Today, the Federal Communications Commission’s Further Notice of Proposed Rulemaking (FNPRM) on Universal Service Fund contribution reform was published in the Federal Register. Comments are due July 9, 2012; Reply Comments are due August 6, 2012.

The FCC is seeking comment on proposals to reform how Universal Service Fund (USF or Fund) contributions are assessed and recovered. The FNPRM sets forth four basic issues that the FCC seeks comments on.

1. Who should contribute to USF. The FCC seeks comment on expanding the pool of USF contributors to “reduce uncertainty, minimize competitive distortions, and ensure the stability of the Fund.” The FNPRM considers a service-by-service evaluation of whether the following should contribute to USF:

• enterprise communications services that include a provision of telecommunications;
• text messaging services;
• one-way VoIP service; and
• broadband Internet access services.

Many of the questions involving these services seek to understand the market and operation of these services in order to evaluate how their inclusion in USF would work. Regarding text messaging, the FCC seeks comments on consumers’ use of app alternatives under their data plan, companies’ use of common short codes, and the overall size of the text message marketplace. As for one-way VoIP service, the FCC wants to understand who, besides Skype, offers one-way VoIP and whether they have a competitive advantage by not paying USF. For broadband Internet, the FCC seeks comment on how and whether to differentiate between broadband services, such as wired, wireless, and satellite, among other items.

2. Contribution assessment. The FCC is considering how to improve the current revenue-based system and the feasibility of alternatives to that system. Improvements under consideration for the current revenue-based system include reporting bundled services and allocating assessable and non-assessable services. Suggested alternatives to current system include connection-based and numbers-based contributions. Connection-based contributions would assess USF based on the number of connections and communications network provided to customers, regardless of revenue generated from the connection. Numbers-based contributions would assess USF based on the companies’ count of NANP phone numbers, again regardless of revenue.

3. Contribution administration. Improvements under consideration include updating reporting worksheets, adjusting the frequency of contribution factor adjustments, revising the pay-and-dispute policy currently in place, and other administrative aspects of USF contribution.

4. Consumer pass-through. Finally, the FCC seeks comment on how to address pass-through USF charges as separate line-item charges on consumers’ bills and whether additional information should be required.

Although the FNPRM does not emphasize any one reform and is seeking comment on a variety of broad issues, the FCC does seem intent on reforming USF contribution in some fashion. Arent Fox can assist on comments on any these issues.

A copy of the FNRPM, along with the Federal Register publication, are both available in the “Downloads” section to the right.

For further information, contact Ross A. Buntrock, Michael B. Hazzard, or Jason A. Koslofsky or any of our attorneys in the Telecomm Group.