Universal Service Reform & Convergence USF Policy for the 21st Century PDF Download

Author: Derek Turner
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Languages : en
Pages : 0

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Book Description
Congress is currently considering overhauling several key components of the 1996 Telecommunications Act, in the attempt to bring the law in line with recent advances in market competition and technology. One major area under consideration for reform is the Universal Service Fund. Many observers believe that the current universal service funding mechanism is both inefficient and unsustainable. Furthermore, the access charge regime -- an implicit universal service subsidy mechanism -- may also be in need of reform in order to face the realities of a converged marketplace. Despite the fact that broadband is viewed by many as the communications technology of the 21st century, under current regulations, only schools, libraries, and rural health care facilities are eligible to receive universal service support explicitly for broadband services. However, several legislative proposals currently under consideration in Congress would extend universal service to broadband. The impetus to expand USF to broadband is driven in part by recent data that show the U.S. falling behind other developed nations in measures of broadband penetration, speed, and price. However, a satisfactory explanation of this “broadband lag” is needed in order for members of Congress and the FCC to craft policies that adequately move the U.S. towards the goal of universal, affordable broadband access. This report employs comparative statistical methods to characterize and understand the differences in broadband performance between the U.S. and other Organization for Economic Cooperation and Development (OECD) nations. A key finding is that the U.S.'s unusually high poverty rate may be a major factor contributing to this country's increasingly poor international broadband performance. This finding suggests that extending USF to broadband may help ameliorate this disturbing trend. However, any proposal to reform USF must ensure that contributions are collected and distributed in a more efficient and equitable manner (compared to the current system), while at the same time adhering to the statutory goals of the program. This report examines the costs and benefits of several contribution reform proposals, and concludes that a numbers-connectivity contribution system would be far more efficient than the current revenue-based approach, and that most consumers would benefit under a properly designed numbers-connectivity system. The report also finds that one of the major economic justifications for universal service -- network externalities -- is most relevant when applying universal service to broadband. The report recommends gradually transitioning the universal service system away from the archaic voice standard, and towards a “bits” metric, where in the future all recipients of universal service support will be required to offer a broadband capable connection.