Reforming and Modernizing the FCC’s Universal Service Programs

May 2012 

The Universal Service Fund
• Based on FCC’s historic commitment to universal service • Expanded in Telecommunications Act of 1996
Contributions flow from telecommunications providers via an assessment on their interstate revenues . . .

Wireline telco

Wireless telco

Cable

. . . into the four Universal Service Fund programs High-Cost Lifeline E-Rate Rural Health Care

. . . which distributes funds to eligible entities (primarily telephone companies) to reduce cost of service for rural Americans for lowincome Americans for schools and libraries for rural health providers

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Connect America Fund – Goals

• Universal service
Robust home & business broadband to over 18M unserved Expand mobile broadband and voice coverage where it’s lacking Protect existing voice and broadband service in rural areas • Fiscal responsibility Fairness to consumers who bear burden of paying Address bipartisan calls to eliminate inefficiency and control costs • Business realities

Reasonable transition periods

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Connect America Fund Overview

Connect America Fund
$4.5B annual budget

Fixed Locations
• Price Cap areas o Phase I (ongoing) o Phase II • Rate-of-Return areas

Mobility Fund
• Phase I (Sept.) • Tribal Phase I • Phase II

Remote Areas Fund

Policy Innovations
• • • • Express support for broadband networks Overall budget Dedicated support for remotest areas Dedicated support for mobile • Competitive bidding to allocate support • No subsidy for areas served by unsubsidized competitor • Explicit public interest obligations & greater accountability
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Connect American Fund Phase I

• Launched April 25 • Commission announced availability of $300 million in additional support to eligible carriers in these areas
- Funds come from USF reform savings; not increasing size of Fund - Focused on unserved areas: $775 / location served

• Carriers have 90 days to decide accepted support amounts

• Funds come with buildout and accountability requirements
- Broadband speed (4 Mbps down/1 Mbps up), latency, usage - Deployment to 2/3 of locations within 2 years and complete within 3 years

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Unserved Areas

www.fcc.gov/maps
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The Connect America Fund: Mobility

• For first time, Commission recognized ubiquitous mobile voice and broadband service as independent universal service goal

• $300m to upgrade areas with no 3G using market-based competitive process: reverse auction
Funds come from USF reform savings; Carriers bid to cover unserved road miles Auction rules and eligible areas announced May 2 Short form applications due July 11 Auction scheduled for Sept. 27

• Winners will be required to deploy 3G in 2 years or 4G in 3 years

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Mobility Fund Eligible Areas

www.fcc.gov/maps
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Connect America Fund: Ongoing Activities
• Implementation of: – Connect America Fund Phase II (model and reverse auction) – Mobility Fund Phase II for ongoing mobile support – Remote Areas Fund Reasonable comparability for broadband/voice service and pricing Petitions for waiver/reconsideration Long term support mechanism for smaller carriers And lots of other implementation issues . . .

• • • •

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