[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5072 Introduced in House (IH)]







109th CONGRESS
  2d Session
                                H. R. 5072

To reform the universal service provisions of the Communications Act of 
                     1934, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 30, 2006

Mr. Terry (for himself and Mr. Boucher) introduced the following bill; 
       which was referred to the Committee on Energy and Commerce

_______________________________________________________________________

                                 A BILL


 
To reform the universal service provisions of the Communications Act of 
                     1934, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Universal Service Reform Act of 
2006''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds the following:
            (1) The current State and Federal mechanisms used to 
        collect and distribute universal service support are not 
        sustainable in a competitive and rapidly changing technological 
        environment.
            (2) Voice-over-Internet-Protocol, wireless voice services, 
        and popular flat rate, all-distance pricing plans for voice 
        services have rendered meaningless the distinctions between and 
        among interstate telecommunications and information services, 
        and between and among intrastate telecommunications services 
        and information services, thus making universal service support 
        mechanisms based upon such jurisdictional concepts 
        unsustainable.
            (3) Providing unlimited universal service support to 
        multiple competing telecommunications carriers in the same 
        service area results in an excessive demand for universal 
        service support.
            (4) Implicit support mechanisms were the universal service 
        support mechanisms of choice for State commissions and during 
        the natural monopoly era that preceded the Telecommunications 
        Act of 1996. Implicit support mechanisms are effective in 
        monopoly environments; however, they are inconsistent with the 
        competitive environment fostered by the 1996 Act, and they 
        should be eliminated.
            (5) The Commission was required by the Telecommunications 
        Act of 1996 to make all Federal universal service support 
        mechanisms explicit. Explicit universal service support 
        mechanisms are appropriate in the competitive 
        telecommunications marketplace of the 21st century.
            (6) Universal service support mechanisms should preserve 
        incentives for continued investment in and enhancements to the 
        public switched telephone network and to increase the 
        availability of broadband services.
            (7) Maintaining predictable, sufficient, and sustainable 
        universal service support will require that support be 
        collected from a broad base of service providers and in a more 
        competitively and technology neutral manner.
            (8) The aggregate amount of universal service support is 
        increasing annually and as a result, telecommunications 
        carriers have had to pay an increased percentage of their total 
        revenues to support universal service support mechanisms. By 
        law, telecommunications carriers may pass through these costs 
        to their subscribers, increasing the amount consumers are 
        required to pay to maintain the continued growth of universal 
        service support.
            (9) Federal universal service support mechanisms have 
        succeeded in bringing quality and affordable telecommunications 
        services to rural areas that are reasonably comparable to those 
        in urban areas. Existing Federal universal service support 
        mechanisms have helped to bring telecommunications services to 
        approximately 95 percent of United States households.
    (b) Purposes.--The purposes of this Act are to reform State and 
Federal universal service support contribution and distribution 
mechanisms by--
            (1) targeting universal service support specifically to 
        eligible telecommunications carriers in high-cost geographic 
        areas to ensure that communications services and high-speed 
        broadband services are made available throughout all of the 
        States of the United States in a fair and equitable manner;
            (2) constraining the growth of universal service support by 
        extending the current cap on the portion of the high cost loop 
        support mechanism that is distributed to rural incumbent local 
        exchange carrier study areas to all eligible telecommunications 
        carriers receiving support from the high cost support 
        mechanism;
            (3) ensuring universal service support contributions are 
        assessed fairly, equitably, and in a competitively neutral 
        manner by means of a contribution assessment methodology 
        determined by the Federal Communications Commission applicable 
        to any entity that currently contributes to universal service 
        support, provides real-time voice communications, over any 
        platform, in which the voice component is the primary function, 
        or offers a connection to the network over any platform;
            (4) strengthening the criteria for eligible recipients of 
        universal service support: and
            (5) ensuring that the United States becomes a world leader 
        in broadband deployment by making high-speed broadband services 
        and facilities eligible for universal service support.

SEC. 3. DEFINITIONS.

