what does universal service fund fees apply to

American system of telecommunications subsidies and fees

The Universal Service Fund (USF) is a arrangement of telecommunications subsidies and fees managed by the United states of america Federal Communications Committee (FCC) intended to promote universal admission to telecommunications services in the United states. The FCC established the fund in 1997 in compliance with the Telecommunications Deed of 1996. The FCC is a government agency that implements and enforces telecommunications regulations across the U.S. and its territories.^[1] The Universal Service Fund's upkeep ranges from $5–eight billion per year depending on the needs of the telecommunication providers. These needs include the cost to maintain the hardware needed for their services and the services themselves. The total 2019 proposed budget for the USF was $eight.4 billion.^[2] The upkeep is revised quarterly allowing the service providers to accurately gauge their costs. As of 2019, roughly sixty% of the USF budget was put towards "high-cost" areas, xix% went to libraries and schools, 13% was for depression income areas, and 8% was for rural wellness care.^[2] In 2019 the rate for the USF upkeep was 24.iv%^[3] of a telecom visitor'south interstate and international finish-user revenues.^[iv]

While separate itemization is not required by the FCC, it is common for USF fees to be listed separately from other charges on a consumer's neb.^{[5] [6]} Universal Service charges should not exist dislocated with what are sometimes referred to in telephone company bills as "Federal Subscriber Line" charges, which are access fees charged by telecommunications companies, not the local or federal government.^{[5] [6]}

Some take raised concerns about the future funding of the USF; despite falling taxable revenues, the size of the fund has increased from $one.two billion in collections at 5.7% in 4Q 2000,^[7] to $2.ii billion in 4Q 2014 at sixteen.one%.^[8] Some believe that reclassifying broadband Cyberspace access services nether Title Two of the 1996 Telecommunications Act would be followed by requiring ISPs to pay into the USF as a new source of revenue for the fund.^[9] The FCC has made clear that the modify does requite it the power to do and so, but will not crave contributions on broadband Net access revenues at this fourth dimension,^[10] as the FCC volition forbear from the contribution requirements in Department 254(d) of the Communications Act.^[11]

History [edit]

Calls for universal service [edit]

By 1913, AT&T had favored status from U.Southward. government, allowing it to operate in a noncompetitive economic environment in exchange for subjection to price and quality service regulation. The regime asserted that a monopolistic telephone industry would best serve the goal of creating a "universal" network with compatible technology state-wide for phone consumers. Regulators emphasized limits on profits, enforcing "reasonable" prices for service, setting levels of depreciation and investment for new technology and equipment, dependability and "universality" of service. "Universal" was originally used past AT&T to mean, "interconnection to other networks, not service to all customers". After years of regulation, the term came to include infrastructural development of telephony and service to everyone at a reasonable price.^[12]

Willis Graham Act of 1921 [edit]

The Willis Graham Human activity of 1921 was called into activity in gild to resolve pressing bug in the argue about the claim of interconnectivity of telecommunication.^[13] The act marks the first piece of legislation in the history of telecommunication to tackle the increasingly difficult challenges of the telecommunication industry in the 20th century.^[14] Earlier the Graham act was passed the ordinarily expressed opinion was, such equally by the Senate Commerce Committee, that telephone service fit the definition of a natural monopoly.

The central applied problem, according to the committee, with the Willis Graham Act was competing telecommunication services serving ane individual market.^[14] The act was in favor of a monopoly, which aimed to exempt competing telephone companies from the antitrust laws and allow them to unify the service by merging competing telecommunication service providers.^[13] The primary principle behind the act was that there should exist only ane organisation in each customs through which all users communicate. The focus was exclusively on local service rather than long-distance service, as no independent long-distance lines were able to compete with AT&T.^[fourteen]

Communications Act of 1934 [edit]

The Communications Act of 1934 includes in its preamble a reference to universal service. It calls for "rapid, efficient, Nation-wide, and globe-wide wire and radio advice service with adequate facilities at reasonable charges" to "all the people of the United States." Communications Act of 1934 – Title I, Sec. 1 [47 U.South.C. 151] The Communications Act of 1934 first established the concept of making affordable bones telephone service bachelor to everyone everywhere within a nation, state, or other governmental jurisdiction.

To comply with the act, AT&T began increasing the toll of long-distance service to pay for universal service. The human action also established the FCC to oversee all non-governmental broadcasting, interstate communications, too as international communication which originate or stop in the United states.

