As anticipated, the FCC unanimously adopted rules yesterday to transition the legacy universal service fund (USF) from landline telephony to broadband support and retool the intercarrier compensation (ICC) regime to facilitate the free and fair exchange of telecommunications traffic across a variety of platforms. Describing the order as a “once-in-a-generation overhaul of universal service,” FCC Chairman Julius Genachowski told reporters that “we are taking a system built for Alexander Graham Bell telephones and modernizing it for a Steve Jobs vision” of the nation’s future in broadband and wireless communications. The agency’s four commissioners also predicted that the new rules will expand broadband services to at least 18 million unserved Americans by the end of the decade, create 500,000 new jobs, and boost economic growth by $50 billion over the next six years. Specifically, the order takes a two-step approach toward the establishment of a new Connect America Fund (CAF) that will support broadband services and eventually replace the existing, $4.5 billion high-cost USF. The first phase of CAF deployment, to begin early next year, would freeze all existing high-cost USF support to price cap telcos and provide an additional $300 million in CAF funding to spur construction of broadband networks in unserved areas with minimum speeds of 4 Mbps upstream/1 Mbps downstream. Under the second phase, which would span five years, the CAF would use a forward-looking broadband cost model to be developed by the FCC’s Wireline Competition Bureau, as well as competitive bidding to support deployment of networks that carry both voice and broadband. The CAF will also include a separate Mobility Fund that would provide up to $300 million in one-time support during the first phase to boost wireless broadband services in rural and unserved areas and $500 million in annual ongoing support for such networks during the second phase. Meanwhile, with respect to ICC, the FCC ruled that carriers with revenue sharing arrangements will be required to refile their interstate switched access tariffs at lower rates if they report significantly more terminating traffic than originating traffic. The FCC also specified that voice-over-Internet protocol (VoIP) operators are obligated to pay for traffic exchanged with local exchange carriers. As one of the many telecom executives who welcomed the order, Verizon senior vice president Kathleen Grillo applauded the FCC’s ruling as one that puts the USF and ICC systems “on a sustainable path and will enable millions of American households to connect to . . . high speed broadband networks.” Lamenting, however, that the decision “set the long-term funding level for mobile services at only 11 percent of the high-cost fund,” Steve Largent, the CEO of wireless association CTIA, said the agency’s action “falls short of what could have been done to fully capture the revolutionary migration to mobile services.”