    Section 3(a) of the Communications Act of 1934 (47 U.S.C. 153(a)) 
is amended--
            (1) by redesignating paragraphs (20) through (52) as 
        paragraphs (22) through (54);
            (2) by redesignating paragraphs (11) through (19) as 
        paragraphs (12) through (20), respectively;
            (3) by inserting after paragraph (10) the following new 
        paragraph:
            ``(11) Communications service provider.--The term 
        `communications service provider' means any entity that--
                    ``(A) contributes to or receives universal service 
                support for the most recent calendar quarter ending 
                before the date of enactment of the Universal Service 
                Reform Act of 2006;
                    ``(B) uses telephone numbers or Internet protocol 
                addresses, or their functional equivalents or 
                successors, to offer a service or a capability--
                            ``(i) that provides or enables real-time 2-
                        way voice communications; and
                            ``(ii) in which the voice component is the 
                        primary function; or
                    ``(C) offers for a fee, directly to the public, or 
                to such classes of users as to be effectively available 
                directly to the public, a physical transmission 
                facility, whether circuit-switched, packet-switched, a 
                leased line, or using radio frequency transmissions, 
                regardless of the form, protocol, or statutory 
                classification of the service, that allows an end user 
                to obtain access, from a particular end user location, 
                to a network that permits the end user to engage in 
                electronic communications (including 
                telecommunications) with the public.''; and
            (4) by inserting after paragraph (20) (as redesignated by 
        paragraph (2) of this section) the following new paragraph:
            ``(21) High-speed broadband service.--
                    ``(A) Definition.--The term `high-speed broadband 
                service' means a two way network that uses the Internet 
                protocol or a successor protocol, and the associated 
                capabilities and functionalities, services, and 
                applications provided over an Internet protocol 
                platform or for which an Internet protocol capability 
                is an integral component, and services, facilities, 
                equipment, and applications that enable an end-user to 
                receive communications in Internet protocol format, 
                regardless of whether the communications are voice, 
                data, video, or any other form, at a download receiving 
                rate not lower than 1 megabit per second.
                    ``(B) Commission speed adjustment requirements.--
                The Commission shall review the speed requirement in 
                subparagraph (A) every other year beginning the sixth 
                year after implementation of the Universal Service 
                Reform Act of 2006 and shall make the necessary 
                adjustments to move to higher speeds as deployment and 
                advancement of new technology allows communications 
                service providers to provide higher speed broadband to 
                end users in an economically efficient manner.
                    ``(C) Internet protocol.--The term `Internet 
                protocol' means the Transmission Control Protocol/
                Internet Protocol, or any predecessor or successor 
                protocols to such protocol.''.

SEC. 4. UNIVERSAL SERVICE REFORM.

