The USF Beat – Part 2: The Mississippi and Alabama Situation

Posted by: Hank Hultquist on July 28, 2010 at 1:54 pm

My previous blog post examined how a wireless provider like AT&T mobility ended up getting money from the Federal Universal Service Fund (USF), and why AT&T continues to receive money from a fund which it has been urging the FCC to reform for years. In this blog, I take a closer look at the USF funding that AT&T receives for its wireline operations in rural and high cost areas.

As I mentioned last time, AT&T’s USF receipts are split about 50/50 between its mobility business and its traditional wireline local phone business.  And, on the wireline side, well over half of the money AT&T receives is for just two of the twenty-two states where AT&T provides traditional wireline phone service – Mississippi and Alabama. (You can get all the gory details here.)

If that seems odd to you, be assured that you’re not alone. In fact, you’re in the good company of the U.S. Court of Appeals for the 10th Circuit, which has twice told the FCC to fix the program that creates this situation. The FCC in turn has made no changes to this program, but has most recently told the court that the program is in fact serving the policies set out by Congress, and, by the way, the FCC plans to phase the program out entirely as it transitions universal service support to broadband.

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The Not So Elusive Middle Ground

Posted by: Jim Cicconi on July 27, 2010 at 2:11 pm

Amidst the flurry of blogs and op-eds on net neutrality, Title II and broadband reclassification that cross my desk on a daily basis, it was a welcome and refreshing change to read Paul Misener’s piece that ran in CNET last week.

Although I don’t agree with everything the vice president for global public policy at Amazon.com had to say (what do you mean network operators haven’t deployed innovative new services?), Paul does lay out a fair airing of the issues to help reach what some people think is an elusive middle ground.

I was particularly pleased to read Paul’s clear recognition that certain quality-of-service/network management practices by ISPs are not only necessary but in the best interest of consumers.  I couldn’t agree more.

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Walking the USF Beat

Posted by: Hank Hultquist on July 22, 2010 at 3:29 pm

If, like me, you’re in a sports fan diaspora (i.e., you grew up someplace else and continue to follow the teams you rooted for when you were a kid), you’re probably familiar with the feeling you get when the local paper has a full-length article about one of your teams.  It’s a mix of excitement (yay! they’re writing about the Sox) and concern (I just know they’re going to somehow get the story wrong).  Well, that’s pretty close to the feeling I had when I saw this story about universal service reform in The Washington Post the other day (If you have not noticed yet, USF is one of the “teams” I follow closely).  As it turned out, I got to indulge both emotions.

First, on the concern front, readers of the Post article may have gotten the misconception that the Federal Universal Service Fund (USF) spends more than $8 billion annually on subsidies for rural America. In fact, the parts of the fund that focus on rural/high cost areas, account for about $4.6 billion. The rest of the money is divided among the E-rate program, about $2.7 billion, (which funds services provided to schools and libraries), the Low-Income program, approx $1.2 billion, (which provides discounts to qualified low-income consumers), and the Rural Healthcare program, approx $214 million, (which funds eligible health care providers for services, including broadband).

Now, on to the excitement.  The WaPo article asked, but did not answer (at least not directly), a very interesting question.  Why is it that AT&T and Verizon, which are the largest recipients of USF dollars, are supporting fundamental changes in the FCC’s high-cost support mechanisms? I mean, why would anyone want to turn down free money?  While I can’t speak for Verizon, I can explain why AT&T wants these mechanisms changed (and don’t worry, I’m not going to say that it’s out of the goodness of our heart).  But, in order to do so in a way that makes sense, I’m first going to provide a little more detail about some of the component parts of the high-cost program. 

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AT&T Statement on USF Bill

Posted by: AT&T Blog Team on July 22, 2010 at 2:29 pm

Today, U.S. Representatives Rick Boucher, Chairman of the Subcommittee on Communications, Technology, and the Internet, and Lee Terry introduced the Universal Service Reform Act of 2010. The following may be attributed to AT&T’s Executive Vice President-Federal Relations, Tim McKone:

“AT&T applauds Chairman Boucher and Rep. Terry for their determined efforts to bring the benefits of broadband services to the citizens of rural America.

“For years, policymakers and Congress have attempted to untangle the knotty dilemma of the universal service fund (USF), and with their leadership and vision, Chairman Boucher and Rep. Terry have set the right path for a historic transformation of the USF.  We are particularly supportive of this legislation because it focuses on modernizing a program that was born before broadband, so that the goal of universal and affordable broadband for all Americans is achieved. 

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AT&T Statement on Sen. Rockefeller and Public Safety Legislation

Posted by: AT&T Blog Team on July 21, 2010 at 5:05 pm

Background – Senator John D. (Jay) Rockefeller IV, Chairman of the U.S. Senate Commerce, Science, and Transportation Committee, today announced his intent to introduce the Public Safety Spectrum and Wireless Innovation Act. The following statement may be attributed to Tim McKone, AT&T Executive Vice President-Federal Relations.

“AT&T applauds Senator Rockefeller’s commitment to introduce the Public Safety Spectrum and Wireless Innovation Act.  Spectrum is a scarce and valuable national commodity, but we are encouraged by Senator Rockefeller’s action today that public safety will have sufficient resources to support a nationwide wireless broadband network.  It is vital that our first responders have access to a robust, interoperable network to ensure the public’s safety and preserve national security.   

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