Before the Telecommunications Deed of 1996, the Universal Service Fund (USF) operated every bit a mechanism past which interstate long-altitude carriers were assessed to subsidize telephone service to low-income households and loftier-price areas in guild to ensure that all the people in the United States have access to rapid, efficient, nationwide communications service with sufficient facilities at realistic charges.^[15]

Ozark Plan [edit]

In the 1960s the telecommunication monopolies were shocked by new evolving technologies and competitions: new long-distance carriers and microwave networks were authorized. The predominant method used for financing subsidies for the underprivileged was to reallocate profit margins made by long-distance telecommunications to funds for local telephone connection. This procedure began in the mid 1960 and was institutionalized through the Ozark plan of 1970 into activeness. At the time of the institutionalization telephone penetration ranged between 85–95%.^[xiii]

Era of deregulation [edit]

There was a push for deregulating the telecommunication industry in the 1980s. Under President Ronald Reagan, the FCC shifted its focus from "social disinterestedness to an economic efficiency objective," which it claimed was a primary purpose of the Communications Human action of 1934.^[12] After AT&T was split up in 1984, universal service was still "supported by a system of to a higher place-cost access charges paid to local exchange companies." This system was administered by the National Commutation Carrier Clan. Increased contest and universal service were after legislatively addressed and codified with the Telecommunications Deed of 1996.^[16]

Telecommunications Human action of 1996 [edit]

The Universal Service Fund was first codified in the Telecommunications Act of 1996, the kickoff major rewrite of the Communications Act of 1934. The human activity addresses new challenges and opportunities of the digital information age, with the goal of promoting an economic environs conducive for the growth of new information technology. It as well further developed the significant and implementation of universal service. The human activity calls for the creation of a joint federal-state lath to make recommendations to the FCC on defining federal universal services and set fourth dimension tables. The act also ready out immediate priorities of universal service. These include quality and reasonably priced services, admission to advanced telecommunication services, access for rural, low-income and loftier-cost regions, equitable and nondiscriminatory service, specific and predictable price structure, admission of advanced telecommunication services for schools and health care and libraries (Sec. 254(b)(one)-(vii)). The deed provided ability in the constantly changing telecommunication environment to periodically revisit and suit universal service, while setting cadre principles (Sec. 254(c)). The 1996 act also "mandated the creation of the universal service fund (USF) into which all telecommunications providers are required to contribute a per centum of their interstate and international end-user telecommunications revenues".^[16]

The major goals of Universal Service as mandated by the 1996 Act are as follows:

• Promote the availability of quality services at just, reasonable and affordable rates for all consumers
• Increase nationwide access to advanced telecommunications services
• Accelerate the availability of such services to all consumers, including those in depression income, rural, insular, and loftier cost areas, at rates that are reasonably comparable to those charged in urban areas
• Increase access to telecommunications and avant-garde services in schools, libraries and rural health care facilities
• Provide equitable and non-discriminatory contributions from all providers of telecommunications services to the fund supporting universal service programs

The 1996 Deed states that all providers of telecommunication services should contribute to federal universal service in an equitable and nondiscriminatory style; in that location should exist specific, predictable, and sufficient Federal and Country mechanisms to preserve and advance universal service; all schools, classrooms, wellness care providers, and libraries should, more often than not, have access to advanced telecommunication services; and finally, that the Federal-Land Joint Lath and the FCC should determine those other principles that, consequent with the 1996 Act, are necessary to protect the public involvement.^[17]

Expansion of the fund into broadband [edit]

The concept of universal service may include other telecommunications-information services, mainly Internet admission. Members of Congress have spoken out in favor of increased contribution to the USF from alternate sources.

Many of the services covered by the USF are related to traditional phone technology. There is a rising business organisation that more than recent developments in telecommunications are only every bit important to the consumer equally these older technologies. For example, consumers' subscriptions to traditional telephone services take fallen while their subscription rate to wireless services have been ascent consistently. Nonetheless many cellular companies are likely to receive less funding under the new rules, which may reduce consumers' access to wireless services in areas of the country that take depression populations. Similarly, a question currently debated is whether access to broadband internet should be supported by the USF and if so, how best to fulfill such a large mandate without damaging the stability of the fund. The Telecommunications Act of 1996 states that "advanced services" should exist accessible to all Americans [Section 254(b)(3)]. One question is whether the providers of internet access should contribute to the fund like other companies that provide admission to telecommunications, if such providers also desire to draw from the fund. Supporters of including cyberspace access in the Universal Service Fund include former Congressman Rick Boucher (D-VA)^[18]

Adding additional services to the fund has corporate support from major telecommunication companies, including Verizon and AT&T. In March 2009, senior executives from Verizon Communications met with the Business firm Subcommittee on Communications, Technology, and the Internet, providing recommendations for how best to continue bringing broadband and mobile communication admission to rural and unserved areas. Citing reform to the Universal Service Fund as a means "to better serve rural America," Verizon recommended that a limit be assault the size of USF's high-price fund, competitive behest wars be employed to decide which company aggrandize service to unserved areas, structure a "wire-center approach" model to replace statewide cost averaging, restructure how contributions to the USF are determined, and impose a borderline on the FCC for completion of their reform of inter-carrier compensation.^[nineteen]

In October 2011 the FCC formally proposed a "Connect America Fund" to address these and other concerns.^[20] Reform finally arrived on October 27, 2011, when the FCC approved a six-twelvemonth transfer procedure that would transition money from the Universal Service Fund to a new $4.v billion a twelvemonth Connect America Fund that will support the expansion of broadband services to areas that don't accept broadband access yet.^{[21] [22]}

In June, 2015, the FCC announced steps to modernize and reform Lifeline for broadband.^[23] Public comments were sought, with a deadline of August 31, 2015. The collection of public comments are available here.^[4] The NDIA played a critical role in providing comments and encouraging others to participate in the procedure.

