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Understanding Universal Service Funds and Intercarrier Compensation Rates in Telecom

This document analyzes the current state of Universal Service Funds (USF) and intercarrier compensation rates as discussed at the 54th MARC Convention in 2008. It highlights key statistics and trends related to small and large ILEC and CLEC rates, the challenges of adapting USF contributions to evolving technology, competition, and the need for effective distribution mechanisms. The discussion also includes insights on state universal service funds, broadband initiatives, and the implications of deregulation in the telecom sector.

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Understanding Universal Service Funds and Intercarrier Compensation Rates in Telecom

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  1. Universal Service Funds Roy Lathrop NCTA NARUC Telecom Committee 54th MARC Convention 2008 Grand Traverse Resort, Michigan

  2. Universal ServiceFunds Good news: NOT an intercarrier comp panel

  3. Small ILEC Intrastate ( 5.1) CLEC Interstate (0.6) CLEC Intrastate (3.0) Large ILEC Intrastate (2.5) Average Rates in Cents per Minute Small ILEC Interstate (1.8) CMRS – ILEC InterMTA ( 0.6) Recip Comp Voice (0.2) Large ILEC Interstate (0.6) Recip Comp ISP ( 0.1) CMRS – ILEC IntraMTA (0.2) LONG DISTANCE CALLS LOCAL CALLS WIRELESS CALLS High (¢/min): 1.5 8.9 9.9 34.9 6.8 35.9 0.3 0.1 8.9 0.3 Low (¢/min): 0.5 0.3 0.4 0.7 0.2 0.4 0.0 0.0 0.2 0.0 Current Intercarrier Compensation Rates The System is Broken 23

  4. Universal ServiceFund • Contribution • Distribution • Broadband?

  5. Universal Service Contribution 12.9%

  6. Universal ServiceDistribution • FCC Rural Health Care Pilot $ 417m 62%

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

  8. Universal Service Distribution • 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 program • Periodic adjustments • Programs & 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: unservedareas, underserved populations • Pole rates, assessment

  12. Available, Relevance Not interested Hotspots, corporate and government users

  13. Broadband: What About Climate Change? Energy Issues? Health Care?

  14. Broadband Initiatives:Ongoing Challenges Eyesores or salvation? ATT withdrew app for 850 boxes in SF Envtl review 8/10/08 free vs. $10–20 / mo

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