FCC Finally Overhauls USF, Intercarrier Compensation

October 28th, 2011 by · 5 Comments

Can it be?  Has the FCC finally put together a plan to reform the Universal Service Fund and intercarrier compensation after a decade of procrastination?  I have hesitated to write about the possibility, given the long history of deadlines missed and proposals never followed through on.  But nevertheless, that's what the news out of the FCC says today -- although nobody has actually seen the full text of the actual order yet.  The commission voted 4-0 to accept Genachowski's Connect America Fund proposal yesterday.

A few features of the proposal:

  • A $4.5B fund to promote rural broadband with a firm annual budget
  • Competitive bidding to distribute the money efficiently
  • A long term Bill & Keep plan, but phased in over many years
  • A new fee on phone bills, but rates not affected (uh huh)
  • Curtailing of phantom traffic and access stimulation

Here's a link to the Executive Summary for those who would like to take a closer look.

The devil has always been in the details and loopholes though, and it will be a while yet before those bubble to the surface of the discussion.  I expect everyone will have problems with some part of this plan, seeing as it seems to walk a central line.  But the thing is - we just need *something* in place. The existing system was antiquated during the Clinton administration, and the uncertainty has held back the entire sector in a myriad of ways.

The FCC is billing the new plan as a source of 500,000 jobs over the next six years by expanding broadband to 7 million people in rural areas. That's one way to cut opposition off at the knees in today's environment! Congrats to Julius for finally putting something on the table, even if he did screw around with Net Neutrality first.

What do you think.  Did the FCC finally get it right?

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Categories: Government Regulations

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5 Comments So Far


  • Parkite says:

    A new fee on phone bills??? Love it already.

    500K new jobs??? Yeah, that is believable.

    Boy, we are in a world of hurt as a country. Tax and spend. Tax and spend.

  • De-Stimulated OSP contractor says:

    That 500k on top of all the jobs that were supposed to be created by the Broadband Stimulus awards that were shovel-ready?
    Wow, can’t wait to raise our OSP pricing with the obvious upcoming uptick in demand!

  • Carlk says:

    Rob, nobody will say it better than you just did, with the Devil turning into the Details along with the loopholes when the full text of the plan is finally released. There are some sprinkles of Jim Crowe speak, so maybe he will talk about what he knows and is allowed to on Nov. 2nd?

    If there is one thing I know Julius got right for all consumers around the globe, it’s the LVLT/GLBC merger. The next thing I hope he gets right partnering with Justice, is the blocking of AT&T with TMobile, something certain to destroy competition, handicap consumers, and slow down progress as well as innovation if it passes in any form.

  • Anon says:

    Does anyone else think it is strange to tax a struggling & (not unrelatedly) heavily regulated service (PSTN, voice) to then gift monies to the booming & unregulated broadband sector?

    I don’t think the iPhone was developed with free money from the analog cel phone industry?

    Other than Solyndra, is there a worse federal subsidy idea out there?

  • Carlk says:

    It would seem to me, while still missing many of the puzzle’s pieces, that the key to the effectiveness of this planned system may become dependent upon the legitimacy along with transparency of the “competitive bidding process” peppered throughout the Executive Summary.

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