as mandated by the Telecommunications Act of 1996. In addition, the 1996 Act states that all providers of telecommunications services should contribute to federal universal service in some equitable and nondiscriminatory manner; there should be specific, predictable, and sufficient Federal and State mechanisms to preserve and advance universal service; all schools, classrooms, health care providers, and libraries should, generally, have access to advanced telecommunications services; and finally, that the Federal-State Joint Board and the FCC should determine those other principles that, consistent with the 1996 Act, are necessary to protect the public interest.

Goals

The goals of Universal Service are:

• To promote the availability of quality services at just, reasonable, and affordable rates,
• To increase access to advanced telecommunications services throughout the Nation,
• To advance the availability of such services to all consumers, including those in low income, rural, insular, and high cost areas at rates that are reasonably comparable to those charged in urban areas.

Programs offered

The Universal Service Fund (USF) is one fund with four programs.

The four programs are:

High Cost - This support ensures that consumers in all regions of the nation have access to and pay rates for telecommunications services that are reasonably comparable to those in urban areas.

Low Income - This support, commonly known as Lifeline and Link Up, provides discounts that make basic, local telephone service affordable for more than 7 million low-income consumers.

Rural Health Care - This support provides reduced rates to rural health care providers for telecommunications and Internet services so they pay no more than their urban counterparts for the same or similar telecommunications services.

Schools & Libraries - This support, commonly referred to as E-rate support, provides affordable telecommunications and Internet access services to connect schools and libraries to the Internet. This support goes to service providers that provide discounts on eligible services to eligible schools, school districts, libraries, and consortia of these entities.

Contributions

In the past, only long distance companies made contributions to support the federal Universal Service Fund. In 1996, Congress passed a law that expanded the types of companies contributing to the Universal Service Fund.

Currently, all telecommunications companies that provide service between states, including long distance companies, local telephone companies, wireless telephone companies, paging companies, and payphone providers, are required to contribute to the federal Universal Service Fund. Carriers providing international services also must contribute to the Universal Service Fund.

Telecommunications companies pay contributions into one central fund. USAC makes payments from this central fund to support the four Universal Service Fund programs.

Controversy

Wide disagreement over the nature and administration of the USF exists in telecommunications policy circles. Such disagreements fragment traditional partisan alliances in the United States Congress. Recently, Senator Ted Stevens (R-AK) sponsored a bill (the Universal Service for Americans Act) that would increase universal service tax base to include broadband ISPs and VoIP providers, in order to fund broadband deployment in rural and low-income regions of the country. Senator John E. Sununu (R-NH) argues that such subsidies distort competition and thwart progress in the arena of broadband access.

Recently, the USF has gained new attention as several Iowa-based companies have used USF subsidies to provide free, international calling. This practice, which began in late 2006, represents an unintended consequence of the USF.

Universal Service Reform

Amid the growing controversy surrounding universal service, and more specifically the Universal Service Fund, the Federal Communications Commission is in the process of wide-sweeping universal service reform. One of the primary focus areas for reform is the high cost program. In August of 2006 the Commission requested comments on a proposal to use reverse auctions as a means of allocating funds under the universal service high cost program.

Currently, universal service funds are allocated by state PUC's to eligible telecommunications carriers. Pursuant to Section 214(e)(2) of the 1996 Act, state PUC's designate ETC's based upon a public interest standard. In reality, determining eligibility is similar to the old spectrum allocation regime. An administratively costly, and often unfair, beauty contest.

If successful, the current proposal would allocate universal service funding to the lowest bidder. Establishing a competitive market for the provision of telecommunications services in high cost markets has the potential to eliminate, or substantially reduce, many of the inefficiencies that plague the USF.

See also

• E-rate
• Universal Service Administrative Company

External links

• HealthEconomics.Com - Resources for assessing quality, costs, and impact of healthcare interventions; also includes jobs in the field, journals, consulting companies, etc.
• FCC website
• USAC Website
• Universal Service Administrative Company
  • USF Schools & Libraries
  • USF High Cost
  • USF Low Income
  • USF Rural Healthcare