Note: This resolution addresses NASUCA’s support for and concerns with the Boucher/Terry “Universal Service Reform Act of 2010” as introduced in this session, and (given industry support – see third-to-last “Whereas” clause) as it is likely to be introduced next session. If the bill is introduced next session, a NASUCA task force will need to be formed to address the legislation as it proceeds through Congress – similar to the task force that participated in the Telecommunications Act of 1996.
The Boucher/Terry bill is extensive, thus requiring a greater than number of “Whereas” clauses, which describe the bill and then express NASUCA’s position. The “Be it resolved” clauses, by contrast, are brief, intending to allow flexibility in the legislative process.
THE NATIONAL ASSOCIATION OF STATE UTILITY CONSUMER ADVOCATES
RESOLUTION 2010-04
EXPRESSING SUPPORT FOR AND CONCERNS WITH H.R. 5828, THE “UNIVERSAL SERVICE REFORM ACT OF 2010”
WHEREAS, efforts to achieve the national universal service goal, especially as embodied in 47 U.S.C. § 254, have provided benefits to telephone consumers throughout the Nation;
WHEREAS, those benefits have been paid for by telephone consumers though the universal service assessments paid by telephone companies and passed through to their customers;
WHEREAS, the National Association of State Utility Consumer Advocates (“NASUCA”) and its members represent both the consumers who benefit from universal service efforts and those who pay for those efforts, and NASUCA’s positions on universal service issues, expressed in numerous comments to the Federal Communications Commission (“FCC”) and other means, have attempted to balance those two concerns;
WHEREAS, numerous issues regarding the universal service programs have arisen over the years, leading to discussions of changing the statutory basis for the programs;
WHEREAS, the most recent of these efforts is the “Universal Service Reform Act of 2010” (“USRA10”), H.R. 5828, introduced on July 22, 2010 by Representative Rick Boucher (D-VA) and Representative Lee Terry (R-NE), containing comprehensive and wide-ranging changes to the current universal service program;
WHEREAS, according to the Overview of USRA10, the legislation “improves the universal service fund and ensures its continued viability by controlling distributions from the fund, including by limiting universal service support in areas where there is competition and implementing competitive bidding for wireless providers; allowing use of the fund for broadband deployment; and broadening the base of contributions into the fund”; and the Overview also states that the legislation “also makes a number of other much needed changes to improve fund administration”;
Support for broadband services
WHEREAS, USRA10 defines “high-speed broadband” at a minimum data rate to be established by the FCC to be a universal service, so support for the build out of broadband lines would be explicit, and requires periodic review of the minimum data rate; WHEREAS, NASUCA has frequently noted the problem of supporting broadband under the current law, which allows support only for telecommunications services, and has supported periodic raising of the minimum data rate, but has noted that support for traditional telephone networks should not be eliminated;[A2] WHEREAS, USRA10 requires universal service fund recipients, within five years of the date of enactment, to be offering high-speed broadband service throughout the areas where they receive universal service support either themselves or through resale of satellite broadband services; WHEREAS, although a requirement of ubiquitous broadband service is in the public interest, conditioning such a requirement on receipt of universal service support will disadvantage the customers of carriers that receive no or little universal service support but have unserved areas in their service territories; further, the resale of satellite broadband service is problematic given the lower quality and higher price of satellite broadband service; WHEREAS, USRA10 allows the FCC to waive the broadband deployment requirement for providers for whom offering such service would be technically or economically infeasible, and USRA10 “automatically” waives the requirement for providers that can demonstrate that their cost per line of deploying such service is at least three times the nationwide average cost of providing high-speed broadband service, or that there is insufficient satellite capacity to allow them to provide the service; WHEREAS, Allowing such waivers without explicitly requiring additional support for areas where such providers have such burdens will disadvantage those providers’ customers; and the concept of an “automatic” waiver for a carrier that must make a demonstration is problematic; WHEREAS, USRA10 directs the FCC to develop a new cost model for calculating high-cost support that takes into account the cost of providing voice service and high-speed broadband service to replace the FCC’s existing calculation methodology for rural and non-rural carriers; requires the model to maximize access to broadband service; allows the FCC to include net revenues from advanced and information services in the model; requires support to be provided on a wire center basis for non-rural carriers, in contrast to the current statewide basis; allows rural carriers to make a one-time election to receive support based on the model; and provides for a phase-in of the results of the new model, with ILEC ETCs receiving their current level of support until the model is developed; WHEREAS, NASUCA has long supported continuing improvements to the FCC’s high-cost model, but recognizes the difficulties of applying such models to the smallest rural carriers; supports the maximization of broadband and the inclusion of revenues other than basic service revenues in the model; as for statewide averaging, NASUCA supports continuing the use of statewide costs for larger carriers because, despite the claims of harm from the current system, no carrier has shown that the use of statewide averages has led to rural rates that are not reasonably comparable to urban rates; and notes that giving carriers the option of the basis for their support will lead only to increases in support; Universal service fund cost model WHEREAS, USRA10 directs the FCC, within one year