On Apr 1, 2016, the Federal Communications Committee voted to expand the Lifeline telephone subsidy for low-income Americans to include Internet access.

On Apr 27, 2016, the full text of the ruling was released.

The key points of the conclusion include:

• Establishes a National Eligibility Verifier to verify eligible Lifeline subscribers. Eligibility volition be based on participation in SNAP, Medicaid, SSI, Federal Public Housing Assistance, the Veterans *Pension benefit program, current Tribal qualifying programs, or those who tin can demonstrate income of less than 135 percent of the federal poverty guidelines.
• Defines minimum service standards for broadband and mobile vocalism services.
• Defines a v and half year transition plan to migrate from voice-focus to broadband-service-focus.
• Creates a Lifeline Broadband Subscriber designation process to encourage new service providers.
• Requires that Lifeline providers brand available hotspot-enabled devices and Wi-Fi enabled devices when providing such devices for utilize with the Lifeline-supported service.
• Directs the Consumer and Governmental Diplomacy Agency (CGB) to develop recommendations to address the not-price barriers to digital inclusion. In addition, CGB's program should address best practices for increasing the digital skills of those already online and how those best practices tin can be spread throughout the digital inclusion community.

Components [edit]

USF's money is funded then spent amongst the fund's iv programs. The Connect America Fund provides funding for phone companies that provide services to high-cost areas. The Low-Income Back up "assists depression-income customers by helping to pay for monthly telephone charges and then that telephone service is more affordable."^[24] The E-Charge per unit programme "provides telecommunication services (east.m., local and long-altitude calling, both stock-still and mobile, high-speed data transmission lines), Net access, and internal connections to eligible schools and libraries."^[24] Lastly, the Rural Wellness Intendance Support programme "provides funding to eligible health care providers (HCPs) for telecommunications and broadband services necessary for the provision of health care."^[24] As far as State funds become, they accept experienced inhibited growth. "The growth of State USF funds was tempered past reductions in Lifeline support and IAS funding, both driven by changes in federal regulation."^[25] At that place currently are xl-five states that provide some sort of State universal service support in improver to the existing federal funds. There are six states, however, that do not have whatever state funds. These include Alabama, Florida, Massachusetts, New Bailiwick of jersey, Tennessee, and Virginia.

The Universal Service Fund every bit made up of the following four elective programs:

Connect America Fund [edit]

The largest and most complex of the 4 programs, the loftier toll program subsidizes telecommunication services in rural and remote areas. The programme paid out $4.2 billion in subsidies to telecommunication companies in 2013,^[26] with a goal of making telecommunications affordable to rural and remote areas. The plan has been criticized as wasteful, granting large sums of money to telecommunications companies while having little effect on admission.^[27]

As role of the National Broadband Programme proposed in March 2010, the FCC proposed reorganizing the Loftier Cost program into a new "Connect America Fund", which will include both voice and 4 Mbit/s internet connectivity.^[28] On October 27, 2011, the FCC canonical a six-year transfer process that would transition the money from the Universal Service Fund Loftier-Toll Program into the new $iv.5 billion a year Connect America Fund, effectively putting an stop to the USF Loftier-Cost Fund by 2018.^{[21] [22] [29]}

In 2012, during "Phase I" of the Connect America Fund, $115 million in subsidies were given out to build out broadband in 37 states, with $71.9 million going to Frontier Communications and $35 million to Century Link, with AT&T and Verizon declining to participate.^[thirty] In 2013, also during "Phase I", CenturyLink accepted another $54 million,^[31] and AT&T accepted $100 one thousand thousand.^[32]

In March 2014, the FCC approved "Phase II" of the transition to the Connect America Fund, adding $1.eight billion a year in funding,^[33] and clarifying the specifics of the funding process. Under the framework the FCC approved, incumbent carriers accept priority access to subsidies, but if the funds are declined, the funds are allocated by a competitive bidding process. The FCC also proposed upping the minimum speed requirement from 4Mbit/southward to 10Mbit/south.^[34] In May 2014, the tenth circuit court of appeals upheld the shift in funds in the face up of a legal claiming by telephone companies.^{[35] [36]}

The Connect America Fund also includes the Mobility Fund, which is given to wireless carriers who expand service to underserved areas. "Phase I" of the Mobility Fund offered $300 meg for a September 2012 round of auctions, and "Phase II" of the Mobility Fund plans to requite out $500 million in almanac support.^[37]

