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FCC Reforms Seek Efficient, Fair USF Contribution System

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Released: April 27, 2012

Federal Communications Commission

News Media Information 202 / 418-0500

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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action.
See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).

April 27, 2012
Mark Wigfield, 202-418-0253


Unanimous Commission Seeks Comment on Reforms To Reduce Disputes, Simplify Compliance, and

Promote Competition

Washington, D.C. – Continuing its overhaul and modernization of the Universal Service Fund (USF), the
Federal Communications Commission today launched reform of how funding is collected to support
universal access to voice and broadband.
Sweeping reforms adopted by the FCC in the past two years have increased fiscal responsibility and cut
waste in the USF, while updating it to help bring high-speed Internet and voice service to all. With
reforms in place to contain spending, today’s Further Notice of Proposed Rulemaking examines ways to
pay for USF more fairly and efficiently.
USF is paid for by an assessment on the interstate and international revenues of carriers, such as long-
distance revenues, as well as Voice over Internet Protocol (VoIP providers). Contributors may bill
consumers and business customers for the cost. The Notice builds on the FCC’s efforts to limit the Fund’s
burden on consumers and businesses while modernizing USF for the 21st century.
The current contribution system has given rise to uncertainty, inefficiency, and market distortions.
Outdated rules and loopholes mean that services that compete directly against each other may face
different treatment. Universal service charges billed to consumers and businesses vary by company
despite virtually identical service offerings, creating confusion and distorting markets. And compliance
costs have increased as companies struggle to apply old rules to new products.
The Notice seeks comments on reforms of the USF contribution system that will seek to promote
efficiency, fairness and sustainability.
In particular, the Notice asks:
What services and service providers should contribute to the fund
How should contributions should be assessed -- on revenues, the number of connections, by
phone numbers, or a hybrid approach
How to reduce the cost, promote transparency and increase clarity of the contribution system
Whether consumers could benefit from increased transparency and limitations on how providers
recover their USF costs

The overarching goal of reform: ensuring delivery of voice and broadband communications to all
Americans and achieving core FCC objectives of promoting broadband innovation, investment and
adoption. The Notice seeks comment on the appropriate transition periods for reforms to allow service
providers and consumers to adapt.
Action by the Commission April 27, 2012 by Further Notice of Proposed Rulemaking (FCC 12-46).
Chairman Genachowski, Commissioners McDowell and Clyburn. Separate Statements issued by
Chairman Genachowski, Commissioners McDowell and Clyburn.
Wireline Competition Bureau Staff Contact: Vickie Robinson at 202-418-2732
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