USF reformers mull wireless auctions, VoIP contribution

Congress is holding hearings today to discuss proposed changes to the Universal Service Fund (USF) that include an auction process for wireless USF recipients, USF support for broadband and possibly requiring voice-over-IP providers to contribute to USF in states where their customers live.

The draft under discussion by the U.S. House Subcommittee on Communications, Technology, and the Internet requires the FCC, within a year of the proposed act’s passage, to set up auctions for wireless operators providing universal service to high-cost rural and isolated areas. Auction winners would receive USF support for as many as 10 years before a new auction would be held. Auctions would take place only where there are at least three competing providers, and bidders’ proposed minimum broadband speeds would be a primary consideration. Where there are fewer than three competitors, the FCC would continue supporting service line-by-line.

The draft would allow carriers to apply USF to broadband deployment. Notably, though, the draft defines broadband as having download speeds of at least 1.5 megabits per second. That’s about twice the speed at which the FCC defines broadband – 768 kilobits per second.

The draft would also allow states to force companies providing communications services within their borders to contribute to USF, which could include companies that provide Internet-based voice-over-IP services. Oregon Public Utility Commissioner Ray Baum, who testified to the committee today on behalf of the National Association of Regulatory Utility Commissioners, called that section “a critical step forward,” though it’s unclear whether the FCC will follow through.

“The FCC has the authority now to eliminate the need for the new definition of ‘communications service provider’ by making a long-overdue final classification of the status of facilities-based and so-called nomadic VoIP providers,” Baum said in a prepared statement. “But it is unclear when or if they will do so.”

Baum applauded the draft for addressing problematic issues such as traffic pumping and phantom traffic. But he was most concerned with the section of the draft that granted the FCC authority to reform intercarrier compensation policy for both interstate and intrastate traffic. That section requires the FCC to hold a proceeding on IC reform within a year of the bill’s passage. Baum warned against the FCC applying a “one-size-fits-all” approach despite the variability in intercarrier-compensation economics among the various states.