Low income (Lifeline) [edit]

Since 1985, the Lifeline program has helped low-income people pay for phone service; offset landlines, and then cellphones, and as of 2016 it besides offers the option of Net connectivity.^[38] Information technology provides a subsidy of up to $10.00 a month for Americans beneath 135% of the poverty line for this service.^{[ citation needed ]}

As of 2012, 17 1000000 households received a $9.25 subsidized discount through the program. This was down to 12 million households by 2015.^{[39] [38]} In 2013, the Lifeline program paid out $1.8 billion in subsidies to phone companies; reduced to $1.5 billion by 2015.^{[26] [38]} As the original program was set up to cover country lines, there was criticism of meaning waste in the programme.^[40] Residents of Native American Indian and Alaska Native tribal communities may qualify for enhanced Lifeline assistance (upwardly to an additional $25.00) and expanded Link-Upwards support (up to an boosted $lxx.00). States with their ain programs may have their own eligibility guidelines.

On January 31, 2012, the Federal Communications Commission canonical an order changing the Lifeline Program to reduce fraud and abuse.^{[41] [42]} In April 2013 a hearing was held before the Subcommittee on Communications and Engineering of the Commission on Free energy and Commerce, U.Southward. Business firm of Representatives, to explore issues relating to whether the program should be eliminated or placed nether a budget cap, and if non, whether a freeze should be put in place until the reform measures currently underway are completed.^[43]

The Lifeline program is express to i discount per household. A "household" includes anyone living at the aforementioned accost "who share income(s) and household expenses".^[44]

Link-Up America assisted consumers with the installation costs of phone service. Link-Up program paid upwards to 50% or $30 of the telephone service installation fees,^[45] and provides up to $200 of ane yr, interest-free loans for any boosted installation costs. On January 31, 2012, among other changes to the Lifeline Plan, the FCC announced that they would be ending the Link-Upwards America Program, except on Indian reservations.^[45]

In 2016, Lifeline services were expanded to offer a broadband option.^[38]

This is the proposed cost and data program for the Lifeline program reform.

On March 31, 2016 the Federal Communications Commission set up a programme to reform the Lifeline program. The reform attempted to make the Lifeline program more modern and comprehensive to present 24-hour interval gild. The 2016 Lifeline Modernization Lodge included that broadband service would be provided to low income households as an add-on to the preexisting Lifeline plan benefits. The Commission also set service standards in order to ensure the highest value for the Universal Service Fund. The FCC projected that the annual corporeality of mobile phonation minutes bachelor for each private household per calendar month will increment, while the toll of voice back up volition simultaneously decrease and will somewhen become a completely unsubsidized service.^[46] The FCC also appointed a National Eligibility Verifier whose purpose would exist to decide the eligibility of the independent subscribers to the programme.^[46]

In February 2017, FCC Commissioner Ajit Pai suspended the expansion of Lifeline. While current broadband providers are technically authorized to provide subsidized broadband, the FCC itself could not bespeak to a single company that actively provides broadband.^[47]

Companies [edit]

• Assurance Wireless
• Safelink Wireless
• Life Wireless

Rural health care [edit]

The rural health intendance plan provides subsidies to health care providers for telehealth and telemedicine services, typically by a combination of video-conferencing infrastructure and high speed Internet access, to enable doctors and patients in rural hospitals to access specialists in afar cities at affordable rates. The Rural Wellness Intendance Support Machinery allows rural wellness care providers to pay rates for telecommunications services like to those of their urban counterparts, making telehealth services affordable. Over $417 one thousand thousand has been allocated for the construction of 62 statewide or regional broadband telehealth networks in 42 states and three U.Southward. territories under the Rural Health Care Airplane pilot Program.^[48] In 2013, the rural wellness care program paid out $159 million.^[26]

There are three components of the Rural Health Care Programme: Telecommunications Program, HCF Program, Pilot Program.^[49]

"The Telecommunications Plan (formerly known as the Primary Programme) provides discounts for telecommunication services for eligible health care providers (HCPs)."^[49]

"The Healthcare Connect Fund (HCF) Program is the newest component of the Rural Health Care Program. The HCF Programme will provide a 65 percent discount on eligible expenses related to broadband connectivity to both individual rural health intendance providers (HCPs) and consortia, which tin include non-rural HCPs (if the consortium has a majority of rural sites)."^[49]

"The Airplane pilot Program provides funding for up to 85 percent of eligible costs of the construction or implementation of statewide and/or regional broadband networks. There are 50 agile projects involving hundreds of health intendance providers (HCPs)."^[49]

Schools and Libraries Program (E-Rate) [edit]

The E-Rate program provides subsidies for Internet access and general telecommunications services to schools and libraries. The subsidies typically pay 20% to xc% of costs based on need,^[l] with rural and depression-income schools receiving the greatest subsidy. In 2013, the East-Rate program paid out $2.2 billion.^[26] USAC has more than $37.3 billion in E-Rate funding commitments and $26.8 billion in Due east-Rate funding disbursements issued to schools and libraries nationwide through the E-Rate from 1998 to 2013.^[26] Every year since 2010, the Wireline Competition Bureau announces the funding cap for the E-Rate program to attach to the current needs of schools and libraries telecommunications.^[51]

"The Eligible Services Listing (ESL) for each funding year provides guidance on the eligibility of products and services nether the Schools and Libraries Program." In 2015, USAC outlined two specific categories for grouping the ESL, and one category for miscellaneous services.

