USF Contribution Slips Slightly, But Pressure Remains to Reform Factor
The Universal Service Fund’s contribution factor will dip to 14.4 percent in the third quarter of 2011, the FCC said in a public notice released Tuesday. It’s a dip from the second quarter’s 14.9 percent, but it’s not enough of a dip to ease pressure on Chairman Julius Genachowski as he focuses on universal service distribution reform through the fall, officials said. “Whether the contribution factor goes slightly up or slightly down is irrelevant,” Commissioner Robert McDowell told us Tuesday: “What’s important is that it’s either at or near record highs, indicating that the system is broken."
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McDowell has long urged the commission to tackle contribution and distribution reforms, “as we tried in 2008.” “Folks should look to the great progress we made in late 2008 when we were able to walk and chew gum at the same time,” he said. “I don’t buy into the notion that we can’t accomplish doing it all at once politically or even logistically in terms of the workload on the staff."
Telcos are meeting frequently to come up with an industry-endorsed reform package; at the same time, FCC and Hill staff are being lobbied heavily by telcos arguing for their own needs. McDowell said he’s worried that the focus on distribution will sap the strength needed for contribution reform. “I do have a concern that if we only focus on distribution side this year and issue an NPRM on contributions sometime in the future that extremely important issue won’t be resolved before the end of President Obama’s current term,” he said. “You want to make sure you avoid a scenario where you walk into a store saying, ‘I want to buy this, that and those and I will leave it to someone else to figure out how to pay for it.'”
An FCC spokesman said Genachowski hasn’t lost sight of the importance of contribution reform. “We're focusing first on the framework that would spur jobs and investment by supporting deployment of broadband to all, cutting waste, and increasing efficiency,” the spokesman said. “We fully appreciate the need to address contributions reform and will do so in due course."
Stuart Polikoff, vice president at OPASTCO, said he shared McDowell’s sense of urgency over contribution. Tuesday’s notice “demonstrates the need for immediate reform of the contribution system -- particularly, expanding the base to include all broadband providers over all platforms."
American Cable Association President Matt Polka said contribution problems would be fixed by straightening out problems in the high cost fund. “ACA supports capping the High Cost Fund and funding the Connect America Fund with money extracted from the elimination of inefficiencies in the High Cost Fund, such as directing support to carriers that face competition from entities that do not receive support,” Polka said. “Under this paradigm, there is no need to expand the contribution base."