The FCC adopts Further Notice of Proposed Rulemaking seeking input on ways to pay for USF more fairly and efficiently. Currently revenues are generated by assessment on the interstate and international revenues of carriers to include long-distance revenues and Voice over Internet Protocol. Contributors may pass this cost along to customers. With this Notice, the Commission is looking for ways to ease the Fund’s burden on consumers and businesses.

FCC Chairman Genachowski stated that the reform has three goals, enhancing efficiency, fairness and sustainability. Genachowski noted that since 2008 there has been a 10% decline in the pool of revenues from which USF contributions are made. Although no details were given, several FCC officials made vague reference to expansion of the base of contributors.

The Notice seeks input on:

  • What services and service providers should contribute to the fund.
  • How should contributions should be assessed -- on revenues, the number of connections, by phone numbers, or a hybrid approach.
  • How to reduce the cost, promote transparency and increase clarity of the contribution system.
  • Whether consumers could benefit from increased transparency and limitations on how providers recover their USF costs.

Additionally, the Commission adopted an Order launching the new Connect America Fund. The CAF will use $300 million in savings from USF reforms as part of a once-in-a-generation boost to quickly deliver broadband to hundreds of thousands previously unserved homes and business in rural America.

With this Order the FCC:

  • Adopted the specific methodology for establishing “benchmarks” for high cost loop support.
  • Launches first phase of funding from the CAF. Carriers have 90 days to accept the funding, as well as the aggressive buildout requirements that must begin in the coming months. The Commission expects that carriers will likely supplement the CAF funding with private investment.
  • Implements additional reforms designed to make more effective use of existing funding. Approximately 500 carriers serving over 2 million lines will get more funding for broadband.