USF swan song?

The ugly process of rule making has been on full display over the past few weeks in Washington. For those outside the Beltway, the procedures and reactions are hints to where various segments of the industry are headed. It started earlier this month, when the FCC declared that voice-over-IP services like those offered by Vonage are interstate in nature and not subject to state public utility regulation. Perhaps just as important, but largely ignored, was the fact that the commission also said the same services offered by cable companies would not be subject to traditional state regulation. While much of the industry reacted with joy at the thought of ridding themselves of state regulators, The National Telecommunications Cooperative Association and a handful of other rural-oriented groups slammed the decision because it could shrink the Universal Service Fund. Two weeks ago, those same groups hailed Sens. Byron Dorgan (D-N.D.), Conrad Burns (R-Mont.) and Ted Stevens (R-Alaska) for retaining language in the final fiscal year 2005 omnibus appropriations legislation that would prohibit the FCC from further considering any proposal to restrict universal-service support to a primary or single line. Despite the victory, most agree that major changes are in store for the USF and those who rely on it. Whether VoIP carriers are required to contribute or not, the USF pool is drying up because of changes in technology and the structure of voice services. Like it or not, rural carriers that rely on USF must learn to deal with life without significant support.