Opening Statement of Chairman Ted Stevens
USF Distributions Hearing
Earlier this week we held a hearing about the funding of the Universal Service program. Today, we address the way those funds are spent. This hearing will examine what universal service should support, and who should get money out of universal service relative to who pays in.
The changing face of communications demands that we reexamine the way Universal Funds are being spent and to what purpose. There have been many successful programs supported by USF, but there have also been some programs that could use some fine tuning. Today, we will listen to various parties in order to learn how the distribution of universal service funds might be improved in light of new realities in the marketplace and changes in technology.
In a competitive world we need to understand how we maintain America’s technology position in the world and what communications infrastructure we need to support that position, particularly in rural areas.
I look forward to hearing how universal service funds can be used to encourage the deployment of broadband and other advances services to all Americans as quickly as possible.
STATEMENT OF SENATOR CONRAD BURNS
U.S. SENATE COMMITTEE ON COMMERCE, SCIENCE AND TRANSPORTATION
HEARING ON UNIVERSAL SERVICE DISTRIBUTIONS
MARCH 2, 2006
Today is the second of two important hearings examining the Universal Service Fund. At stake in this debate is no less than the future of rural America. For those who say that the Universal Service no longer makes sense, or that it should be repealed or scaled back- I encourage them to visit Montana or other rural areas and see the fund in action. The day has not arrived when technology and the free market can make affordable telecommunications services available everywhere. Simply put, competition and technology have not changed the fact that it still costs a lot of money to provide telephone service in Montana and other rural areas. Until that time arrives, Universal Service funds are the only alternative. As we look at revising universal service, we need to keep foremost in mind that without support from the Universal Service Fund phone bills in high cost areas around the country would increase dramatically – For example an average Montanan living in a rural area would pay an additional $329.97 each year to receive telecommunications services. Many schoolchildren would not have access to the Internet – access vital to help children do homework, conduct research and compete in a global economy. Many people in remote communities would not have access to health care using the Internet – an important issue in Montana where many counties do not even have a doctor. That is not to say that changes do not need to be made to the Universal Service Fund. Recently, the amount of money distributed by the fund has been increasing, impacting the ability of the fund to keep up with demand. Much of the current fund growth can be attributed to the rapid increase in funding provided to wireless carriers who have become eligible for Universal Service payments. Among the issues we need to address include clarifying the purpose of universal service support. Is the purpose of the fund to promote competition in rural areas, rural service, or both? To what extent, if at all, should broadband service qualify for Universal Service support? Another issue is what types of discipline and accountability should be implemented to control the growth of the fund and ensure its survival?
These and other challenging issues have made it necessary for Congress to take a look at revising the way Universal Service funds are distributed. We must make sure the law keeps pace with this changing landscape. In this regard, on February 8th of this year, the 10th anniversary of the Telecommunications Act, I introduced S.2256, The Internet and Universal Service Act of 2006 (NetUSA), to revise the Universal Service Fund to adapt to the radically changing telecommunications landscape.
Any distribution mechanism must ensure that Universal Service support distributions are fair, equitable, and competitively neutral. At the same time, maintaining a sustainable Universal Service Fund requires recipients to be accountable for how support is used. We need to not only control the growth of the fund, but to make sure the funds are going where they are needed, and invested in advanced technologies like broadband.
My NetUSA bill will shore up the Universal Service Fund, ensuring that investment in a ubiquitous, advanced telecommunications infrastructure can continue to all corners of the country. In general, the NetUSA bill would broaden the base of contributions into the Universal Service Fund, and it would govern more prudently the distributions of the funds.
With respect to distribution of funds, the NetUSA bill requires the Federal Communications Commission to ensure that companies that receive universal service fund support invest in and deploy broadband infrastructure in rural and high cost areas. We must ensure that Universal Service Funds are used to accelerate the deployment of broadband so that the U.S. becomes a world leader in broadband deployment.
