FCC Chairman Urges Better Funding For Rural Telecom Services - InformationWeek

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10/26/2005
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FCC Chairman Urges Better Funding For Rural Telecom Services

The declining costs of phone services, introduction of technologies like voice-over-IP, and a blurring of the lines of what defines a telecom company have decreased fund contributions for rural areas.

Federal Communications Commission Chairman Kevin Martin told Telecom '05 conference attendees in Las Vegas yesterday that he hopes the government will act soon to improve funding for advanced telecom services for rural and isolated businesses, schools and consumers.

"The commission needs to revise the way in which it collects universal service funds," Martin said. The chairman, who grew up in rural North Carolina, noted that the FCC is charged with assuring that rural America doesn't get left behind in services.

The current Universal Services Fund requires interstate telecom carriers to pay taxes into the fund based on their revenue. Introducing broadband and other high-tech telecommunications services to rural areas is cost-prohibitive for carriers, so the fund ensures service by subsidizing small rural carriers, often to the point where subsidies account for a large portion of their revenue.

However, the declining costs of phone services, introduction of technologies like voice-over-IP, and a blurring of the lines of what defines a telecom company have decreased fund contributions and changed the playing field. In Martin's mind, this has created an "outdated" system that ignores an evolving telecommunications marketplace.

Martin proposed an alternative collection scheme whereby companies would pay taxes based on the number of lines they service, not on their total revenues. He noted not everyone is happy with the proposal, and said he is open to any proposal that would make universal service fund contributions more technology-neutral.

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