    (a) In General.--Section 254 of the Communications Act of 1934 (47 
U.S.C. 254) is amended by amending subsections (a) through (e) to read 
as follows:
    ``(a) Procedures to Reform Universal Service.--
            ``(1) Federal-state joint board on universal service.--
        Within one month after the date of enactment of the Universal 
        Service Reform Act of 2006, the Commission shall institute and 
        refer to the Federal-State Joint Board under section 410(c) of 
        this title a proceeding to recommend changes to any of its 
        regulations in order to implement section 214(e) of this title 
        and this section (as amended by the Universal Service Reform 
        Act of 2006), including the definition of the services that are 
        supported by Federal universal service support mechanisms and a 
        specific timetable for completion of such recommendations. In 
        addition to the members of the Joint Board required under 
        section 410(c) of this title, one member of such Joint Board 
        shall be a State-appointed utility consumer advocate nominated 
        by a national organization of State utility consumer advocates. 
        The Joint Board shall, after notice and opportunity for public 
        comment, make its recommendations to the Commission 9 months 
        after the date of enactment of the Universal Service Reform Act 
        of 2006.
            ``(2) Commission action.--The Commission shall initiate a 
        single proceeding to consider the recommendations from the 
        Joint Board required by paragraph (1) and shall complete such 
        proceeding within 18 months after the date of enactment of the 
        Universal Service Reform Act of 2006. The rules established by 
        such proceeding shall include a definition of the services that 
        are supported by Federal universal service support mechanisms 
        and a specific timetable for implementation.
    ``(b) Universal Service Principles.--The Joint Board and the 
Commission shall base policies for the preservation and advancement of 
universal service on the following principles:
            ``(1) Quality and rates.--Quality services should be 
        available at just, reasonable, and affordable rates.
            ``(2) Access to advanced services.--Access to advanced 
        telecommunications and information services should be provided 
        in all regions of the Nation.
            ``(3) Access in rural and high cost areas.--Consumers in 
        all regions of the Nation, including low-income consumers and 
        those in rural, insular, and high cost areas, should have 
        access to the services the Commission determines to be 
        universal services in accordance with subsection (c), including 
        advanced telecommunications and information services, that are 
        reasonably comparable to those services provided in urban areas 
        and that are available at rates that are reasonably comparable 
        to rates charged for similar services in urban areas.
            ``(4) Equitable and nondiscriminatory contributions.--All 
        communications service providers should make equitable and 
        nondiscriminatory contributions to the preservation and 
        advancement of universal service.
            ``(5) Specific and predictable support mechanisms.--There 
        should be specific, predictable and sufficient Federal and 
        State mechanisms to preserve and advance universal service.
            ``(6) Access to advanced telecommunications services for 
        schools, health care, and libraries.--Elementary and secondary 
        schools and classrooms, health care providers, and libraries 
        should have access to advanced telecommunications services as 
        described in subsection (h).
            ``(7) Additional principles.--Such other principles as the 
        Joint Board and the Commission determine are necessary and 
        appropriate for the protection of the public interest, 
        convenience, and necessity and are consistent with this Act.
    ``(c) Definition.--
            ``(1) In general.--Universal service includes the services 
        defined on the date of enactment of the Universal Service 
        Reform Act of 2006 as universal services, high-speed broadband 
        services, and an evolving level of telecommunications and 
        information services that the Commission shall establish 
        periodically under this section, taking into account advances 
        in telecommunications and information technologies and 
        services. The Joint Board in recommending, and the Commission 
        in establishing, the definition of the services that are 
        supported by Federal universal service support mechanisms shall 
        consider the extent to which such services--
                    ``(A) are essential to education, public health, or 
                public safety;
                    ``(B) are being deployed in public 
                telecommunications networks by communications service 
                providers; and
                    ``(C) are consistent with the public interest, 
                convenience, and necessity.
            ``(2) Alterations and modifications.--The Joint Board shall 
        consider whether to recommend to the Commission modifications 
        in the definition of the services that are supported by Federal 
        universal service support mechanisms no less than once every 5 
        years.
            ``(3) Special services.--In addition to the services 
        included in the definition of universal service under paragraph 
        (1), the Commission may designate additional services for such 
        support mechanisms for schools, libraries, and health care 
        providers for the purposes of subsection (h).
            ``(4) High-speed broadband service.--The definition of 
        universal service shall not be construed to exclude eligible 
        communications service providers from using universal service 
        funding for the provision, maintenance, and upgrading of high-
        speed broadband service.
    ``(d) Universal Service Support Contributions.--
            ``(1) Calculating universal service support 
        contributions.--
                    ``(A) In general.--The Commission shall assess 
                contributions to universal service support mechanisms 
                from communications service providers. The Commission 
                shall assess such contributions in a manner that is 
