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Key lawmaker moves to reform phone subsidy, USF

Rep. Rick Boucher (D-Va.), chairman of the Communications Subcommittee, introduced a bill Thursday that would cap the Universal Service Fund, put more money toward broadband access, and change the way regulators determine who receives the subsidies.

“The Universal Service Fund is broken," said Boucher and Rep. Lee Terry (R-Neb.), who co-sponsored the bill, in a statement. They said consumers pay more than 13 percent of long-distance bills into the annual $8 billion phone service subsidy.

"Our legislation … will control the spiraling growth of the Universal Service Fund while ensuring that sufficient universal service support is available on a technology-neutral basis to the carriers which rely on it to provide service," they said.

Take a look at our story this week on the fund, and calls by lawmakers, big telecom firms, public interest groups and the Federal Communications Commission to reform it. Also, AT&T wrote a blog post critcizing my story, for your information.

Boucher and other lawmakers have introduced USF reform bills in the past. The FCC has also tried to create rules that would allot more money from the fund to broadband service providers. Those efforts have been unsuccessful, with rural carriers and rural lawmakers resistant to changes they say could hurt their businesses and local economies.

Except for rural communications service providers, all major telecom, wireless and cable firms Thursday came out in support of Boucher and Terry's bill.

Here are highlights of the bill:

* Requires fund recipients to offer high-speed broadband within five years of the date of getting funds. The FCC would determine speeds for those networks.

* Directs the FCC to develop a new cost model for calculating high-priced support that takes into account the cost of providing voice service and high-speed broadband service. The new model will replace the FCC’s existing calculation methodology for rural and non-rural carriers.

* Limits universal service support in areas where there are service providers providing voice and broadband services to 75 percent of the area.

* Requires the FCC to adopt a competitive bidding process to determine which wireless providers get funds.

* The USF will constrain the fund size.

By Cecilia Kang  |  July 22, 2010; 4:18 PM ET
Categories:  Broadband , FCC  
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After reviewing the Boucher/Terry bill, we at EchoStar Satellite Services are encouraged by the technology-neutral approach and explicit reference to satellite broadband in this bill. Satellite broadband provides a much-needed service today to the hardest-to-reach homes and businesses in the U.S. We look forward to working with Congress and the FCC to ensure that USF reform remains technology neutral while taking into account any relevant differences in competing technologies, and that USF reform does not artificially deprive satellite broadband from the benefits of USF when providing service to rural America.

Posted by: Marc_Lumpkin_EchoStar | July 23, 2010 11:40 AM | Report abuse

Satelite is too expensive, unreliable, and very limited on monthly usage. If they could get real high speed capability, unlimited usage, better reliability, and competitive rates, it would be more attractive.

Posted by: jimbobkalina | July 25, 2010 2:02 AM | Report abuse

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