There’s a very interesting piece in Forbes about one of the other raging debates surrounding the telecommunications bill currently pending in the Senate. For once network neutrality is not the topic of focus, but rather the battle over the Universal Service Fund (USF).
According to the article, the size of the fund intended to deliver telecommunications services to rural areas has doubled since 2000 to $3.8 billion. The USF in total has ballooned to around $7 billion last year according to Thomas Hazlett (follow this link for a PDF of Hazlett’s in-depth review of USF). Part of this growth, the Forbes article claims, is from wireless companies claiming USF for the build-out of rural wireless coverage.
It seems no one in the Senate or House is seriously considering the elimination or even a restructuring of the taxes that are the basis of the fund. The lines appear to be drawn on the question of capping USF between the rural telcos and wireless companies.
Rural carriers, represented by the Independent Telephone and Telecommunications Alliance, are resisting a cap in total spending and suggest instead that costs can be controlled by changing wireless carrier subsidies to reflect their real, lower costs to build wireless networks. They also want wireless carriers to be subject to the same requirements they have in building a network, such as providing backup power to continue service in blackouts. They figure such changes will reduce the number of cell companies lining up for USF dollars.
Wireless carriers, on the other hand, aren’t opposed to an overall cap and argue the subsidy rates should be based on their own cheaper networks–thus reducing payments per line for the landline phone companies too. “We’re open to carriers receiving less support,” says Paul Garnett of the Wireless Association. “The problem with the fund is that it leans toward wireline networks. The more they spend, the more they get.”
I don’t support the notion of restructuring the USF to create disincentives for some class of telecommunications service provider to apply for the fees if they are delivering services in rural areas covered by the fund. This would only serve to retard the introduction of faster wireless services and technologies such as WiMax in rural areas. These technologies have the potential to deliver connectivity at much lower costs than fixed-line infrastructure, and the rural telcos stance on this looks like an effort to protect monopoly markets. Also, dare I say that cable companies delivering broadband to rural communities should also be eligible to receive USF monies?
The article doesn’t go into any detail about plans to apply USF taxes to all manner of Voice over IP services which have the technical ability to terminate calls to telephones. This, to me, still seems like an anachronism and the ability to track this will present a real challenge. If we must have a USF, in and of itself a debatable question, it should be applied to the delivery of infrastructure which enables telecommunications services, including wireless and broadband.
