Universal Service Fund Reform

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The Federal Communications Commission adopted an order reforming parts of the Universal Service Fund at its Jan 31, 2012 meeting. The order creates the Lifeline Accountability Database - which would allow for the speedy identification of duplicate applications - and reduce program abuse and fraud. The Commission also announced it would eliminate the Link-Up program – which provided participants a $30 credit towards installation of landlines or activation fee for cell phones – and use the funds for a Broadband Adoption Pilot project.  MADCo member organizations are pouring through the 500-page order to analyze how it affects the public interest.  Comments on the Notice of Proposed Rulemaking within the order, including the establishment of an eligibility database, are due March 5th.   (Photo:  Geoffrey Blackwell, at the time of the Chickasaw Nation and National Congress of American Indians, explains the Universal Service Fund to MADCo grassroots groups in 2009.  Mr. Blackwell now heads the FCC's work on policy that affects Native communities.)
 

Why Does This Matter?

In many parts of the country, particularly rural areas, broadband access is simply not available because cable and telephone companies have not deployed their networks.  In other parts of the country where broadband is available, it is often too expensive for low-income consumers. The Internet is no longer a luxury but a necessity in today’s 21st Century world. With government services, education, and even personal finances moving online, those left without reliable access to the Internet are left behind.
 
Similarly, access to affordable basic voice service is still critical, particularly for our most vulnerable populations, such as the homeless, disabled or elderly, in order to access social services and medical care.  

The Universal Service Fund is a program that currently subsidizes crucial telephone and voicemail access for un-served, impoverished, and underserved populations across the nation, some Internet services for schools and health care facilities, and soon will subsidize broadband infrastructure in rural areas. It is funded by small charges on consumers’ telephone bills, and is made up of four programs:

• The Low Income portion, including the Lifeline program which provides discounts on monthly telephone services and Link Up program which provides a one-time discount off of the initial installation fee for wireline telephones or activation fees for wireless.
• The new Connect America Fund (which replaced the old High Cost Fund) will subsidize broadband  infrastructure in our nation’s rural areas.
• E-Rate program helps schools and libraries afford Internet access, telecommunications services, internal infrastructure and basic maintenance of internal connections.

The Rural Health Care Program provides reduced rates to medical facilities in rural areas for their telecommunications services.

The Low Income and High Cost portions have historically only supported voice communication, not broadband.  Advocates for low income and rural consumers including members of the Media and Democracy Coalition have urged the FCC to reform these programs to include broadband so that every U.S. resident has access to the modern communications tools – both voice and Internet – needed to participate in today’s economy and society.

What Do MADCo Groups Want?

First, MADCo members have urged the FCC to expand the LifeLine program to subsidize broadband access, as well as voice services.

MADCo groups are also asking the FCC to expand eligibility parameters for Lifeline  to include more impoverished Americans, as well as ensure that individuals living in group homes or who are homeless are not disqualified from receiving benefits under a “one per household” restriction.  MADo members also urged that the FCC not cap the amount of monies contributed to the fund at an inadequate $1.3 billion, as proposed.  As the FCC has acknowledged in its own research, the program is only reaching 1/3rd of eligible recipients. Capping the program at such a devastating economic times would prevent low-income and impoverished Americans from accessing crucial communications services.

Members groups also support the successful implementation and evaluation of a broadband pilot project within the Lifeline program. The Open Technology Initiative at New America Foundation has proposed several rubrics and evaluation formats for successful review including both quantitative and qualitative components, the consideration of different meanings of “adoption,” and the use of past research and data to influence evaluation standards.

Unfortunately under current rules, self-provisioned networks – such as those created by community groups or local governments -- are ineligible for USF funds. MADCo members, as working in coalition with the Rural Broadband Policy Group, urged the FCC to include community-based and locally accountable non-profit and municipal networks as eligible USF recipients within the newly established Connect America Fund.

Doing so would have allowed rural, tribal, and low-income communities to be serviced by those who know the technological needs of the community and can meet them far better than a large absentee network owner.
 

What’s Happening Now

The Federal Communications Commission began a long, complex process to reform the Universal Service Fund in 2011.  Here’s where some of the key reform proposals stand:

Connect America Fund Created
The Commission adopted new rules on October 27, 2011 that eliminates the High Cost Fund and creates a new program in its place called the Connect America Fund.  The High Cost Fund was designed to subsidize landline phone access in rural areas. Under the new plan, the $4.5 billion high-cost portion of the fund will be renamed the "Connect America Fund" and will be used to expand broadband Internet access. A number of telecom companies have sued over various aspects of the FCC’s new plan. The agency is considering additional reforms of the Connect America Fund, and will be accepting public comments through February 17, 2012.

InterCarrier Compensation Reform Adopted
Intercarrier compensation (ICC) refers to the charges that one carrier pays to another carrier to originate, transport, and/or terminate telecommunications traffic. The current ICC system is based on out-of-date information that does not adequately reflect our country’s telecommunications networks and is insufficient to address problems raised by broadband and mobile technologies. The Commission reformed parts of the ICC rules as part of its October 27, 2011 order.  Members of the Media and Democracy Coalition are analyzing the FCC’s new rules now to determine how they affect consumers. The FCC is accepting public comment on additional ICC reform proposals through March 30, 2012.

Lifeline and LinkUp Programs
In addition to the recent order to create a National Lifeline Accountability Database and the establishment of a Broadband Pilot Project, the FCC is requesting comments on proposals to establish an eligibility database, broadband literacy training, establishing eligibility for homeless veterans, and more. MADCo member organizations are urging the Commission to adopt an order that provides the greatest possible benefit to low income consumers.

What You Can Do

Write to the Federal Communications Commission and urge it to adopt reforms of the Universal Service Fund program that will provide the greatest possible benefit to low income consumers.

Resources

Center for Rural Strategies calls for better broadband in rural America and explains how USF can help fill the gap.

Benton Foundation aggregates news and information about USF proceedings.

The Rural Broadband Policy Group’s (which includes MADCo members Access Humboldt, Main Street Project, Media Literacy Project, and the Mountain Area Information Network) public letter to the FCC encouraging expansion of the program to self-provisioned networks.

The Media Action Grassroots Network (MAG-Net), a project of the Center for Media Justice, covers USF proceedings and features educations materials.