Universal Service Fund reform: remembering rural America

I am convinced that you cannot fathom the vastness of the United States until you have spent time in the West.

On some mountaintops in Wyoming, you can look out and see the curvature of the earth. You can drive hundreds of miles and never see another car.

The reason I mention this is that it is important for policymakers in Washington, D.C to remember what a vast country we live in, and serving that country’s communications needs is neither easy nor cheap. In the context of the current debate about reforming universal service — our nation’s cornerstone communications policy — I am afraid we are in danger of forgetting what is beyond the Beltway.

It was in 1907 that the nation first began to realize that the future of our economic growth depended in part upon ensuring every American had access to telephone service. In 1934, Congress finally included this idea of universal service in legislative language. At that time, fewer than 40 percent of U.S. households owned a telephone. Congress understood that a national commitment was imperative to ensuring universal connectivity.

In the 1996 Telecommunications Act, Congress recognized that despite great progress, the goals of universal service were not fully accomplished. And still today pockets of un-served areas remain. Additionally, the infrastructure needed to operate basic telephony doesn’t maintain itself, and rural companies simply cannot cover ongoing costs with monthly rates alone. The 1996 Act codified The Universal Service Fund (USF) as a tool to pay for ongoing universal service needs. Simply put, every telecommunications customer pays a small monthly fee into the USF, which is funneled back to areas that are extremely expensive to serve.

Today, the USF is in danger of collapse. As new technologies emerge, contributions into the USF are inadequate to meet the growing demand for USF dollars. In the face of this reality, we should recognize a crucial distinction.

The USF certainly has its flaws, but these flaws cannot undermine our national commitment to the broader objective of universal service.

The good news is that USF is salvageable, and can once again be a successful tool if we are willing to confront the following threats:

Threat: The objective of universal service has been met so the USF is no longer necessary.

Response: The objective of universal service is to reach every American with telecommunications service. We are far from meeting that goal.  

Currently, USF dollars can only be used to subsidize telephone service. In today’s interconnected world, however, any reasonable definition of telecommunications service must include Internet broadband. Broadband is the new economic driver. It is critical to business, to public safety, to medicine, and it enables rural America to keep pace with the demands of this new economy. To argue that universal service objectives have been accomplished is to ignore the broadband divide between urban and rural areas. The USF must be reformed to allow for broadband deployment.

Threat: It is unfair for urban dwellers to subsidize the communications bills of rural Americans.

Response: Time and again this country has decided that in matters of critical national policy, it is incumbent upon every American to ensure that no region is left behind.

Metropolitan areas depend on rural America to supply energy and to put food on the table. These two cornerstones of our national economy depend upon fast, reliable, and affordable communications service. A successful USF means a healthy rural economy. A healthy rural economy is essential for the success of our entire country.  

Those of us who live in rural areas understand we cannot always expect the same amenities enjoyed in metropolitan areas. We also know that a large percentage of our resources are funneled to urban problems.

Enormous public sums are spent each year to fund mass transit, to fight crime, and to provide public housing. We do not begrudge this because we understand it is only right to share in the nation’s challenges, just as we share in its successes.

Threat: USF is too expensive; it should be eliminated in favor of market forces.

Response: The market alone has failed to meet the objectives of universal service.

In my 14 years in Congress I have built a reputation as a fiscal conservative and a proponent of the free market.

Questions of expense and free markets, however, bring us back to remembering how vast our country is. No amount of fervent, fiscal-conservative wishing can make rural areas less expensive to reach. The companies that serve these areas average only 3.5 customers per square mile. Operating a rural telecommunications business is costly, and it defies free market principles in favor of serving the people who live in difficult to reach areas.

Steps can and should be taken to reform USF in ways that will reaffirm our national commitment to universal service. Among many other reforms, companies ought to receive USF dollars based on what it costs to provide service. Contributions to the USF should be spread more equitably across telecommunications services to broaden the base of support. We should not, however, allow a troubled program to destroy the goal of the policy itself.

When this Congress draws to a close, I will return to Wyoming as a private citizen.  The House Subcommittee on Telecommunications and the Internet will be left without a member from the least populated state in the country.  Let us hope that policy makers remember that beyond the Beltway, a very large country exists.  In rural America, universal service is not just an academic exercise- it is a matter of being connected or being cut off.

Cubin is a member of the House Energy and Commerce Committee.