Telecom carriers oppose proposed subsidy cuts

A Republican proposal would transfer $1 billion from the Universal Service Fund to the U.S. Treasury

In an effort to balance the U.S. government's books, some Republicans have proposed taking US$1billion from a fund that subsidizes rural telephone and broadband service and using it to reduce the government's budget deficit.

Four telecom trade groups and the National Association of Regulatory Utility Commissioners have all come out against the proposal to divert money from the Universal Service Fund since the idea surfaced last week. Representative Eric Cantor, a Virginia Republican and House majority leader, proposed the USF cuts last week in a meeting with fellow Republican House members.

Republicans have been pushing for huge cuts in the U.S. government's budget in exchange for their vote to raise the government's debt limit. Members of President Barack Obama's administration have warned that if lawmakers don't raise the debt ceiling by Aug. 2, the U.S. government will eventually default on its $14.5 trillion debt.

Cuts in the USF would make it difficult for small rural carriers to continue to roll out broadband to their customers, said John Rose, president of the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO). The proposed cut would redirect nearly a quarter of the USF's $4.5 billion high-cost fund, which subsidizes telephone and broadband service in rural areas.

The proposed cut would "hurt a lot of our companies' ability to serve their customers with broadband," Rose said.

The USF is supported by fees, about 15 percent of a telephone customer's long-distance service. If Congress takes that targeted fee and gives it to the general treasury, "then you're really imposing a totally new tax," Rose said.

The United States Telecom Association, in a letter to congressional leaders sent last week, noted that no federal tax money goes into the USF. The program's efforts to make telephone service ubiquitous "has truly been an American success story," wrote Walter McCormick Jr., president and CEO of USTelecom.

The U.S. Federal Communications Commission, which oversees the USF, proposed in March 2010 to transition a large portion of the fund to a broadband subsidy. For years, several lawmakers have been calling for the USF to be reformed or capped. The fund's yearly budget is about $8 billion.

A diversion of funds would hurt broadband deployment, McCormick wrote.

"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," he wrote.

Other organizations opposing the USF cuts include the National Telecommunications Cooperative Association and the Western Telecommunications Alliance.

A spokeswoman for Cantor didn't respond to a request for comments. Cantor has previously proposed cutting subsidies for mobile phones from the USF.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags telephonytelecommunicationJohn RoseWalter McCormick Jr.Organization for the Promotion and Advancement of Small Telecommunications CompanieslegislationNational Association of Regulatory Utility Commissionersbroadband4g3gUnited States Telecom AssociationWestern Telecommunications AllianceEric CantorNational Telecommunications Cooperative Associationgovernment

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Grant Gross

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Matthew Stivala

HP OfficeJet 250 Mobile Printer

The HP OfficeJet 250 Mobile Printer is a great device that fits perfectly into my fast paced and mobile lifestyle. My first impression of the printer itself was how incredibly compact and sleek the device was.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?