Academic journal article Federal Communications Law Journal

Universal Service: Problems, Solutions, and Responsive Policies

Academic journal article Federal Communications Law Journal

Universal Service: Problems, Solutions, and Responsive Policies

Article excerpt

  I. THE IMPORTANCE OF UNIVERSAL SERVICE
 II. PROBLEMS WITH UNIVERSAL SERVICE
III. PROBEMATIC POLICIES
 IV. PROPOSED SOLUTIONS
  V. FORBEARANCE, COMPETITION, INFORMATION SERVICES AND
     ARBITRAGE
 VI. EQUITABLE CONTRIBUTIONS FROM ALL PLATFORMS

I. THE IMPORTANCE OF UNIVERSAL SERVICE

Affordable access to telecommunications networks is extremely important to all Americans. (1) The federal universal service policy is critical to ensuring affordable access for low income Americans and those living in rural and high cost areas, and on tribal lands. (2) Consequently the nation's commitment to preserving universal service has been longstanding and continues to this day)

II. PROBLEMS WITH UNIVERSAL SERVICE

Recently, many have begun to question whether the current version of the federal universal service program can be sustained. (4) Indeed, some observers insist that federal and state (5) universal service policies are in imminent danger of demise unless appropriate action is taken. (6) A declining supply of revenues from which the fees (7) are collected and an increasing demand for the fees that remain are identified as the immediate problems. (8)

On the supply side, the method by which universal service has been funded through fees collected from the revenues of local and long distance wireline and wireless carriers, is being undermined in part by wireless competition, (9) the growing use of email, (10) and all distance service bundling. (11) The near term future of universal service is believed to be threatened by the growing adoption of VoIP as an alternative to wireline services.

On the demand side, increasing requirements on the high cost fund by telecommunications carriers (12) and continuing requirements for funding of social inclusion subsidies for indigent, school-age, and rural Americans combine to place increasing strain on the funding process. (13)

III. PROBLEMATIC POLICIES

In addition to the strain caused by market competition and social need, however, there are federal and state procompetition policies that cause substantial damage to the viability of universal service programs. (14)

A policy of regulatory forbearance (15) has been used to increase competition for wireline voice services by exempting cable and VoIP services, and partially exempting wireless services, from paying universal service tees. This policy is said to be partly responsible for the rapid growth of wireless and broadband as well as the recent investment in VoIP. Yet, the policy has also resulted in an erosion of the subscriber base of traditional incumbent wireline providers who pay the bulk of the fees from which universal service funds are derived.

The continuation of the regulatory forbearance policy has long term implications for the survival of universal service. The pursuit of such a policy could result in the exemption of all broadband providers from legacy Title II (telecommunications) and Title VI (cable) regulations, (16) as well as the preemption of state regulation by defining the providers as Title I information services. It is argued that this policy would protect fledgling broadband enterprises from costly and sometimes conflicting regulation. However, the policy also could eviscerate the universal service program as wireline carriers join their cable and wireless counterparts in the election to provide voice and other services as information service providers and avoid universal service obligations altogether.

In addition, federal and state governments have sought to increase competition for rural carriers by allowing states to certify more carriers as eligible for federal high cost area subsidies. (17) The expectation has been that competition will result in lower prices for rural telecommunications services. The policy has resulted in a substantial increase in the demand for universal service funding at a time when revenues coming into the fund are decreasing. …

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