• "Category 1
  • Data Transmission Services and Internet Access, and Voice Services
• Category 2
  • Internal Connections, Managed Internal Broadband Services, and Basic Maintenance of Internal Connections
• Miscellaneous"^[52]

Starting in the 2011 funding year, the different types of schools eligible to receive benefits now include:

• "School on Tribal lands
• Schools that serve children with physical, cognitive, and behavioral disabilities
• Schools that serve children with medical needs
• Juvenile justice schools, where eligible
• Schools with 35 percent or more than students eligible for the National School Lunch Programme (NSLP)."^[53]

Administration [edit]

Universal Service Authoritative Company [edit]

The logo of the Universal Service Authoritative Company

Post-obit the Telecommunications Act of 1996 and the subsequent creation of the Universal Service Fund, the FCC designated the contained American nonprofit corporation named the "Universal Service Authoritative Company" (Universal Service Administrative Co) to manage the contribution of acquirement to and distribution of funding from the Universal Service Fund. The Schools and Libraries Corporation and the Rural Wellness Intendance Corporation were merged into the USAC on Jan one, 1999.^[54] The USAC is a subsidiary of the National Exchange Carrier Clan, and is governed by a 19-person board of directors representing various stakeholder interests and carries out rules adopted by the FCC.^[55] The visitor has 356 employees.^[26]

USAC reports quarterly revenue projections detailing what contributions are expected and detailing what actions are taken in the expansion and bolstering of universal service. The USAC receives contributions from all companies providing interstate and international telephone and Voice over Internet Protocol (VoIP) service. Contributors send payments based on projected quarterly earnings. The FCC does not require companies to charge their customers for these contributions – this funding decision is left up to the private companies.^[56] This revenue is deposited into a central fund, from which the USAC distributes money to the four central services at the cadre of the USF: Loftier Cost, Low Income, Schools and Libraries, and Rural Wellness Intendance.

Providers of telecommunication services are legally required to contribute to the Universal Service Fund. "The USAC collects revenue information from USF contributors on the FCC Grade 499-A (Annual Telecommunications Reporting Worksheet) and FCC Form 499-Q (Quarterly Telecommunications Reporting Worksheet)."^[57] The USAC is responsible for estimating how much coin is needed for the USF programme. The USAC provides a "demand filing," to the Federal Communications Committee (FCC) each quarter in its FCC Filings.^[57]

In the past, only long-distance companies made contributions to support the federal Universal Service Fund. The Telecommunications Act of 1996 expanded the types of companies contributing to the Universal Service Fund. Currently, all telecommunications companies that provide service between states, including long-distance companies, local telephone companies, wireless phone companies, paging companies, and payphone providers, are required to contribute to the federal Universal Service Fund. Carriers providing international services also must contribute to the Universal Service Fund. In June 2006, the FCC voted to require providers of VoIP services to contribute to the Universal Service Fund the same way traditional telephone services had been contributing.^[58]

While the USAC cannot act without Congressional blessing, it can make recommendations. USAC recommendations have resulted in expanding telecommunications resources, specially broadband Cyberspace and mobile access to schools and libraries, and recognizing VoIP equally a form of interstate and international advice, which requires those companies providing VoIP services to contribute to the USF.^[59]

Federal Communications Committee [edit]

The FCC oversees the USAC'south administration of the Universal Service Fund, and institutes reforms every bit information technology sees fit. Although the fund is limited by the telescopic of US law, (mainly the 1996 Telecommunications Act) the FCC has played a function in making several changes to the fund, including shifting funds from the high cost program towards broadband expansion. Under the FCC, there is an Enforcement Bureau that investigates and pursues the violators of the Act of 1996 and any Commissions rules.^[60]

Funding [edit]

All providers of telecommunication service support the Universal Service Fund. These providers contribute to the fund "based on their interstate and international end-user telecommunication revenues." This percentage of contribution is "adapted every quarter based on projected demand for Universal Service funding." As of the end of 2019, telecommunications companies were required to contribute 25%^[61] of their revenue to the fund. Currently, the FCC has proposed to lower this to 21.2%^[62] for the first quarter of 2020. However, non all companies encompass the charge themselves. Instead they neb their customers to brand up the amount. While companies are non required to charge the customer, they must come up with the funds and many service providers find this to be their solution. The contributions are collected past the Universal Service Administrative Company and disbursed towards four programs that the federal USF supports, as directed by the FCC.^[63]

