Lawmakers Move to Fund U.S. Broadband

Two House lawmakers have introduced legislation that would overhaul the federal subsidy for telephone service to deliver broadband service to rural and low-income Americans.

Reps. Rick Boucher (D-Va.) and Lee Terry (R-Neb.) on Thursday unveiled the Universal Service Reform Act (PDF available here), urging swift action on what they described as long-overdue reform.

"The Universal Service Fund is broken," Boucher and Terry said in a joint statement, touting their bill as a path to rein in the "spiraling growth" of the fund.

The bill would establish a mandate and funding mechanism for delivering broadband access to all Americans, particularly those in rural areas where the sparse populations have deterred providers from investing in high-speed networks.

In that sense, it would codify in law one of the major policy objectives the Federal Communications Commission included in its national broadband plan, revisiting an item that has been on the agency's agenda for more than a decade.

Under the bill, most recipients of Universal Service money would be required to offer high-speed broadband service to customers in their coverage area within five years. The FCC would be tasked with setting the connection-speed requirements.

The FCC would also be directed to establish a new methodology for calculating the cost of the fund that would support both wireline and wireless phone and broadband service.

To reverse the shrinking base of contributors to the fund, the bill would require local telecom providers to pay into the fund, as well as any service provider that uses phone numbers, IP addresses or their "functional equivalents" to transmit voice communications as its primary business. That means that VoIP providers such as Skype and Vonage would have to pay into the fund under the legislation.

Additionally, the bill would establish a framework for defunding telecom operators in competitive markets and open a competitive bidding process for wireless providers seeking funding.

The bill won plaudits from the powerful cable industry lobbying group, the National Cable and Telecommunications Association (NCTA), which praised the measure for attempting to reform a fund that props up firms in markets where consumers have their choice of multiple providers.

In a statement, NCTA President and CEO Kyle McSlarrow said the bill "represents a sound first step in modernizing the USF program to bring it into the competitive era and refocus the program on broadband adoption and deployment where support is needed."

The nation's two largest telecom providers, AT&T and Verizon, have also endorsed the bill, praising Boucher and Terry for developing a comprehensive overhaul to modernize the USF and control its costs.

"We are particularly supportive of this legislation because it focuses on modernizing a program that was born before broadband, so that the goal of universal and affordable broadband for all Americans is achieved," Time McKone, AT&T's executive vice president of federal relations, said in a statement.

The formal introduction of the bill follows a discussion draft Boucher and Terry circulated in November.

Kenneth Corbin is an associate editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.