Calls Mount for Rosenworcel to Tee Up USF Revisions

More stakeholders want acting FCC Chairwoman Jessica Rosenworcel to begin moving forward on USF funding revisions (see 2102010059). The current mechanism is unsustainable, experts said in recent interviews. Many disagree on changes.

Former Commissioner Mignon Clyburn urged Rosenworcel to “be bold” and move forward. “There will be more people than not who would appreciate moving in this direction,” she told an Incompas event earlier this month. Rosenworcel could easily tee up this issue and begin working on a major reform, said Incompas General Counsel Angie Kronenberg. Even with growing consensus something's wrong with USF, “there’s not enough agreement across the board about what the right solution is,” Kronenberg said.

The difficulty is the commissioners are evenly split politically, so Rosenworcel would need to get at least one Republican commissioner to vote for it, Kronenberg said. “If we can get a consensus that is nonpartisan, that is ideal,” said telecom consultant Larry Irving. The FCC declined to comment. Then-Chairman Ajit Pai said during his final days on the commission that USF revisions will be its next top challenge (see 2101120066).

Incompas members are open-minded on how the FCC moves forward, preferring commissioners stabilize the situation soon. They seek simplicity in how a revision is implemented, clarity about which services are contributing to the fund and how much contributions should be, and a level playing field between services, said Kronenberg in an interview. “When there's so much discretion left to providers about what potentially should be paid in, there can be a skewing of the marketplace in terms of marketing of services and competing against providers.”

The current funding mechanism is “just not sustainable,” said Deborah Collier, Citizens Against Government Waste vice president-policy and government, also in an interview. Companies that pay into USF pass their fees to consumers, which makes it a regressive tax, she said. One possible solution is for Congress to step in and consider direct appropriation if that means better oversight, Collier said. Some in the telecom industry support that.

A less political direct appropriation could be a multiyear funding mechanism, said Free Press General Counsel Matt Wood. "It's not like a 10-year fund would be completely insulated against political winds, but certainly more so than an annual one." Finish broadband mapping, experts advised. “If you get the mapping done and you know where service exists, you fund where service does not exist first, because those are the people that need help the most in getting connected,” Collier said. “That’s what universal service is all about.”

"We're approaching a really big problem, and the FCC's ability to address that problem by itself is limited," said New Street’s Blair Levin. Rosenworcel could immediately start a proceeding that effectively asks what the past year taught us and what needs to be done to stop the "exploding" contribution factor and "shrinking" revenue, he said. "I think there's a consensus emerging that we really need Congress to act in a variety of ways," Levin said. "There are other funding mechanisms to be considered, but ... if you have a 5-10 year fund, you take some of the political football out for a while, and postpone it in a way."

The FCC has options, Kronenberg said: It could include broadband internet service revenue in the USF, but the last administration reversed the Barack Obama-era regulation classifying broadband as a telecom service, so it becomes more of a political issue. The Telecom Act considered whether Americans would become dependent on broadband, she said, so if the FCC “defines these services correctly, it already has the authority that you would need to stabilize the USF,” Kronenberg said. Or the system could be entirely changed so the commission no longer looks at revenue, but instead at a connection-based system for broadband and voice service or at a phone-number-based system.

Several groups, including USTelecom, backed expanding the contribution base for USF in addition to direct congressional appropriations. Some telecom companies also welcome changes to USF. "The current USF, which is evolving to focus on broadband connectivity, continues to be funded by an assessment imposed solely on telephone customers," USTelecom said earlier this month. "Universal broadband is too important to our nation to be funded by only one set of customers." AT&T, one of the fund's largest contributors, wants to expand the contribution base to include broadband services. The company and the association declined to comment for this report.