Country universal service funds [edit]

Many US States take their ain universal service funds, with upkeep and assistants independent of the much larger federal fund. Examples include in California,^[64] New York,^[65] Wisconsin,^[66] and Texas.^[67]

Controversy [edit]

Wide disagreement over the nature and administration of the USF exists in telecommunications policy circles.^[68] Such disagreements fragment traditional partisan alliances in the United States Congress. Fears continue to abound about what such subsidies mean, and how information technology will bear on telecommunications in the long run.^[69] Critics of the USF programs argue that there are many macro-level issues which are caused past the ¨systematic design problems that have meaning adverse bear upon on consumers and the carriers providing service.¨^[lxx] Service providers and consumers alike are disproportionately granted subsidies or billed considering of the lack of organization among the four programs. Discussions proceed over whether the USF should exist used to provide services such as broadband internet admission.^[71] Plans to subsidize internet service providers has led to backlash from traditional telecommunications carriers. Traditional carriers debate that "the relevant provisions of the 1996 Human activity do non give the FCC carte blanche to play regulatory Robin Hood with their universal service contributions."^[72] Considering Internet access provider'south and traditional telecommunication carriers often provide similar services, the USF may "violate[] the pro-competitive precepts of the 1996 Deed."^[72]

Concerns most 2011 changes [edit]

In 2011, the FCC made textile changes in the USF program, largely benefiting the largest traditional telephone companies in the country, which now take double the access to funding than they had before those changes. Smaller traditional and wireless carriers were given reduced admission to support going forward, which means that unless the FCC makes future changes, the state will depend in large measure on ii carriers to carry out broadband deployment and ongoing operations in rural areas in the hereafter, and in very rural areas of the country, service may diminish.

Waste and fraud [edit]

The event of waste matter and fraud, as with many government programs, has been addressed every bit well. Gilroy stated, "The ability to ensure that only eligible services are funded, that funding is disbursed at the proper level of discount, that alleged services have been received, and the integrity of the competitive bidding process is upheld accept been questioned". Improved auditing of particularly the E-rate plan has been addressed.^[73]

There accept been multiple cases of waste and fraud throughout disbursement of subsidies from the Universal Service Fund. At that place is some concern on the lag time betwixt application, approval, and actual receipt of funds.^[74] In terms of fraud, some school officials accept been bribed by contractors working with corporations so that they use subsidies to purchase computer equipment from said corporation.^[74] In add-on, some beneficiaries inaccurately report costs to inflate their subsidies amount. In terms of waste, some equipment subsidized past the USF has been left unused for several years.^[74]

An investigation into potential fraud in 2004 revealed that contractors working with Hewlett-Packard bribed school officials. Hewlett-Packard wanted the schools to use subsidies provided past the fund to purchase reckoner equipment from Hewlett-Packard. The 2nd case of fraud was when "Sandwich Isles Advice purposely inflated and inaccurately reported money to receive inflated subsidies."^[75]

Critics continue to raise concerns in regards to the wastefulness of the fund. For example, "$v million worth of equipment purchased past Chicago public schools with Due east-rate funds was left unused in a warehouse for years." Lastly, a problem that has plagued the programme is the long lag fourth dimension between the overall application of the programs and the approval.^[74]

The FCC has responded to issues of waste product and fraud in the USF. In an try to combat them, the FCC conducted an investigation into the Lifeline programme which revealed "serious weaknesses in federal safeguards, allowing providers to indiscriminately override checks that are supposed to forbid wasteful and fraudulent activities."^[76] Equally a consequence, Ajit Pai, current FCC commissioner withdrew some Lifeline subsidies "to come with a better fashion to vet them for potential waste, fraud and abuse."^[76] Pai argued that it is necessary to halt some funds towards programs riddled with fraud considering "putting the designations on agree gives the FCC the gamble to make sure the procedure is legally defensible and to avoid potentially stranding customers if the courts ultimately deem the process unlawful".^[76]

In early on 2018, the FCC Chairman Ajit Pai proposed a plan to scale back the USF'due south Lifeline program.^[77] Pai claimed the proposed cutbacks would encourage business investment in low income communities, reducing the need for the government spending on the plan.^[78] Pai as well referenced the fraud that surrounds the usage of the programme equally a reason to scale back Lifeline. If passed and put into effect, this cutback would end Lifeline access for eight million people, which accounts for about 70% of the program's recipients. In the American territory of Puerto Rico, this would translate to about 17% of its population that would lose admission.^[79]

Nine U.S. Senators issued a joint alphabetic character opposing the cutbacks, contending that, "The Lifeline Program is essential for millions of Americans who rely on subsidized internet access to detect jobs, schedule doctor's appointments, complete their schoolhouse assignments, interface with the government, and remain connected in a digital economy."^[80] The FCC must at present decide betwixt the high cost and the USF'due south goal for "universal access" with this programme.

