Industry Reacts to FCC Action on USF

The Federal Communications Commission finally achieved major Universal Service Fund (USF) reform steps Thursday. It will be a few days before the order is ready for perusal, but policy wonks don’t expect any big surprises. The order shifts USF voice support to broadband and reduces current intrastate rates for terminating traffic to interstate levels over the next two years. The FCC limits the High Cost Fund budget to $4.5 billion per year, with $500 million going to mobility.

The American Cable Association (ACA) expressed disappointment that the fund provides a right of first refusal to big telcos to provide broadband in unserved areas.

“ACA is very pleased that Chairman Genachowski agreed with the independent cable operator community on the need to curb the size of the High Cost Fund by requiring it to operate under a budget for the first time and for limiting financial support for telephone companies in areas where they face broadband competition from providers that do not receive any USF support," said ACA President and CEO Matthew Polka, in a statement.

“At the same time, ACA is disappointed that the fund provides larger telephone carriers with a right of first refusal to provide broadband in high cost, unserved areas worth up to $1.8 billion annually – twice the amount of support these carriers receive under the existing USF program today. More than 500 smaller cable operators who are ACA members and were interested in having the same opportunity to participate in the Connect America Fund program know that consumers would have received better broadband services, such as higher speeds, if the FCC had opted for competitive bidding instead of the right of first refusal."

NCTA President and CEO Michael Powell also expressed disappointment about the right of first refusal but added, “We remain hopeful that the order otherwise reflects the pro-consumer principles of fiscal discipline and technological neutrality that will bring needed accountability and greater efficiency to the existing subsidy system.”