                equitable and competitively neutral, is 
                nondiscriminatory in nature, and ensures that 
                communications service providers are subject to similar 
                obligations. The Commission may employ any methodology 
                to assess such contributions, including consideration 
                of--
                            ``(i) revenues derived from the provision 
                        of intrastate, interstate, and foreign 
                        communications services by communications 
                        service providers;
                            ``(ii) working telephone numbers used by 
                        communications service providers; or
                            ``(iii) any other current or successor 
                        identifier protocols or connections to the 
                        network used by communications service 
                        providers.
                    ``(B) Use of more than one methodology.--If no one 
                methodology designated under subparagraph (A) 
                effectuates the principles described in this Act, the 
                Commission may employ a combination of any such 
                methodologies.
                    ``(C) Low volume exception.--The Commission may 
                limit the contributions of communications service 
                providers whose customers typically make a low volume 
                of calls on a monthly basis.
                    ``(D) De minimis exception.--The Commission may 
                exempt a communications service provider from the 
                requirements of this subsection if the communications 
                activities of such provider are limited to such an 
                extent that the level of contributions of such provider 
                to the preservation and advancement of universal 
                service would be de minimis.
            ``(2) Reports.--The Commission shall establish annual 
        reporting requirements for all communications service providers 
        contributing to universal service support mechanisms or 
        receiving universal service support. The reporting requirements 
        shall not impose unnecessary burdens, and shall be technology 
        and provider neutral. The Commission shall periodically review 
        the reporting requirements to ensure that universal service 
        support is used for the provision, maintenance, and upgrading 
        of the facilities for which support is intended.
            ``(3) Universal service support contribution limits.--
                    ``(A) Limitation.--The total amount of universal 
                service support for all universal service support 
                mechanisms other than support for schools, libraries, 
                rural health care, life-line, link-up, and toll 
                limitation shall not exceed the total amount that was 
                collected from all sources for all universal service 
                support mechanisms other than schools, libraries, rural 
                health care, life-line, link-up, and toll limitation in 
                the last year prior to the date of enactment of the 
                Universal Service Reform Act of 2006, as adjusted 
                annually by a growth factor and once, within one year 
                of the date of enactment of the Universal Service 
                Reform Act of 2006, by the amounts that the adjustments 
                in subsections (e)(3) and (m) increase demand for 
                universal service support.
                    ``(B) Growth factor.--The growth factor shall be 
                the annual percentage change in the Gross Domestic 
                Product-Chained Price Index (GDP-CPI), or any successor 
                general inflationary factor that the Bureau of Economic 
                Analysis of the Department of Commerce determines shall 
                supersede such index, plus the annual percentage change 
                in the total number of rural incumbent local exchange 
                carrier working loops, if that percentage change is 
                greater than zero.
                    ``(C) Intercarrier compensation recovery 
                mechanism.--If at any time after the date of enactment 
                of the Universal Service Reform Act of 2006 the 
                Commission mandates that intercarrier compensation 
                revenues be recovered through an alternative revenue 
                recovery mechanism, such alternative revenue recovery 
                mechanism shall be included in the limitation set forth 
                in subparagraph (A), and the Commission shall adjust 
                such limitation once, within 3 months of mandating that 
                intercarrier compensation revenues be recovered through 
                an alternative revenue recovery mechanism, by the 
                amount that such revenue recovery mechanism increases 
                demand for universal service support.
    ``(e) Distribution and Use of Universal Service Support.--
            ``(1) In general.--Only an eligible telecommunications 
        carrier designated under section 214(e) shall be eligible to 
        receive specific Federal universal service support. A carrier 
        that receives such support shall use that support only for the 
        provision, maintenance, and upgrading of facilities and 
        services for which the support is intended. Any such support 
        should be explicit and sufficient to achieve the purposes of 
        this section.
            ``(2) Uses of universal service support.--The use of 
        universal service support for all rural, insular, and high cost 
        areas--
                    ``(A) should be expanded to include high-speed 
                broadband services;
                    ``(B) should be based on actual costs reasonably 
                incurred in providing such services, exclusive of the 
                cost of acquiring spectrum, except that an eligible 
                telecommunications carrier that is an incumbent local 
                exchange carrier may elect to have the Commission 
                calculate the amount of universal service support 
                payable to such carrier pursuant to section 54.309 of 
                title 47, Code of Federal Regulations (as in effect on 
                the date of the enactment of the Universal Service 
                Reform Act of 2006); and