This cut to the Lifeline program prevents other smaller companies known as resellers from "ownership network capacity from big telecom providers and then selling it back to depression-income consumers at cheaper rates."^[79] This is problematic for the majority of Lifeline customers who rely on those cheaper rates.

The current administration looks to be opposed to this program as they feels it is wasteful of taxpayer coin. Since 2017, there has been a 21% subtract in the number of people being assisted past this program. In 2017 just under 11 million people were being assisted whereas now in 2019, slightly nether nine 1000000 people are receiving assistance. It is estimated 2.3 million people are no longer enrolled in this programme.^[81]

The USF has some issues in dealing with bereft controls over determining who qualifies for funding, and limited auditing practices that are supposed to ensure that telecommunication companies are not overpaying or underpaying their dues to the fund.^[82]

The USF is able to reward those living in rural or impoverished areas who are capable of paying the entire cost of personal telecommunication services. Critics argue that inconsistent and asymmetrical audits allow for wealthy consumers to avoid triggering some USF financial burdens.^[83] Wealthy landowners in rural estates decide to utilize USF subsidies and pay a fraction of what they tin realistically beget.^[84]

Critics note that reimbursing carriers on a "'cost-plus' basis" creates "incentives to increase rather than decreas[e] costs" Past reimbursing "carriers for the total toll of infrastructure development plus 11.25 percent of those costs in profit," the fund may expose itself to exploitation.^[85]

Concerns about 2018 changes [edit]

In May 2018, the FCC moved $8 billion from a private bank to the US Treasury. This anticipated motility caused an uproar from FCC Democratic commissioners who were concerned well-nigh the coin being allocated to large corporations instead of the citizens. FCC commissioner, Jessica Rosenworcel stated that this motion "sacrificed $l meg in annual involvement that could have been used to back up rural broadband, telemedicine & internet in schools."^[86] Although lawmakers and commissioners claimed that this movement was unexpected, at that place was a letter previously written to the General Accountability Office (GAO) in January 2018 asking for a review on the program to review the funds. The GAO claimed that the USF funds are not regulated as intensively as other government funds, then this movement was an effort to "ameliorate management and oversight of the funds."^[87]

Subsequently the 2018 USF changes, VoIP service providers are at present required to provide funds for the USF. For example, Vonage must charge an boosted 10.10% fee.^[88] However, they are exempt from the cost of using the Internet for information ship whereas DSL internet providers and mod cable services must burden the cost. This expands cost distortion to long-distance telephone providers and it raises the cost of telecommunications service for more consumers.^[70]

On May 21, the FCC issued an order that prohibited USF programs from buying equipment from Chinese telecommunication companies Huawei and ZTE. These companies are considered a take a chance to national security past American intelligence agencies. National Economic Council Director Larry Kudlow commented that the Trump Assistants are ¨aware of security bug, sanctions issues, engineering science theft issues, et cetera.¨^[89]

Declining revenues [edit]

The speedily irresolute interstate and international telecommunication markets can speedily and unpredictably bring well-nigh changes in USF funding levels. Dorothy Attwood of the FCC Wireline Competition Bureau stated, "One striking development that nosotros've witnessed in the interstate marketplace is the steady reject of interstate revenues. Although traditional long-distance revenues grew consistently between 1984 and 1997, they're now in a period of steady decline". She pointed out that competition in the interstate long-distance market, wireless exchange, and bundling of service packages that mistiness traditional service categories are all reducing revenues that serve to finance the USF.^[ninety] Service providers simply transferred the price to customers in the form of a long-altitude surcharge to make upwards for reduced revenue. While the expenditures of the USF have increased since its inception, in part due to expansion of support paid to competitive providers, the revenues on which contributions are made – interstate and international telecommunications revenues – accept get increasingly more hard for contributors to identify as a issue of evolution of services offered. Overall revenues reported by telecommunications companies have steadily increased, if information service revenues are included. Notwithstanding, the revenues for these services are no longer subject to contribution.

Proposed reform [edit]

Expanding revenue sources [edit]

Contend over the Universal Service Fund has consistently involved the scope of the funding, which technology types and companies should fund the programme, which groups should exist eligible for benefits, and the need to clean upwards waste product and fraud in the program. Proposals accept been made to increment the number of sources from which universal service fund is collected. This could include expanding contributions to include intrastate phone services (calls within single states), vox over IP (figurer-to-computer calls), and information services such as broadband, and increasing contribution requirements from wireless advice providers.

