At an agency event last Thursday, FCC Chairman Julius Genachowski offered reporters a glimpse of sweeping new rules that are intended to reform the universal service fund (USF) and intercarrier compensation (ICC) systems to better serve the nation’s broadband needs. A draft copy of the USF/ICC reform order is currently circulating among the FCC’s commissioners and is expected to be adopted at the FCC’s next monthly open meeting scheduled for October 27. Noting that “core elements” of the draft measure now under review “were presented in the National Broadband Plan,” Genachowski declared that the draft rules were crafted “to expand broadband to millions of Americans in unserved areas” and to “spur private investment, create jobs, and drive our nation’s competitiveness by investing wisely in our innovation infrastructure.” While acknowledging that the draft rules contain elements of plans that were presented to the FCC by incumbent local exchange carriers, rural telco groups, state regulators and other affected parties, Genachowski stressed that the order “will not rubber stamp or adopt wholesale the proposals of any stakeholder or group of stakeholders.” The new rules, explained Genachowski, will transition the legacy USF—which was established in 1997 as a mechanism for subsidizing wireline telephone service in rural and other high-cost areas—to a new Connect America Fund (CAF) that will support the construction of broadband networks that the FCC hopes will reach 18 million additional Americans by 2017. The CAF will also include a Mobility Fund that is intended to spur the deployment of fourth-generation wireless broadband networks that will cover more than 100,000 road miles. According to Genachowski, disbursements through the Mobility Fund “will be targeted exclusively at areas without an unsubsidized competitor and where support is needed to extend or sustain broadband networks.” The CAF would be phased in gradually during a transition period to begin next year, and would-be recipients of CAF funding would have to bid for support via reverse auctions. With respect to ICC reform, the draft order would close loopholes that currently enable end-user carriers to engage in traffic pumping and other methods of artificially inflating charges for terminating traffic on their networks. In a provision that Genachowski estimates will save consumers upwards of $1 billion annually, the new ICC rules would also phase down access rates over a multi-year transition period so as to bring intrastate rates in line with interstate rates. Asserting that “broadband has gone from being a luxury to being a necessity,” Genachowski predicted that the new rules “will bring enormous benefits to individual consumers, our national economy, and our global competitiveness.”