The NetUSA bill also controls the growth of the Universal Service Fund by making the eligibility rules for receiving universal service support competitively neutral and targeting Universal Service to high cost areas. Specifically, to be eligible for universal service fund support a carrier (1) must offer any calling plan comparable to the incumbent local phone carrier; (2) offer services under the requirements to protect customers and promote public health, safety, and welfare applied to incumbent local phone carriers, and (3) offer services substantially over its own facilities and commit to use any universal service support received to achieve coverage of the entire service area within 2 years of the date of designation.
Moreover, my bill ensures the integrity of the Schools and Libraries Program. To deter waste, fraud and abuse, my bill strengthens the FCC’s management and oversight, including imposing sanctions on program violators. It requires the Federal Communications Commission within 180 days of enactment to establish rules regarding the Schools and Libraries Fund: (1) identifying appropriate fiscal controls and accountability standards; (2) defining the role of USAC; (3) creating performance goals and measures; (4) establishing appropriate enforcement actions, including sanctions such as debarment for applicants or vendors who have been convicted of crimes or held civilly liable in connection with the program.
The Universal Service Fund is but one of many instances where the rapid change of technologies and the rise of competition have created many challenges in the telecommunications industry. I look forward to working with my colleagues to craft creative solutions to these issues that are so vital to our nation’s future.
Daniel K. InouyeSenator
If we want to ensure that our citizens have the best communications capabilities and are able to compete in the global economy, we must preserve the sufficiency, stability and viability of the Universal Service Fund. Since the enactment of the Communications Act of 1934, Congress has long supported the core belief that basic telecommunications services should be available to all Americans at reasonable rates.
Through the Telecommunications Act of 1996, we reaffirmed our commitment to the principle of universal service. We ensured that the definition of universal service would capture “an evolving level of telecommunications services.” We did not want to leave behind rural and low-income areas as technology continued to march ahead.
Additionally, Congress expanded the universal service commitment to include schools, libraries, and rural health care providers, as well as other eligible telecommunications carriers. Congress recognized that as telecommunications services reach more and more individuals, all Americans benefit.
On Tuesday, we examined the pressures on the current universal service funding mechanism, and today, we consider how best to distribute the universal service funds that are collected.
For instance, the 1996 Act expanded the Universal Service Fund to support rural health services. Yet, while this fund is capped at $400 million per year, only $25.57 million was distributed in 2005.
This program has the potential to improve the health of millions of Americans who otherwise would not have access to adequate health care services. In rural and remote states like Hawaii and Alaska, tele-health services have provided significant benefits to people on remote islands and in isolated areas who otherwise would not have access to doctors and specialists. We must take steps to improve the efficacy of this program.
Issues surrounding application of the Antideficiency Act threaten to, once again, disrupt universal service funding. We must make certain this does not happen. Congress has twice instituted an exemption to prevent disruptions. It is time we take permanent action. The programs that face the greatest jeopardy include the Schools and Libraries and Rural Health funds. We should not risk education and health programs while debating technicalities in Washington.
As we discussed on Tuesday, the current funding mechanism is under increasing pressure as new Internet technologies and bundled wireless and competitive service offerings steadily diminish the funding base. At the same time, total universal service disbursements have increased from $1.8 billion in 1997 to $6.5 billion in 2005.
The rapid increase in the size of the fund coupled with the decline in interstate revenues has prompted the FCC to institute stopgap measures to temporarily stabilize the collection mechanism. Unfortunately, neither the FCC nor Congress has made the difficult choices to ensure the future stability of the collection mechanism.
Finally, we must consider the effect of emerging competition on the Universal Service Fund. In the 1996 Act, Congress plainly sought to further the co-equal goals of preserving universal service and fostering local competition. The fulfillment of one goal should not, and need not come at the expense of the other.
Witness Panel 1
Mr. Jeff MaoCoordinator for Educational TechnologyMaine Department of Education
Ms. Shirley BloomfieldVice President, Government Affairs and Associated ServicesNational Telecommunications Cooperative Association
Mr. Carson HughesChief Executive OfficerCellular South
Mr. Tony ClarkCommissioner, North Dakota Public Service CommissionChairman, Telecommunications Committee, National Association of Regulatory Utility Commissioners (NARUC)
Mr. Ben ScottPolicy DirectorFree Press