Universal Service

Roy Lathrop NCTA

NARUC Telecom Committee54th MARC Convention 2008

Grand Traverse Resort, Michigan

Funds

2

Universal ServiceFunds

Good news:

NOT an intercarrier comp panel

3

Current Intercarrier Compensation Rates The System is Broken

High (¢/min): 1.5 8.9 9.9 34.9 6.8 35.9 0.3 0.1 8.9 0.3Low (¢/min): 0.5 0.3 0.4 0.7 0.2 0.4 0.0 0.0 0.2 0.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Ave

rage

Rat

es in

Cen

ts p

er M

inu

te

LONG DISTANCE CALLS LOCAL CALLS WIRELESS CALLS

Large ILECInterstate (0.6)

Small ILEC Interstate (1.8)

Large ILECIntrastate (2.5)

Small ILEC Intrastate ( 5.1)

CLEC Interstate (0.6)

CLEC Intrastate (3.0)

CMRS – ILEC InterMTA ( 0.6)

CMRS – ILEC IntraMTA (0.2)

Recip Comp Voice (0.2)

Recip Comp ISP ( 0.1)

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4

Universal ServiceFund

• Contribution

• Distribution

• Broadband?

5

Universal Service

12.9%

Contribution

6

Universal ServiceDistribution

FCC Rural Health Care Pilot $ 417m

Federal Program 2008 Amount

High Cost $ 4,478m

Low Income $ 819m

Schools / Lib $ 1,760m

Rural Health $ 49m

Total $ 7,106m

62%

7

High-Cost Fund $2.6b in ‘01 $4.3b in ‘07

ILECs

CETCs

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

2001 2002 2003 2004 2005 2006 2007

$ B

illio

ns

8

Universal ServiceDistribution

Mechanisms not kept pace with technology & competition

More providers + services = more USF !

When competition justifies deregulation, it justifies reduced support

9

State Universal Service Funds

Assessments vary by programPeriodic adjustmentsPrograms & rules can change

California:6 programs (Adv. Svcs.

12/07)

10

Broadband:Part of USF?

• Lifeline/Linkup Pilot Program

• NTIA / RUS rules for ARRA

• Rural Broadband Report (Copps)

• National Broadband Plan (FCC)

11

Broadband:Part of USF?

• Control voice USF first• Any USF support: unserved

areas, underserved populations

• Pole rates, assessment

12

Not interested

Hotspots, corporate and government users

Available,

Relevance

13

Climate Change?Energy Issues?Health Care?

Broadband:What About

14

Broadband Initiatives:Ongoing Challenges

Eyesores or salvation?

free vs. $10–20 / mo

ATT withdrew app for 850 boxes in SF Envtl review 8/10/08

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