SHOULD BROADBAND QUALIFY FOR UNIVERSAL SERVICE SUPPORT?

Most telecom analysts agree that an industrywide transition from narrowband copper networks to broadband architectures is inevitable, and President George W. Bush has called for broadband to be universally available throughout the U.S. in 2007. Whether this requires providing universal-service fund (USF) support to broadband could be a key Beltway debate during the next year.

Buildouts of the copper networks in outlying areas was accomplished in large part because universal-service fund support made it economically feasible. Similar network deployment challenges are expected in rural areas during the broadband era, so many advocate extending universal-service support to broadband networks to ensure the U.S. is not left with a “digital divide” between those with broadband access and those who are limited to narrowband technologies.

Under current law, broadband could qualify for universal-service support when network deployments and adoption increase, according to FCC commissioners. But critics note that it could take years to reach that threshold, and the USF is already struggling financially to meet its narrowband obligations.

Proponents of the notion say that funding broadband could generate more revenue for the USF because the contribution base could be broadened--all broadband network providers could contribute, as could providers of all the applications that are enabled by ubiquitous broadband.

While such proposals sound good in theory, they may be difficult to implement. “How are you going to collect universal-service [contributions] from Skype?” one FCC staffer asked, referring to the Estonia-based voice-over-IP [VoIP] provider that recently announced a paid service.

In addition, defining a qualifying broadband service can be problematic--should it be based on data throughput speeds or services offered, and should mobility or quality of service be factored in the equation?

The notion also faces political hurdles. Some consumer groups contend universal-service charges on VoIP providers--much less non-voice-related applications--are tantamount to taxing the Internet, which has been something lawmakers have been very hesitant to consider.

“It’s not politically feasible,” said FCC commissioners’ aide said.

And the political case is made more difficult because many question whether introducing USF support--a source of constant argument in the narrowband arena--in the broadband sector might be more trouble than it’s worth. Indeed, while universal-service subsidies served a purpose in a monopoly-dominated environment, it might only skew intermodal competition between broadband providers in today’s world.

“Just because you can [use the USF to support broadband buildouts] doesn’t mean you should,” Legg Mason telecom analyst Blair Levin said.