Lawmakers Finish Draft Universal Service Fund Reform

New legislation would allow the Universal Service Fund to be used for broadband deployment, expanding the USF from its traditional use as a fund to subsidize phone service in underserved and rural areas and Internet connections in schools and libraries.

Reps. Rick Boucher, D-Va., and Lee Terry, R-Neb., released Nov. 6 their draft discussion bill for reforming the Universal Service Fund. The proposed legislation would broaden the base of contributions into the USF and controlling distributions from the fund and allow the use of the USF for broadband deployment.

The USF currently subsidizes phone service in underserved and rural areas. Through the E-rate fund, the USF also subsidizes Internet connections in schools and libraries.

Boucher and Lee said the draft bill would also control costs by directing the Federal Communications Commission to adopt a competitive bidding process to determine which wireless carriers will receive USF support. Additionally, the measure caps the total amount of USF support and changes the calculation methodology for the nonrural, high-cost portion of the fund from geographic to wire center averaging. 

The discussion draft also directs the FCC to establish and implement performance goals for each USF program and to determine the appropriate methodology for audits of USF recipients.

"The Universal Service Fund is broken. Consumers currently pay more than 12 percent of long-distance revenues into the fund, and that number will jump to more than 14 percent next year. Our discussion draft is a comprehensive and forward-looking measure, which will control the spiraling growth of the Universal Service Fund while ensuring that universal service support is available to the carriers which rely on it to provide service," Boucher, chairman of the House Subcommittee on Communications, Technology, and the Internet, and Lee said in a joint statement.

A legislative hearing on the draft discussion bill is scheduled for Nov. 17.