                    ``(C) should be available to communications service 
                providers that are determined to be eligible 
                telecommunications carriers under section 214(e).
            ``(3) Support for non-rural carriers providing service in 
        rural, insular, and high cost areas.--
                    ``(A) Calculating support.--Except with respect to 
                non-rural carriers serving insular areas, in 
                calculating Federal universal service support for 
                eligible telecommunications carriers that serve rural, 
                insular, and high cost areas and that are not rural 
                telephone companies, the Commission shall, subject to 
                the provisions of subparagraph (B), revise the 
                Commission's support mechanism for rural, insular, and 
                high cost areas to provide support to each wire center 
                in which the incumbent local exchange carrier's average 
                cost per line for such wire center exceeds 3.75 times 
                the national average cost per line.
                    ``(B) Hold harmless.--In implementing this 
                paragraph, the Commission shall ensure that no non-
                rural carrier receives less Federal support calculated 
                under paragraph (1) than the non-rural carrier would 
                have received under the Commission's support mechanism 
                for rural, insular, and high cost areas as in effect on 
                the day before the date of the enactment of the 
                Universal Service Reform Act of 2006.
            ``(4) Administration: accountability standards.--
                    ``(A) Network traffic identification accountability 
                standards.--
                            ``(i) Network traffic identification 
                        standards.--Communications service providers 
                        shall ensure that all traffic that originates 
                        on their networks contains sufficient 
                        information to allow for traffic identification 
                        by other communications service providers that 
                        transport, transit, or terminate such traffic, 
                        including information on the identity of the 
                        originating provider, the calling and called 
                        parties, and the jurisdiction in which the 
                        traffic originates.
                            ``(ii) Network traffic identification 
                        rulemaking.--The Commission, in consultation 
                        with the States, shall initiate a single 
                        rulemaking no later than 180 days after the 
                        date of enactment of the Universal Service 
                        Reform Act of 2006 to establish rules and 
                        enforcement provisions for traffic 
                        identification. Such rules shall include 
                        mandatory requirements for identification of 
                        all traffic by the originating provider and 
                        shall require that such traffic identification 
                        information is transferred to transporting, 
                        transiting, and terminating providers unchanged 
                        and unaltered. The rules shall also establish 
                        procedures for carriers to contest 
                        insufficiently labeled traffic in a prompt 
                        manner and shall establish appropriate 
                        enforcement and penalty provisions for carriers 
                        that insufficiently label traffic. The 
                        processes to adjudicate insufficiently labeled 
                        traffic shall require the relevant providers to 
                        demonstrate their compliance with the 
                        Commission's traffic labeling standards.
                            ``(iii) Network traffic identification 
                        enforcement.--The Commission shall adopt clear 
                        penalties, fines, and sanctions for 
                        insufficiently labeled traffic. The penalties, 
                        fines, and sanctions established by the 
                        Commission shall provide--
                                    ``(I) adequate retroactive monetary 
                                reimbursement to the defrauded provider 
                                or providers equal to the rate 
                                differential between accurately and 
                                inaccurately labeled traffic;
                                    ``(II) monetary fines determined by 
                                the Commission;
                                    ``(III) a deterrence penalty for 
                                those offenders who do not resolve 
                                their violations or remit the required 
                                reimbursements to defrauded provider or 
                                providers;
                                    ``(IV) an adequate deterrence 
                                penalty against frivolous accusations;
                                    ``(V) the ability of network 
                                traffic operators to block inaccurately 
                                labeled traffic;
                                    ``(VI) the decertification of 
                                repeat offenders or those providers 
                                unwilling to comply with the 
                                established rules and penalties; and
                                    ``(VII) specific and clear time 
                                frames for the investigation and 
                                subsequent penalty, fines, and 
                                sanctions of offending providers, to 
                                ensure proper accountability.
                            ``(iv) Accountability for network traffic 
                        exchange.--To ensure that all communications 
                        service providers are accountable for the 
                        volume of traffic the providers terminate on 
                        other carriers' networks, the Commission shall 
                        ensure that all providers are compensated for 
