• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Download full size image

Phone Companies Question U.S. Lawmakers Over Universal Fund

Posted on: Friday, 13 March 2009, 10:55 CDT

U.S. Phone companies told the U.S. House of Representatives Energy and Commerce Committee's subcommittee on telecommunications they wanted a change regarding a $4.5 billion annual fund intended to ensure nationwide service in high-cost areas, claiming it is outdated and promotes inefficiency, Reuters reported.

Net payers into the controversial fund include both AT&T and Verizon, who suggested competitive bidding to set fund awards. Some believe the annual total should be capped amid recent years of double-digit growth.

However, other rural carriers like Embarq Corp and United States Cellular Corp argued funding should stay based on actual costs, suggesting a cap would discourage investment and jeopardize coverage in hard-to-serve areas.

LeRoy Carlson, chairman of the board of United States Cellular, told the panel his company serves many rural areas that do not generate sufficient revenues to meet ongoing operating expenses.

"Significant additional investment is still required to bring mobile services to all Americans," he said.

Phone companies argued before lawmakers that the fund's payment system is busted and that in many cases it subsidizes too many private carriers that do not need it . The majority believes it should be used to spur expansion of high-speed Internet, or broadband.

Derek Turner of the public interest group Free Press said the fund, as currently administered, inefficiently supports redundant legacy technologies and enables private companies to become wholly dependent on continuance of the old system.

"The problem is not that we are spending too little money on universal service. The problem is that we are not spending it on the right things," said Verizon Vice President Thomas Tauke.

The Virginia Democrat who chairs the subcommittee, Rep. Rick Boucher, suggested mandating that fund recipients offer broadband at a minimum speed and is backing a bill to revamp the program this year.

However, smaller companies, like Embarq, said that would not be feasible in the high-cost, hard-to-cover areas that they are by law required to cover by law as a carrier of last resort.

Some are calling for the program to be abolished entirely, as many Republicans suggest the private sector is expanding fast enough to cover everyone in time.

Cliff Stearns of Florida, the ranking Republican on the panel, questioned why he should have to tax people when AT&T just announced it would spend $12 billion on broadband in 2009.

Investors in AT&T were informed this week that the company’s 2009 capital spending budget would be between $17 billion and $18 billion, with about two-thirds of that on broadband.

The Federal Communication Commissions issued the high-cost fund as part of a much larger $7 billion universal service fund.


--------

On The Net:

AT&T

Verizon

FCC

Source: redOrbit Staff

More News in this Category