Short title

This Act may be cited as the

Internet and Universal Service Act of 2006

Findings and Purpose

(a)

Findings

Congress finds the following: (1)The concept that all Americans, no matter where they live, should have access to high-quality communication services at affordable rates has been a hallmark of Federal policy for over a century. (2)A national communication and information policy must foster innovation, encourage investment, create jobs, improve productivity, and increase consumer benefits. (3)A national policy is needed to accelerate the private sector deployment of advanced communication infrastructure to all Americans as rapidly as possible. (4)The preservation and advancement of universal service is a fundamental goal of the Communications Act of 1934 and the Telecommunications Act of 1996, and must remain the foundation of future communications policy. (5)Maintaining a sustainable universal service fund requires recipients to be accountable for how support is used. (6)Universal service support mechanisms should be used to support the deployment and advancement of a robust communications infrastructure so all Americans can enjoy new and exciting communication services regardless of where they live or the technology used. (7)Any universal service support funding mechanism should be equitable, nondiscriminatory, competitively neutral, and ensure affordable communications services for all Americans. (8)Universal service support should be used to provide incentives for continued investment into the public network and to increase the availability of broadband service to all Americans. (9)Since 1998 the Federal Communications Commission has committed more than $13,000,000,000 to help schools and libraries acquire Internet and telecommunications services. (10)Recently allegations of waste, fraud, and abuse have surfaced, and as steward of the Schools and Libraries Program, the Federal Communications Commission must ensure that participants use program funds appropriately. (11)Promoting telemedicine helps link rural health care facilities to urban medical centers. (12)Many people in remote communities would not have access to health care without use of the Internet, an important issue in rural communities since many lack a physician. (b)

Purposes

The purposes of this Act are to develop a national telecommunications and information policy that fosters innovation, encourages investment, creates jobs, improves productivity, and increases consumer benefits by— (1)ensuring that the United States becomes a world leader in broadband deployment by ensuring that consumers have access to high-capacity broadband services and facilities; (2)updating and advancing the definition of universal service to ensure appropriate incentives through the Federal universal service support fund are used to accelerate the deployment of advanced communications and information services and technologies, including broadband services, for the benefit of all Americans; (3)eliminating economic and technical barriers to investment by eligible telecommunications carriers in rural and high-cost areas, as contemplated in section 706 of the Telecommunications Act of 1996 (47 U.S.C. 157 note); (4)targeting universal service support specifically to high cost areas to ensure that communications services and broadband facilities are made available throughout all of the States in a fair and equitable manner; (5)ensuring universal service support contributions and distributions are— (A)assessed and distributed in a fair, equitable, and competitively neutral manner; and (B)based upon a methodology to assess contributions that effectuates the principles referenced in this Act; (6)guaranteeing the integrity the methods used to calculate and distribute universal service support in a manner consistent with sections 214 and 254 of the Communications Act of 1934 (47 U.S.C. 214 and 254); (7)ensuring that all providers that use the network and facilities of another provider fully compensate each provider for the use of its network and facilities; (8)ensuring the integrity of the Schools and Libraries Program to deter waste, fraud, and abuse, by strengthening the Federal Communications Commission’s management and oversight, including imposing sanctions on applicants and vendors who repeatedly and knowingly violate significant program rules; and (9)improving the effectiveness of the Rural Health Care Program.

Advanced telecommunications infrastructure investment incentives

(a)

Removal of barriers to advanced infrastructure investment

Section 706 of the Telecommunications Act of 1996 (47 U.S.C. 157 note) is amended by adding at the end the following:

(d)

Advanced telecommunications infrastructure investment incentives

The Commission shall ensure that eligible telecommunications carriers have sufficient incentives, through the use of Federal universal service support mechanisms, to invest and deploy network facilities necessary to provide broadband service and broadband voice service for the benefit of all Americans in rural, insular, and high-cost areas.

(b)

Effectuation of investment incentives

(1)

Rulemaking

(A)

In general

Not later than 180 days after the date of enactment of this Act, the Federal Communications Commission shall complete a rulemaking to define advanced telecommunications infrastructure and broadband service. (B)

Required content

In the rulemaking required under subparagraph (A), the definition of advanced telecommunications infrastructure and broadband service shall include— (i)network facilities and capabilities that enable 2-way transmission of information using Internet protocol or any 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 (ii)service facilities and equipment and applications that enable an end-user to receive communications in Internet protocol format, regardless of whether the such communications are voice, data, video, or any other form at a download receiving rate of not lower than 1 megabit per second. (2)

Advanced telecommunications capability rulemaking

Not later than 3 years after the date of enactment of this Act, and every 3 years thereafter, the Federal Communications Commission shall complete a study to review the definition of advanced telecommunications infrastructure and broadband service, as such term is defined under the rulemaking required in paragraph (1), taking into account prevailing standards of technical and economic feasibility and acceptance in the marketplace. (3)

Deployment of next generation networks

Not later than 180 days after the date of enactment of this Act, and every 3 years thereafter, the Federal Communications Commission shall complete a study to identify economic and technical barriers to the deployment of next generation advanced telecommunications and information networks, services, and technologies, including high-capacity transmission and distribution networks capable of delivering 20 megabytes per second capacity, for the benefit of all Americans in rural, insular, and high-cost areas.

