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Republican Senator Aims To Reform $7 Billion Universal Telecom Fund January 5, 2007

Posted by notapundit in Congress.
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WASHINGTON (Dow Jones)–Providers of all forms of telephone service would have to pay into a fund earmarked for rural America, according to a bill introduced Thursday.

In his second attempt at reforming the Universal Service Fund, the bill’s author, Sen. Ted Stevens, R-Alaska, said that reform to the roughly $7 billion fund is essential to ensure that rural Americans have continuing access to telecommunications services.

“Through the years, our nation’s universal service program has ensured that rural Americans have access to basic telephone and cell phone service,” said Stevens in a statement. “The universal service program is essential to bringing broadband, distance learning and telemedicine to rural Alaska, as well as the rest of our nation.”

Stevens’ home state of Alaska has been one of the biggest beneficiaries from the Universal Service Fund.

The bill is very similar to reform attempted by the lawmaker as part of a wider rewrite of telecom legislation in the last session of Congress. That bill died on the floor of the Senate.

Unlike last year’s bill, which had the backing of Democrats on the Commerce Committee, this attempt hasn’t been co-sponsored by Sen. Daniel Inouye, D-Hawaii, who this week assumed the chairmanship of the committee from Stevens.

The fund as it exists today was created in 1996 in a bid to ensure that people living in rural areas would have access to affordable telephone service. It also provides funding for low-income households, high-cost areas as well as cash for connecting schools and libraries.

The bulk of the money in the bill is contributed by traditional telephone companies, but would also include companies that provide broadband Internet telephone service.

While there is no cash in the fund specifically earmarked for the development of broadband, Internet connections for schools and libraries are often funded through the universal service program.

Also, companies using cash from the fund to lay fiber optics in remote areas for telephone service can use the same fiber to build a broadband network.

Stevens said the fund should be modernized to include all providers of telecommunications service and to facilitate the spread of broadband Internet service to the more remote parts of the country.

The bill also aims to improve the auditing of the fund.

Detractors have argued that since residential phone service is available virtually everywhere across the U.S., the fund is no longer relevant and should be discontinued.

Federal Communications Commission Chairman Kevin Martin has also advocated reform to the fund. He prefers to see contributions calculated on a per-number, rather than per-household, basis so that people with multiple phone numbers pay a greater proportion into the fund.

By Corey Boles, Dow Jones Newswires

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