Reforming and Modernizing the FCCs Universal Service Programs

May 2012

The Universal Service Fund

Based on FCCs historic commitment to universal service Expanded in Telecommunications Act of 1996
Contributions flow from telecommunications providers via an assessment on their interstate revenues . . .

Wireline telco

Wireless telco

Cable

. . . into the four Universal Service Fund programs High-Cost Lifeline E-Rate Rural Health Care

. . . which distributes funds to eligible entities (primarily telephone companies) to reduce cost of service for rural Americans for lowincome Americans for schools and libraries for rural health providers

Connect America Fund Goals

Universal service
Robust home & business broadband to over 18M unserved Expand mobile broadband and voice coverage where its lacking Protect existing voice and broadband service in rural areas Fiscal responsibility Fairness to consumers who bear burden of paying Address bipartisan calls to eliminate inefficiency and control costs Business realities

Reasonable transition periods

Connect America Fund Overview

Connect America Fund

$4.5B annual budget

Fixed Locations
Price Cap areas o Phase I (ongoing) o Phase II Rate-of-Return areas

Mobility Fund
Phase I (Sept.) Tribal Phase I Phase II

Remote Areas Fund

Policy Innovations
Express support for broadband networks Overall budget Dedicated support for remotest areas Dedicated support for mobile Competitive bidding to allocate support No subsidy for areas served by unsubsidized competitor Explicit public interest obligations & greater accountability
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Connect American Fund Phase I

Launched April 25 Commission announced availability of $300 million in additional support to eligible carriers in these areas
- Funds come from USF reform savings; not increasing size of Fund - Focused on unserved areas: $775 / location served

Carriers have 90 days to decide accepted support amounts

Funds come with buildout and accountability requirements

- Broadband speed (4 Mbps down/1 Mbps up), latency, usage - Deployment to 2/3 of locations within 2 years and complete within 3 years

Unserved Areas

www.fcc.gov/maps
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The Connect America Fund: Mobility

For first time, Commission recognized ubiquitous mobile voice and broadband service as independent universal service goal

$300m to upgrade areas with no 3G using market-based competitive process: reverse auction
Funds come from USF reform savings; Carriers bid to cover unserved road miles Auction rules and eligible areas announced May 2 Short form applications due July 11 Auction scheduled for Sept. 27

Winners will be required to deploy 3G in 2 years or 4G in 3 years

Mobility Fund Eligible Areas

www.fcc.gov/maps
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Connect America Fund: Ongoing Activities

Implementation of: Connect America Fund Phase II (model and reverse auction) Mobility Fund Phase II for ongoing mobile support Remote Areas Fund Reasonable comparability for broadband/voice service and pricing Petitions for waiver/reconsideration Long term support mechanism for smaller carriers And lots of other implementation issues . . .