                        the use of their networks by other providers.
                    ``(B) Universal service distribution accountability 
                standards.--To ensure fairness and accountability in 
                the distribution of universal service funding 
                contributions, the Commission shall promulgate rules to 
                calculate the level of universal service support to be 
                distributed to all eligible recipients.''.
    (b) Rural Health Care Support Mechanisms.--
            (1) Amendment.--Subparagraph (A) of section 254(h)(1) of 
        the Communications Act of 1934 (47 U.S.C. 254(h)(1)) is amended 
        to read as follows:
                    ``(A) Health care services for rural areas.--Within 
                180 days after the date of enactment of the Universal 
                Service Reform Act of 2006, the Commission shall 
                prescribe regulations that provide that a 
                communications service provider shall, upon, receiving 
                a bona fide request, provide covered services which are 
                necessary for the provision of health care services in 
                a State, including instruction relating to such 
                services, to any public or nonprofit health care 
                provider that serves persons who reside in rural areas 
                in that State at rates that are reasonably comparable 
                to rates charged for similar services in urban areas in 
                that State. A communications service provider providing 
                service under this subparagraph shall be entitled to 
                have an amount equal to the difference, if any, between 
                the rates for services provided to health care 
                providers for rural areas in a State and the rates for 
                similar services in urban areas in that State treated 
                as a service obligation as a part of its obligation to 
                participate in the mechanisms to preserve and advance 
                universal service.''.
            (2) Definition of health care provider.--Subparagraph (B) 
        of section 254(h)(7) of such Act (47 U.S.C. 254(h)(7)(B)) is 
        amended to read as follows:
                    ``(B) Health care provider.--The term `health care 
                provider' means--
                            ``(i) post-secondary educational 
                        institutions offering health care instruction, 
                        teaching hospitals, and medical schools;
                            ``(ii) community health centers or health 
                        centers providing health care to migrants;
                            ``(iii) local health departments or 
                        agencies;
                            ``(iv) community mental health centers;
                            ``(v) not-for-profit hospitals;
                            ``(vi) critical access hospitals;
                            ``(vii) rural hospitals with emergency 
                        rooms;
                            ``(viii) rural health clinics;
                            ``(ix) not-for-profit nursing homes or 
                        skilled nursing homes;
                            ``(x) hospice providers;
                            ``(xi) emergency medical services 
                        facilities;
                            ``(xii) rural dialysis facilities;
                            ``(xiii) elementary, secondary, and post-
                        secondary school health clinics; and
                            ``(xiv) consortia of health care providers 
                        consisting of one or more entities described in 
                        clauses (i) through (xiii).''.
            (3) Definition of rural for health care support.--Section 
        254(h)(7) of such Act is further amended by adding at the end 
        the following new subparagraph:
                    ``(J) Rural area.--Within 180 days after the date 
                of enactment of the Universal Service Reform Act of 
                2006, the Commission shall prescribe regulations that 
                provide that, for purposes of the rural health care 
                universal service support mechanisms established 
                pursuant to this subsection, a `rural area' is--
                            ``(i) any incorporated or unincorporated 
                        place in the United States, its territories and 
                        insular possessions (including any area within 
                        the Federated States of Micronesia, the 
                        Republic of the Marshall Islands and the 
                        Republic of Palau) that has no more than 20,000 
                        inhabitants based on the most recent available 
                        population statistics from the Census Bureau;
                            ``(ii) any area located outside of the 
                        boundaries of any incorporated or 
                        unincorporated city, village, or borough having 
                        a population exceeding 20,000;
                            ``(iii) any area with a population density 
                        of fewer than 250 persons per square mile; or
                            ``(iv) any place that qualified as a `rural 
                        area' and received support from the rural 
                        health care support mechanism pursuant to the 
                        Commission's rules in effect prior to December 
                        1, 2004, and that continues to qualify as a 
                        `rural area' pursuant to such rules.''.
    (c) Schools, Libraries, Rural Health Care, Life-Line, Link-Up, and 
Toll Limitation Hold Harmless.--Except as provided in subsections 
(h)(1)(A), (h)(7)(B), and (h)(7)(J) of section 254 of the 
Communications Act of 1934 (47 U.S.C. 254), as amended by subsection 
(b)--
            (1) nothing in this Act (and the amendments made by this 
        Act) shall be construed as limiting, changing, modifying, or 
        altering the amount of support or means of distribution for the 
        schools, libraries, rural health care, life-line, link-up, and 
        toll limitation programs; and
            (2) the Federal Communications Commission shall ensure that 
        such amendments do not result in a decrease of such support to 
        a level below the level for the fiscal year preceding the 
        fiscal year in which this Act is enacted.

