Consumers in rural areas are increasingly turning to wireless for their communication needs. They recognize the convenience, mobility, efficiency and security wireless provides them. As more rural consumers choose wireless, an equitable share of USF monies is essential for carriers to meet the increasing demands and preferences of these consumers.

Many industry experts and regulators agree the current USF funding and distribution mechanisms are broken. The same can be said of the intercarrier compensation system, which dictates the financial and technical terms under which carriers exchange telecommunications traffic.

Current universal service and intercarrier compensation regulations are based on outdated classifications, and encourage and reward inefficient investment and performance by traditional local telephone companies often referred to as incumbent local exchange carriers (ILECs). To the detriment of providers utilizing different technologies, ILECs are significantly subsidized by USF monies. This system keeps the cost of ILECs’ service artificially low so consumers have an incentive to use it more than they would under normal, free-market conditions. The system also discourages potentially more affordable competitors, such as wireless companies, from entering the market, and it imposes unreasonable costs and constraints on rural consumers.

The bottom line? The current universal service and intercarrier compensation systems lead to less value, fewer choices, and increased costs for consumers, which is certainly not in their long-term best interests.

Disproportionate Contribution and Withdrawal
There’s also a problem with who is contributing into the universal service pot, and who is benefiting from taking out of it. Unfortunately, this disproportionate contribution and withdrawal is not a recent phenomenon. It has been that way for years. Let’s take a look at the numbers. From 2001 to 2005, wireless companies received a little more than $1 billion of USF monies, while ILECs received more than $20 billion over the same period of time. All this money went to ILECs, even as they lost customers and consumers increasingly subscribed to mobile wirele ss services. This trend continues today. In 2006, wireless consumers were contributing about 33% of the federal Universal Service Fund, while wireless service providers withdrew only about 16% of funds available.

Wireless Saves Time and Money in Rural America

“Cell phones have saved us so much gas! My husband owns a welding service and is often out in farmers’ fields mending broken plows or other machinery. When another customer calls for help, he can find out the necessary details without driving home in between jobs. If a part is needed, he can call the supplier or me to order the part instead of running home to do it. If someone is hurt in the field, assistance can be called before too much time is lost.”

Joan Mauser, Pennsylvania 
North Jackson Grange #1740

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