of completing the new cost model, to implement a mechanism for reducing or eliminating high-cost support to incumbent carriers in areas where at least 75 percent of households can receive voice and high-speed broadband service from a competitive provider that does not receive universal service support; requires the non-incumbent provider in an area that the FCC has determined is competitive to meet statutory provider-of-last-resort requirements and to provide stand-alone basic local service; and provides that an incumbent carrier whose high-cost support is reduced in a competitive area may demonstrate to the FCC how much per-line support it requires in the non-competitive parts of the service area to ensure that rates for supported services remain comparable in the competitive and non-competitive parts of the service area; WHEREAS, reducing support for basic service for incumbents in competitive areas is in the public interest only if the competitors have a provider of last resort obligation and are required to provide stand-alone basic service like the incumbents, and if the incumbents can receive support if needed for the non-competitive portions of their service areas; Lifeline ETC designation WHEREAS, USRA10 allows the FCC to create a separate Lifeline ETC designation; WHEREAS, NASUCA has supported the creation of a Lifeline ETC designation, with clear eligibility rules; Competitive bidding for support to wireless carriers WHEREAS, USRA10 directs the FCC to adopt a competitive bidding process to determine eligibility of mobile wireless communications service providers for universal service support; provides that the total amount of support the FCC awards pursuant to the competitive bidding process must be no more than the amount of high cost support received by all mobile wireless communications service providers in the year before the date of enactment; and provides that in areas where at least 3 mobile wireless communications service providers are eligible to participate in competitive bidding, the FCC shall issue a request for proposals identifying the area a winning bidder must serve and the minimum requirements for serving the area, that the FCC shall select up to 2 winning mobile wireless communications service providers in each service area and should consider the amount of the bid and minimum proposed broadband speeds as primary factors when evaluating applications, and that winning bidders shall receive a flat amount of subsidy per year for up to 10 years, as determined by the FCC; and provides that in areas where fewer than 3 mobile wireless communications service providers are eligible to participate in competitive bidding, the FCC shall continue to provide universal service support at the per-line level in effect prior to the date of enactment. WHEREAS, the need for universal service support for wireless carriers in areas currently served has not been conclusively shown, and USRA10 does not require such a showing before the competitive bidding process is undertaken; neither does the legislation specifically address the need for support for wireless service in currently-unserved areas; Primary line restriction WHEREAS, USRA10 prohibits the FCC from restricting support to a primary line per household or location; WHEREAS, NASUCA has consistently supported limiting high-cost support to a single line per household, because that level of service is the most that consumers in other areas should be required to support; Other support issues WHEREAS, USRA10 eliminates the “parent trap,” an FCC regulation which provides that a carrier which acquires telephone exchanges from an unaffiliated carrier receives universal service support at the same level for which those exchanges were eligible prior to the transfer, in order to encourage the sale of exchanges to rural carriers; WHEREAS, the “parent trap” was implemented to prevent rural carriers from buying non-rural carriers’ exchanges merely to take advantage of increased universal service support, and despite non-rural carriers’ neglect of many of their rural exchanges, the rationale for the parent trap rule remains valid; WHEREAS, USRA10 prohibits the FCC from reducing high-cost support to tribal lands, absent a finding that such reductions are in the public interest; . WHEREAS, USRA10 clarifies who qualifies as a “health care provider” eligible for rural health care support; revises the definition of “rural area” to among other things grandfather areas which qualified under a previous FCC definition; and bases support for advanced telecommunications services on the difference between the cost of service in an urban area and a rural area, instead of on the flat percentage rate discount in current FCC regulations. WHEREAS, NASUCA has long supported an effective and efficient rural health care support mechanism; Universal service fund contribution mechanism WHEREAS, USRA10 provides that in making the changes required by the Act, the FCC shall ensure that the contribution burden on consumers does not unreasonably increase; WHEREAS, the legislation should explicitly provide that the contribution burden on consumers should not increase, and that the FCC bears the burden of justifying any increase over current total contribution levels; WHEREAS, USRA10 allows the FCC to assess universal service support contributions on any entity that pays into the universal service fund under the current system (such as long distance providers); any provider of a service that uses telephone numbers, IP addresses or their functional equivalents to provide or enable real time voice communications and in which the voice component is the primary function (such as VoIP providers); and any provider that offers a network connection to the public (such as DSL, cable modem, WiMax and broadband over powerline providers); and also provides that the FCC may assess any provider of telecommunications or information service if such contribution is found to be in the public interest; WHEREAS, NASUCA has long supported broadening the base of providers to the universal service fund; WHEREAS, USRA10 allows the FCC to determine whether to use a contribution methodology based on revenues, numbers, network connections or a combination of these; and requires the FCC to study the issue of the basis for the contribution mechanism and provide a report to