SEC. 5. ELIGIBLE RECIPIENTS OF UNIVERSAL SERVICE SUPPORT.

    (a) Amendment.--Section 214(e) of the Communications Act of 1934 
(47 U.S.C. 214(e)) is amended--
            (1) by redesignating paragraphs (3), (4), (5), and (6) as 
        paragraphs (6), (7), (9), and (8), respectively, and reordering 
        such paragraphs in numerical order; and
            (2) by striking paragraphs (1) and (2) and inserting the 
        following:
            ``(1) Eligibility to receive universal service support.--A 
        communications service provider shall be eligible to receive 
        universal service support in accordance with the requirements 
        of this subsection only if such communications service 
        provider--
                    ``(A) uses its own facilities to make available in 
                a service area the services that have been determined 
                by the Commission to be universal services pursuant to 
                section 254(c), and responds to reasonable requests for 
                service from persons located anywhere in such service 
                area consistent with carrier-of-last-resort 
                requirements in the State in which the requesting 
                person is located;
                    ``(B) advertises the supported services and their 
                associated charges throughout the service area using 
                media of general distribution, and advertises the 
                availability of life-line and link-up services in a 
                manner reasonably designed to reach those likely to 
                qualify for those services;
                    ``(C) demonstrates the ability to remain functional 
                in emergency situations;
                    ``(D) satisfies consumer protection and service 
                quality standards; and
                    ``(E) meets the basic requirements for the 
                deployment of high-speed broadband service, and 
                provides high-speed broadband service, except that the 
                Commission shall establish a process--
                            ``(i) whereby a determination can be made 
                        to waive the requirements of this subparagraph 
                        for 3 years upon application of a 
                        communications service provider demonstrating 
                        that the deployment and provision of high-speed 
                        broadband service is not technically feasible 
                        or would materially impair the communications 
                        service provider's ability to continue to 
                        provide local exchange service throughout its 
                        service area, except that a waiver shall be 
                        deemed automatically granted under this clause 
                        for a communications service provider which can 
                        demonstrate that the cost per line of deploying 
                        and providing high-speed broadband service is 
                        at least three times the average cost of 
                        providing high-speed broadband service among 
                        all recipients of universal service support, 
                        subject to the renewal provisions set forth in 
                        clause (ii);
                            ``(ii) whereby the communications service 
                        provider may seek renewal of such waiver every 
                        3 years for as long as the deployment and 
                        provision of high-speed broadband service is 
                        not technically feasible or would materially 
                        impair the communications service provider's 
                        ability to continue to provide local exchange 
                        service throughout its service area; and
                            ``(iii) whereby any application of a 
                        communications service provider for a waiver 
                        pursuant to clause (i) on which the Commission 
                        has not taken final action within 60 days of 
                        the date of submission to the Commission shall 
                        be deemed granted.
            ``(2) Eligibility criteria.--In addition to the criteria 
        specified in paragraph (1), the Commission shall establish such 
        additional eligibility criteria for the receipt of universal 
        service support by communications service providers as it deems 
        necessary and in the public interest. The criteria established 
        in paragraph (1) and the criteria established by the Commission 
        pursuant to this paragraph shall be used by State commissions 
        in determining which providers shall be designated as eligible 
        recipients of universal service support for the purpose of 
        paragraph (3).
            ``(3) Designation of eligible recipients.--A State 
        commission shall, upon its own motion or upon request, 
        designate as an eligible recipient of universal service support 
        only those providers meeting the requirements of paragraphs (1) 
        and (2).
            ``(4) Grandfather provision.--Recipients of universal 
        service support in any service area prior to the date of 
        enactment of the Universal Service Reform Act of 2006 shall 
        meet the eligibility requirements for eligible recipients of 
        universal service support--
                    ``(A) as described in paragraphs (1)(A) through (D) 
                within one year of the date of enactment of the 
                Universal Service Reform Act of 2006; and
                    ``(B) as described in paragraph (1)(E) within 5 
                years after the date of enactment of the Universal 
                Service Reform Act of 2006.
        Failure of such an eligible recipient of universal service 
        support to maintain and meet the eligibility requirements 
        within the period required by subparagraph (A) or (B) after the 
        date of enactment of the Universal Service Reform Act of 2006 
        shall require the automatic termination of Federal universal 
        service support to that recipient. This paragraph shall not be 
        construed to prohibit such a recipient from obtaining a waiver 
        under paragraph (1)(E).
            ``(5) State authority.--Nothing in this Act or the 
        Universal Service Reform Act of 2006 precludes a State from 
        establishing funding mechanisms to preserve and advance 
        universal service within that State pursuant to section 254(f) 
        of this Act.''.
    (b) Definitions.--Paragraph (9) of section 214(e) (as redesignated 
by subsection (a)) is amended to read as follows:
            ``(9) Definitions.--As used in this subsection, the term 
        `service area' means a geographic area that aligns with the 
        area in which a communications service provider is licensed or 
        authorized to provide service for the purpose of determining 
        universal service obligations and support mechanisms. In the 
        case of an area served by a rural telephone company, `service 
        area' means such company's `study area' or the licensed or 
        authorized service area of any other communications service 
        provider serving an area that overlaps with the service area of 
        a rural telephone company.''.

