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Nov. 19, 2009

Late yesterday, the CTIA (Cellular Telephone Industries Association) and Verizon Wireless have given their support for the USF (Universal Service Fund) reform after a hearing on a bill sponsored by Rep. Rick Boucher, (D-Va.), and Rep. Lee Terry, (R-Neb.)

CTIA CEO Steve Largent said the association welcomes the effort by Boucher and Terry to reform the way Universal Services Funds are collected and distributed.

"As this bill moves forward, we urge Congress to work toward competitively neutral reforms that target support to where it is truly needed," Largent said.

Verizon Wireless issued a statement saying it endorses the Boucher-Terry legislation because it embraces policies to reform and sustain the USF in directing funds to meet the true communications needs of consumers.

Peter Davidson, Verizon Wireless' senior vice president of federal government relations, said the draft Universal Service Reform Act "takes us a big step toward addressing 5 of the most pressing matters: An overall budget for the high-cost fund; a new contribution methodology; competitive bidding for wireless support; a date certain for related reform of mobile intercarrier compensation; and an end to traffic pumping."

On Nov. 12, the FCC issued a public notice seeking more focused comment on universal service and intercarrier compensation policies as part of its mission to make broadband universally available to all people in the U.S.

The USF subsidizes programs mostly for low-income people in rural areas, or in areas where the population density is a lot lower when compared to metropolitan suburbs.

In September, the CTIA has submitted a new filing to the Federal Communications Commission that compares the U.S. wireless industry with the U.K., based on a report issued by Britain's Office of Communications (OFCOM) issued more than two months ago.

The U.S. market has "more competitors, lower concentration, lower prices, higher usage and even innovative services" than the U.K., said CTIA in a statement.

The industry association cites the market share of Tier 1 companies as a main indicator of the competitiveness of the U.S. market. In the United Kingdom, the top four wireless carriers have 93.5 percent of the market, and the top 5 network operators have 100 percent of the market, says CTIA.

By comparison, the top 4 U.S. carriers serve about 85 percent of the market. The top 5 serve less than 90 percent, and the remaining ten percent is made up of numerous competing wireless carriers.

In its filing, the CTIA argues that the market in America is a world leader in wireless services when measured with the standards applied by OFCOM, the United Kingdom's independent regulator.

The filing comes on the heels of another report from the Organization for Economic Co-Operation and Development (OECD) that suggests the highest prices for mobile calls were found in Canada, Spain and the United States, with the lowest found in Finland, the Netherlands and Sweden.

For its part, the CTIA further argues that U.S. mobile consumers pay less for their service than those in the U.K. The price per minute in the U.K. is 12 cents versus 5 cents in the United States.

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Source: The CTIA.