FCC Cancels USF Vote

The Federal Communications Commission has canceled an Election Day vote on a major plan to overhaul universal service rules. As usual, the highly-political program, representing $6.7 billion in direct annual revenue for some service providers, about $3.7 billion in indirect revenue and billions more in inter-carrier compensation payments for others, is highly contested.

 

Consider that some rural telcos earn as much as $770 a month, per line, in universal service funds, to support phone service in their tough-to-serve areas. Many smaller independent telcos routinely earn 10 percent to 30 percent of their revenue from USF payments.

 

Aside from the payments issue, larger service providers disproportionately pay, while smaller service providers largely receive, the benefit of inter-carrier compensation payments made to terminating local carriers. That's why larger carriers, such as Verizon (News - Alert) Communications and AT&T, favor the proposed new plan, while smaller carriers oppose the changes.

 

Martin has been seeking to reform the multibillion "inter-carrier compensation" system, the byzantine menu of charges that telecom carriers pay to access each other's networks, by moving toward uniform, lower rates. His plan also included major changes to the $7 billion Universal Service Fund. Among other things, Martin would have required carriers to use Universal Service money to invest in broadband networks in parts of the country that lack high-speed Internet connections.

 

Wrangling over the USF has been on-going for years.