Terry Says End Game of USF Reform Talks is Legislation

Congress will finish off Universal Service Fund reform, Rep. Lee Terry, R-Neb., said at a press conference Thursday kicking off rural telecom associations’ marketing push on rural broadband. Terry said he’s “extremely optimistic” there will be a deal by the end of August that’s supported by industry, the FCC and the House Commerce Committee. Also at the event, Sen. Mark Begich, D-Alaska, predicted that the Senate will get “very aggressive” on the issue.

The FCC and House Commerce Republicans have been working together as the industry talks, Terry said. “Our mutual expectation is … that when this document is written, it will be supported” by House Commerce and the FCC, he said. It will be a “mutual agreement that we can move forward and pass” in the House, Terry said. “Then it will be the Senate’s turn” to pass legislation based on the deal, he said.

The House has done a lot of work, but the Senate will get involved in the final deal, Begich said. “There’s such a strong interest in the Senate in the rural piece of this and the Universal Service Fund that I think you will see the Senate [get] very aggressive … and be sure it’s done right.” Begich’s recent letter with Sen. John Thune, R-S.D., and 26 other senators from both parties is a rare show of bipartisanship in the Senate, he said. When the issue heats up, even more senators will speak up, he said.

Terry cited progress for small rural carriers in the USF talks. “As it sits now, it looks like rate of return for our small companies is going to stay,” and instead negotiators are working to set the appropriate rate. Reverse auctions are also “just about off the table,” Terry said. The goal of USF reform is to ensure there’s no digital divide between rural and urban areas, he said.

It’s “critical” that rural is treated the same as urban, Begich agreed. The senator is against trimming $1 billion from USF as part of deficit reduction efforts, as proposed by House Republicans (CD July 14 p1), he said. That would “cut off our future,” he said. Telephone cooperatives are the ones making the investments in rural areas, he said.

Earlier, USTelecom issued an open letter to the White House and Congress. It said the proposal to raid the fund is “inadvisable” and “unworkable.” The association has been leading the USF discussions among large and mid-sized carriers and has reached a “framework” on reforms, it said. USTelecom said using the fund to close the deficit might threaten the reform effort. Diverting “these funds to deficit reduction would constitute, in practical and legal effect, not only the imposition of a new tax on consumers’ monthly communications bills, but also a dramatic departure from one of the Nation’s highest priorities -- the deployment and adoption of broadband service throughout the United States, including rural areas that are hardest and most expensive to reach,” USTelecom said in its letter.

The Independent Telephone and Telecommunications Alliance also panned the budget proposal. “The USF is an industry driven fund that is not part of the federal budget,” association Vice President Paul Raak told us. “Unless Congress wants to return to the days of the Excise Tax and use telephone customers as an A.T.M. for the treasury, we hope Congress changes course."

Rural telecom association executives from OPASTCO, the National Telecommunications Cooperative Association and the Western Telecommunications Alliance launched their ad and social media blitz Thursday. The associations hope to warn Congress and the public that certain changes under consideration at the FCC may have negative consequences for rural areas, they said.