The FCC officially began its process today to modernize its telephone subsidy programs, the Universal Service Fund (USF) and Intercarrier Compensation (ICC) system.   The comments we filed today highlight the urgent need to update these policies if the Commission hopes to achieve its National Broadband Plan goals.  The following statement may be attributed to AT&T’s Vice-President, Federal Regulatory Hank Hultquist:   

“The overriding goal of the FCC’s National Broadband Plan – to ensure that all Americans have access to, and use, broadband services – will not be achieved unless sweeping reforms of USF and ICC are enacted.  Policymakers have long recognized that broadband is ‘the straw the stirs the drink’ for future economic growth, jobs and innovation, and is critical for improving healthcare, education and the environment.  And, to achieve these broadband goals, policies that are hindering broadband investment and adoption in rural and high-cost areas need to be reformed.

“We all understand that communications technology is undergoing a historic transformation from narrowband Plain Old Telephone service (POTS) to broadband IP-enabled services.  Where we once bought local or long distance voice service separately, voice is now simply another app you download.  Where we once tethered a black rotary phone to a wall, we are now tethering wireless devices to go online from a laptop.  But regulatory policies and regulations have woefully lagged behind these changes, and by doing so are thwarting our country’s broadband goals. 

“The business model upon which the current universal service system is built is dying before our very eyes.  More than a quarter of U.S. households have ‘cut the cord’ and abandoned last century’s technology altogether.  Consumers are dropping traditional phone company POTS services – legacy, circuit-switched, wireline phones lines – at an astonishing rate, around 10% each year.  In fact, approximately 700,000 lines are lost to newer technologies every month.

“With this historic transformation, we need similarly historic changes in our regulatory model.  While more and more consumers are abandoning their wireline telephone for wireless, VoIP and other communications services, policymakers need to also abandon policies—such as state carrier-of-last-resort – that require traditional phone providers to continue to maintain a service that fewer and fewer people are buying.  Maintaining rules that require shelf space for horse-and-buggy whips is costly, irrational and ultimately an obstacle to ensuring America’s broadband future.

“Regulations that merely prop up the dying POTS regime only impede the transition to next-generation, broadband networks.  In eliminating outdated service obligations and adopting a new regime that relies on a procurement-model approach to universal service, the FCC can hasten, rather than delay, the day when all Americans have access to broadband and IP-enabled services.”

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