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Universal Service Fund Reform Proposed

May 2, 2007

The US Federal-State Joint Board on Universal Service has asked the FCC to act immediately in order to more efficiently manage Universal Service Fund disbursements.

The Joint Board is also soliciting comments for long-term and thorough reform of the USF program- a program with increasingly high costs.

To that end, the Joint Board is suggesting that the FCC impose an interim, emergency cap on the amount of per-state support that competitive eligible telecommunications carriers (ETCs) are entitled to receive from this fund. Most ETCs are in rural areas, where the high cost of implementing broadband upgrades is subsidized by payments distributed via the USF.

These revised payments would be calculated via the average level of competitive ETC support distributed in that state last year. The Joint Board is worried that if such provisions are not enacted, the escalating broadband deployment costs subsidized by the USF will result in the USF running out of money.

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