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CTIA Position:
The universal service system should draw equally from telecommunications consumers and make support available to all eligible competitors. At the same time, the Universal Service Fund (USF) should be no bigger than necessary to achieve the goals outlined by Congress.

Consumers receive the most benefit from a limited USF system that ensures competitors have equal access to support.

The universal service fund – which was about $7 billion in 2005 – is paid for by consumers and is intended to ensure that consumers in rural areas, low-income consumers, schools, libraries, and rural healthcare providers have access to affordable and high-quality telecommunications and information services.

Key Points:

  • Adopt a Numbers- and Capacity-Based Contribution Methodology. Communications consumers are currently paying universal service fee charges based on how much interstate service they use. This revenue-based system is outdated, inefficient, and relies on obsolete distinctions. Under CTIA’s numbers- and capacity-based proposal, consumers would be assessed universal charges based on the number of telephone numbers they have and, in the case of many business customers, the number and capacity of end user connections they purchase.
  • Equitable and Non-Discriminatory Contributions and Withdrawals Currently, wireless consumers contribute about one-third into the Universal Service Fund, yet last year wireless providers only withdrew about 11% of the disbursed funds. That difference is highlighted when considering high-cost universal service subsidies. Since 1997, $22 billion has been provided in  high-cost support, with nearly $21 billion of that going to incumbent local exchange carriers (ILECs) and a little more than $1 billion to wireless carriers. Even though wireless carriers were provided about 16% of high-cost support last year, there remains a huge inequity even as more consumers are demanding wireless services. Everyone should pay their fair share of universal service, and the funds should be distributed in an equitable and non-discriminatory manner that recognizes consumer demand.
  • Rely on Competition and Consumers to Determine USF Support The FCC has recognized that the current universal service system does not reflect market realities. It favors incumbent wireline networks while largely ignoring consumer demands for wireless communication, Internet protocol-enabled, broadband and other information services that operate without regard to jurisdictional boundaries. Consumers never benefit from regulations that distort the competitive market. CTIA supports market-driven reforms to curb demand for universal service subsidies, increase accountability and encourage efficiency.
  • Commit to Efficient Deployment of Networks in Rural America. The current support mechanism for distributing universal service funds to high-cost, rural areas is administratively complex, guarantees ILEC profits, and promotes inefficiency. These problems result in a bloated fund that does not effectively target appropriate levels of support to those living in high-cost, rural areas. In many cases, this denies consumers in rural areas the benefits of competitive choice enjoyed by consumers in urban areas. CTIA proposes combining the current five high-cost universal service mechanisms into one mechanism that calculates support based on the most efficient technology in a small geographic area, and puts the highest priority on serving consumers. CTIA also is open to other market-oriented reforms that will drive down the cost of universal service.