July 04, 2006

Comment on FCC Order regarding USF

Recently, FCC issued a report and order and notice of proposed rulemaking regarding Universal Service Fund. Jeff has given a detail summary of the report and how it impacts IP Communications. The following is a draft of my comment on this report that I am planning to submit to FCC.

Honorable Commissioners:

In your recent R&O & NPRM, you state that actions need to be taken to ensure the stability of sufficiency of the USF. You identify that interstate long distance revenues have been declining and that correspondingly wireless service and interconnected VoIP services have been growing dramatically. It looks like this is the main supporting point for your decision that the two latter services need to participate in and contribute to USF. I would like to respectfully submit to you that this approach may be insufficient from a practical point of view and may be fundamentally faulty from a technical point of view.

Just as interstate long distance revenues are declining, the revenue generated by interconnected VoIP services will also see a corresponding decline. The reality is that as other communication modes are adopted, the revenue generated by voice service (independent of the technology) will decline, thereby threatening the sufficiency of the USF.

More importantly, once more the Commission has missed the opportunity to broadly interpret the spirit behind the Act that created the USF. As you state that a goal of the Act is “ensuring the delivery of affordable telecommunications services to all Americans”. I want to emphasize that the goal is “telecommunications services” and not “voice services”. For example, even if a line is exclusively used for Fax or Data modem application exclusively, it needs to contribute to USF. Similarly, an interstate call generated by such a line is taken into consideration for USF (even though the network can - no, indeed - distinguish such calls easily). So it has become customary to include all access to then communications network (PSTN). In as much as the nation is moving towards an alternate communications network, it is imperative that all Americans have access to this network as well. Accordingly, the scope of USF should be extended to cover this network as well, both from the point of view of contribution and consumption.

Chairman Martin states that, “I still believe that this system needs fundamental reform, and I remain committed to adopting and implementing a numbers based contribution system.” This is very hopeful; but I would urge you consider an alternate scheme. After all, it is possible that the network could move away from “numbers” based system. Commissioner Copps’ comment is closer to the mark: “Last August the Commission put in motion a process to exempt DSL from contributing to the support of universal service. There were other options available to us that would have been more in keeping, I believe, with Section 254 of the Communications Act …”

In summary, I think we should consider that “public Internet” is becoming an alternate communications network, on par to PSTN. So we must include access to this network as part of our larger objective and this new network must contribute equally. But at the same time isolating a single application for contributing to USF is counter to our actions in PSTN and does not anticipate the possibility that the interim proposal may also not be sufficient.

Respectfully submitted,
Aswath Rao

Update: Phoneboy had made the same point that USF must be applied to ISPs and not VoIP. It is important to note that the logic for this proposal is that this is based on PSTN precedence. After all PSTN provides access to a communications network AND provides voice as an application. For every regulation in PSTN, we can easily deduce whether it is applied to "access service" or to "voice application service". Then, if a regulation is for the former, then the corresponding regulation should apply to ISPs in the new network. I had made this observations here and here.

Posted by aswath at July 4, 2006 09:30 PM
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