SEC. 6. REMOVAL OF IMPEDIMENTS TO SUFFICIENT SUPPORT MECHANISMS.

    Section 254 of the Communications Act of 1934 is amended by adding 
at the end the following new subsection:
    ``(m) Removal of Limitations on High Cost Support Mechanisms.--The 
limitations on universal service support contained in section 54.305 of 
the Commission's regulations (47 C.F.R. 54.305), and the individual 
caps imposed upon carriers contained in section 36.631 of the 
Commission's regulations (47 C.F.R. 36.631), shall cease to be 
effective on the date of enactment of the Universal Service Reform Act 
of 2006. The Commission shall not, on or after such date of enactment, 
enforce or reimpose limitations on support mechanisms for rural 
telephone companies or exchanges they acquire based on fund size or 
other considerations unrelated to the sufficiency of support to achieve 
the purposes of this section.''.

SEC. 7. APPLICATION OF ANTIDEFICIENCY ACT.

    (a) Making Antideficiency Act Exemption Permanent.--Section 254 of 
the Communications Act of 1934 (47 U.S.C. 254) is amended by adding the 
following subsection (n):
    ``(n) Application of Antideficiency Act.--Section 1341 and 
subchapter II of chapter 15 of title 31, United States Code, do not 
apply--
            ``(1) to any amount collected or received as Federal 
        universal service contributions required by this section, 
        including any interest earned on such contributions; nor
            ``(2) to the expenditure or obligation of amounts 
        attributable to such contributions for universal service 
        support programs established pursuant to this section.''.
    (b) Investment of Universal Service Fund Contributions.--
Notwithstanding any other provision of law, including but not limited 
to sections 3302, 3321, 3322, and 3325 of title 31, United States Code, 
the cash balance of receipts of universal service contributions 
collected pursuant to section 254 of the Communications Act of 1934 (47 
U.S.C. 254) shall be invested by the Commission or its designee in 
conservative, liquid, interest-bearing investment vehicles of 
government backed securities until such time as such receipts are 
disbursed pursuant to section 254 of the Communications Act of 1934 (47 
U.S.C. 254).

SEC. 8. SCOPE OF SUPPORT.

    The Commission in implementing the requirements of this Act with 
respect to the distribution and use of Federal universal service 
support shall not limit such distribution and use to a single 
connection or primary line, and all residential and business lines 
served by an eligible telecommunications carrier shall be eligible for 
Federal universal service support.

SEC. 9. REPORT TO CONGRESS.

    The Commission shall, not later than 3 years after the date of 
enactment of this Act and triennially thereafter, report to Congress 
regarding the availability of the services designated by the Commission 
as universal services to all Americans, including schools, libraries, 
rural health care providers, and low income consumers.
                                 <all>