Congress; WHEREAS, NASUCA has long opposed the use of a numbers-based contribution mechanism, because of its impact on low-volume users, because of the complexity of an equitable numbers-based mechanism, and because of the costs of implementing such a mechanism; and has opposed the use of a combination or hybrid mechanism because of these problems and others; WHEREAS, USRA10 provides that if the FCC opts for a revenues-based approach, it can assess contributions based on revenues derived from the provision of intrastate, interstate and foreign communications services; WHEREAS, allowing assessments on intrastate revenues for federal universal service programs could impact intrastate universal service programs and should be done only if needed and implemented carefully; WHEREAS, USRA10 provides that the FCC shall not increase the contributions of providers whose customers typically make a low volume of calls on a monthly basis, and could exempt from the contribution requirement providers whose communications activities are so limited that their level of contributions to the preservation and advancement of universal service would be de minimis; and that, if it adopts a numbers-based mechanism, it could provide a discount on contributions of additional phone numbers provided under a group or family pricing plan for residential customers. WHEREAS, the current revenues-based mechanism typically limits the contributions of low-volume users and of those whose contributions would be de minimis; and an equitable numbers-based mechanism would have to include limitations in addition to those for group or family plans; Performance goals WHEREAS, USRA10 directs the FCC to establish and implement outcome-oriented performance goals and measures for each universal service fund program and to report to Congress about progress toward meeting such goals; . WHEREAS, NASUCA has long supported outcome-oriented performance goals and measures for universal service programs; WHEREAS, USRA10 directs the FCC to determine the appropriate methodology for audits of universal service fund recipients, to ensure that auditors are trained in universal service fund program compliance and that they may only audit records that universal service fund recipients are required to retain pursuant to the FCC’s rules; and provides that any appeal of a USAC finding related to an audit must be resolved by the FCC within 6 months after the date of filing. WHEREAS, NASUCA has long supported adequate oversight of universal service programs that produces benefits commensurate with its costs; Anti-Deficiency Act WHEREAS, USRA10 permanently exempts the universal service fund from the Anti-Deficiency Act to avoid the need to renew the exemption annually, allows the FCC to invest contributions to the universal service fund until they are disbursed; WHEREAS, NASUCA has long supported a permanent exemption for the universal service fund from the Anti-Deficiency Act and allowing investment of universal service contributions; Intercarrier compensation WHEREAS, USRA10 addresses a number of issues that are not strictly universal service issues, including directing the FCC to complete a proceeding to reform intercarrier compensation within one year of the date of enactment; WHEREAS, NASUCA has long supported reform of the intercarrier compensation system that respects at least the following principles: 1) all carriers that use the networks of other carriers should pay for that use; 2) such payments must include contribution to the joint and common costs of the networks; 3) there should be no guaranteed recovery of lost access charge revenues, whether from increases in the subscriber line charge or from the federal universal service fund; and 4) reform must respect the jurisdictional boundaries between interstate and intrastate authority; WHEREAS, USRA10 addresses the problem of traffic pumping by prohibiting access charge recovery when an entity offers a free or below cost service and shares the switched access revenues with a local exchange carrier;. WHEREAS, NASUCA has long supported elimination of the incentives for arbitrage in the current intercarrier compensation system, of which traffic pumping is a symptom; WHEREAS, USRA10 requires carriers to identify all traffic which originates on their networks and requires all intermediate carriers to pass through that identification so that carriers which terminate that traffic can seek appropriate intercarrier compensation; WHEREAS, NASUCA has long supported proper identification of all intercarrier traffic, consistent with the first principle for intercarrier compensation reform set forth above; WHEREAS, the release that accompanied the introduction of USRA10 noted the endorsements of the American Public Communications Council, Inc., AT&T, CenturyLink, Frontier Communications, the Independent Telephone and Telecommunications Alliance, the National Cable and Telecommunications Association, the National Telecommunications Cooperative Association, OPASTCO, Qwest, USTelecom, Verizon, Vonage and the Western Telecommunications Alliance; WHEREAS, as can be seen from the testimony presented to the U.S. House of Representatives Committee on Energy and Commerce Subcommittee on Communications, Technology and the Internet on September 16, 2010, various members of the industry focused on the pieces of the legislation they felt to be more favorable while largely overlooking portions with which they have traditionally disagreed; WHEREAS, the support of this broad spectrum of the telecommunications industry does not demonstrate that the entirety of the legislation is in the public interest and should be adopted; now, therefore be it RESOLVED, That NASUCA continues to support the goals of the universal service programs; and be it further RESOLVED, That NASUCA supports efforts to reform the federal universal service programs, whether at the FCC or in Congress; and be it further RESOLVED, That NASUCA supports the portions of USRA10 identified in this resolution, supports other portions with changes, and opposes other portions as contrary to the interests of consumers; and be it further RESOLVED, That the NASUCA Telecommunications Committee, with the approval of the Executive Committee of NASUCA, is authorized to take any and all actions consistent with this Resolution in order to secure its implementation.