Failed legislation [edit]

A typhoon proposal of the Telecommunications Act of 2005 was the subject of hearings in Congress. The proposal outlined a significant restructuring of the Telecommunication Act of 1996, ultimately the Business firm of Representatives passed a bill, the Communications Opportunity, Promotion, and Enhancement Act of 2006 (COPE – H.R.5252.RS, S.2686).^[91] The beak was sent from the Business firm to the Senate, where subsequent readings left it awaiting a legislative action. Under the proposed restructuring of the Telecommunication Act of 1996, greater emphasis on the broad availability of broadband and mobile access would be considered. Additionally, consideration of revenue contribution to the Universal Service Fund would exist radically revised, given that the cosmos of obligatory broadband and mobile communication access would require a wide range of broadband, mobile, and Voice over Internet Protocol (VoIP) service providers to contribute a portion of their acquirement to the fund. Lastly, the Act urged an FCC consideration of the universal service structure. The nib was not passed.

In January 2007, Senator Ted Stevens (R-AK) sponsored a neb (the Universal Service for Americans Act) that would increase universal service revenue enhancement base of operations to include broadband ISPs and VoIP providers, to fund broadband deployment in rural and depression-income regions of the country. This bill was referred to committee, just as no further activeness was taken on information technology by the 110th Congress, the bill never became constabulary.^[92] Since then the but congressional activity has been H.R. 176, introduced by Congressman Bob Latta (R-OH) on February 13, 2009, which states that, "in order to continue aggressive growth in our Nation'south telecommunications and engineering science industries, the United States Government should 'Go Out of the Style and Stay Out of the Style'." The bill died in committee.^[93]

On July 22, 2010, the Universal Service Reform Deed of 2010 was introduced by Representatives Boucher (D-Va) and Terry (R-NE). The measure is intended to improve and modernize the USF by reining in the size of the fund and promoting broadband deployment.^[94]

Supporting natural monopolies [edit]

The condition quo but benefits powerful telecommunications companies. In the interest of reducing waste material, limited back up to a monopoly universal service provider for each territory has been considered. Wireless applied science is increasingly favored by consumers, and can cover a single territory often for less than landline technology. All the same, wireless has traditionally been a competitive manufacture, which has resulted in a variety of innovative services for consumers, but means that supporting wireless companies requires a complex understanding of how to allocate funding on a shared basis, in order to avoid injury to the positive forces of competition.^{[ commendation needed ]}

Expanding rural broadband [edit]

In March 2016, the FCC unanimously voted to provide $xx billion over the side by side 10 years in "support for minor carriers." The previous FCC chairman Tom Wheeler under the Obama Administration implemented this reform. The FCC will be offering the fund $xx billion over the next 10 years to support service in "high cost areas." This reform is a modernization of the program back up of broadband in "high cost areas." It will target communities that nigh need back up. Reformation of the Lifeline program included minimum service requirement standards implemented to ensure that consumers benefited the virtually from the program. Pai and the proponents of the budget cuts claim that the Lifeline program is existence driveling past resellers claiming that some recipients listed in the databases are deceased or practice not exist.^[95] Pai's promise is that this budget cut will stimulate the free market and allow existing broadband networks to expand their infrastructure into the rural areas. These small carriers are also known every bit "rate-of-return" carriers; these carriers have fabricated significant progress in contempo years just many still practise non have access to "terrestrial fixed broadband." The reform is made upwardly of 3 principal elements: "Modernizes Existing Universal Service Plan for Charge per unit-of-Render Carriers", "Create Ii Paths to a 'Connect America Fund' for Rate-of Return Carriers" and "Increment Fiscal Responsibleness in the Universal Service Fund."^[96]

In 2017, new FCC chairman under the Trump Administration, Ajit Varadaraj Pai, plans to keep rural areas a priority. He wants to bridge "the digital dissever between rural and urban areas" by working on "expanding broadband options". Pai believes that there is waste material occurring between the private and public sectors as private capital is already being given to areas in order to build out networks. However, some of these areas are still existence subsidized. Pai intends to make sure that broadband accessibility is included in an infrastructure bill to come.^[97] This decision from Pai is reducing the impact of the Lifeline program, some even speculating that he may eventually dismantle the entire program.^[98]

Out of the iv USF programs, the Lifeline program is currently the but ane without a strict budget cap. Lifeline can become over its electric current budget as long as the FCC provides a reason as to why they demand to spend more than money. This allows the FCC to subsidize communication services to people with low income. As stated above, this will most likely change as the FCC is reviewing Pai's proposal on November 16, 2017 to prepare a upkeep cap on the Lifeline program.^[99]

See also [edit]

• E-Rate
• National broadband plans from around the earth
• Rural electrification
• National Exchange Carrier Association

References [edit]

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External links [edit]

• FCC website
• Universal Admission (Free Press)
• Universal Service Administrative Company
  • About the USAC
  • Schools & Libraries
  • Loftier Cost
  • Depression Income
  • Rural Healthcare
• Committee on Energy and Commerce

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Source: https://en.wikipedia.org/wiki/Universal_Service_Fund

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