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News Release
January 15, 2004
CONTACT: David Fish
(202) 289-8928

Universal Service: Imperiled by
VoIP and Wireless?

Differing Views of Phone Subsidy Featured at Congressional Seminar

WASHINGTON, DC – A crucial element of communications policy – the Universal Service program– faces immense challenges, not the least of which are threats to its funding stream from the growth in Internet telephony and wireless phone usage. Will this age-old bundle of programs survive? A panel of experts believes it will, if current technology and new market conditions are properly taken into account.

As an FCC board prepares to issue its report on the topic, The Progress & Freedom Foundation is releasing a transcript of its recent Congressional Seminar, “Universal Service: Who Gives, Who Gets and For How Long?” It featured Matt Brill, senior legal advisor to FCC Comm. Kathleen Abernathy; Kathryn Brown, senior VP for public policy development at Verizon; John Rose, president of OPASTCO; John Stanton, CEO of Western Wireless Corp. and Hon. Nanette Thompson, Commissioner, Regulatory Commission of Alaska (and state chair of the Federal-State Board on Universal Service). The moderator was Raymond Gifford, Foundation president and former chair of the Colorado Public Utilities Commission. The following are excerpts:

Brill: The FCC “is going to have to get away from the artificial distinction between interstate and intrastate [in the USF contribution mechanism].” One proposal: “to give the FCC authority to assess intrastate revenues.” Others: include a “flat charge” on every connection or assigned number. Thompson: “It’s just a question of the legal and regulatory systems catching up with the enormous changes we have seen in market developments. We are basically a few steps behind the markets…the distinctions that existed historically in the law between intra-and interstate jurisdictions have become pretty much meaningless in the modern world.” Brown: “My greatest fear is that we will lose confidence in the universal service system by putting higher and higher percentages of tax on the bottom of customers’ bills. And this is not just a carrier issue, it is a customer issue.” Rose: Focus on “what we really want the universal service to do”, increased accountability over the funds, and “the cost of how you draw down funds should be based on cost.” He also called for Congress to “broaden the base“ of the fund. Stanton: “The opportunity…is to take advantage of the benefits of new technologies to reduce the costs of providing services to rural areas and, as a consequence, reduce the burdens on all the payers into the system.”

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation