Add to del.icio.us     Digg this

Jan. 31, 2008

The Federal Communications Commission has posted proposed reforms to the Universal Service Fund which could relieve significant pressure on the fund.

The USF provides subsidies to telecom companies for offering services in rural areas, schools and libraries.

One of the proposals the FCC seeks public comment on is the idea of reverse auctions.

The FCC is to provide subsidies to carriers that offer to do reverse auctions for the least amount of help.

The Commission is also seeking public comment on changes to its current policy that awards wireless telecom providers amounts equal to those of landline telecoms.

FCC Chairman Kevin Martin backs the reverse auction plan, saying that he believes reverse auctions to be the "long-term answer" for reforming the high costs of the USF.

But two commissioners oppose the idea, citing concerns over quality of service and long-term investment in rural areas. The two instead support the idea of supporting broadband, as well as reforming the reward structure so that wireless carriers and wired providers are not given equal amounts.

Both of these plans have been discussed at lenght by the commission.

Another reform Martin backs, but on which the commission does not agree, is capping rewards given to telecoms. Whichever reform ends up passing, wireless carriers stand to lose the most.

In 2007, Alltel was slated to receive as much as $240 million in USF support, while AT&T was said to have collected $87 million.

Dobson Communications, which AT&T recently acquired, received as much as $40 million from the fund.

Almost all of the major wireless carriers benefit from the fund in some form or another.

Add to del.icio.us     Digg this

Source: The FCC.

    This article was featured on Business 5.0.