Ensuring integrity and accountability in the distribution of universal service

(a)

Controlling the growth of universal service support

Section 214(e) of the Communications Act of 1934 (47 U.S.C. 214(e)) is amended— (1)in paragraph (1)— (A)by redesignating subparagraph (B) as subparagraph (E); (B)in subparagraph (A), by striking ; and and inserting a semicolon; and (C)by inserting the following after subparagraph (A):

(B)offer any calling plan, approved by the State, as meeting the definition of affordable service, at rates, terms, and conditions comparable to those offered by the eligible telecommunications carrier that is the incumbent local exchange carrier for such service area; (C)offer such services and perform such functions as may be required of the eligible telecommunications carrier that is the incumbent local exchange carrier for such service area under applicable Federal and State law to protect customers and promote public health, safety, and welfare, including promoting the quality and reliability of the telecommunications services and infrastructure of the nation; (D)offer such services substantially over its own facilities, excluding unbundled network elements, and further commit to use any support received to achieve facilities-based coverage of the entire service area within 2 years of such date of designation; and

;

(2)in paragraph (2)— (A)in the second sentence, by striking , in the case of an area served by a rural telephone company, and shall, in the case of all other areas,; and (B)in the last sentence, by striking for an area served by a rural telephone company; and (3)by striking paragraph (5) and inserting the following:

(5)

Service area defined

(A)

In general

The term service area means the entire study area of an incumbent local exchange carrier for which such carrier is designated as an eligible telecommunications carrier. (B)

Limitation on size

No carrier may be designated an eligible telecommunications carrier under this section for any area smaller than the entire study area of an incumbent local exchange carrier.

(b)

Eligible telecommunications carrier designation discipline

(1)

In general

Section 214(e) of the Communications Act of 1934 (47 U.S.C. 214(e)) is amended by adding at the end the following:

(7)

Calculation of support

(A)

In general

The Commission shall calculate the amount of support payable to any eligible telecommunications carrier based on a prior showing of the actual costs of providing, maintaining, and upgrading of facilities and services in the service area for which such support is intended of each such carrier. (B)

Election

An eligible telecommunications carrier may elect to have the Commission calculate the amount of support payable to it on the basis of the forward looking costs of such carrier.

(2)

Rulemaking

Not later than 270 days after the date of enactment of this Act, the Commission shall complete a rulemaking to implement section 214(e)(7) of the Communications Act of 1934, including establishing competitively neutral criteria for demonstrating actual costs as required by such section for eligible telecommunications carriers not currently submitting cost data under subparagraph (B) of such section. (c)

Oversight of use of universal service support

Section 254 of the Communications Act of 1934 (47 U.S.C. 254) is amended by adding at the end the following:

(m)

Accountability of eligible telecommunications carriers

(1)

In general

The Commission shall require each eligible telecommunications carrier receiving support under this section to certify annually to the Commission that such carrier is using such support in compliance with subsection (e) and section 214(e), including establishing with specificity that such support is being used for the provision, maintenance, and upgrading of facilities and services for which such support is intended. (2)

Competitively neutral criteria

The Commission shall establish competitively neutral criteria for the annual certifications described in paragraph (1) that impose substantially similar burdens of substantiation on each eligible telecommunications carrier.

(d)

Effective date; transition period for authorized eligible telecommunications carriers

(1)

In general

This section and the amendments made by this section shall take effect on the expiration of the date which is 1 year after the date of enactment of this Act. (2)

Compliance with this section for carriers already designated as eligible

(A)

Compliance required

Each telecommunications carrier designated as an eligible telecommunications carrier under section 214(e) of the Communications Act of 1934 (47 U.S.C. 214(e)) prior to the date of enactment of this Act shall comply with the provisions of this section on or after the date described in paragraph (1). (B)

Penalty for noncompliance

Any telecommunications carrier designated as an eligible telecommunications carrier under section 214(e) of the Communications Act of 1934 (47 U.S.C. 214(e)) prior to the date of enactment of this Act, who fails to comply with the provisions of subparagraph (A) shall have such designation revoked by the Commission.

Stabilization of universal service funding

(a)

Ensuring an equitable contribution base for universal service

(1)

In general

Section 254(d) of the Communications Act of 1934 (47 U.S.C. 254(d)) is amended to read as follows:

(d)

Universal service support contributions

(1)

Administration of universal service programs

In administering Federal universal service funding mechanisms, and developing a contribution methodology for support for rural, insular, and high cost areas the Commission shall ensure— (A)that Federal universal service funding mechanisms are specific, predictable, and sufficient— (i)to preserve and advance universal service and to enable access to advanced telecommunications infrastructure and broadband services, as that term is defined under section 3(b)(1) of the Internet and Universal Service Act of 2006; and (ii)to effectuate the principles set forth in subsection (b); and (B)that contributions to such funding mechanisms are specific, predictable, and sufficient to sustain the funding of networks used to preserve and advance universal service. (2)

Non-discriminatory contribution mechanism

(A)

In general

Each provider of telecommunications, broadband service, or broadband voice service shall contribute to the Federal universal service funding mechanisms established under this section. (B)

Requirements

The Commission shall ensure that the contributions required under subparagraph (A) shall be— (i)equitable and non-discriminatory among different types of providers; (ii)applied as broadly as possible to all types of providers; and (iii)competitively and technologically neutral, excluding no class of providers from the obligation to contribute. (3)

De minimis exception

The Commission may exempt a provider of telecommunications, broadband service, or broadband voice service or any class of such providers 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. (4)

Contribution assessment flexibility

(A)

In general

The Commission may employ any methodology to assess contributions to effectuate the principles referenced in this section, including— (i)revenues; (ii)working telephone numbers; or (iii)any other current or successor identifier protocols or connections to the network. (B)

Use of more than 1 methodology

If no 1 methodology employed under subparagraph (A) effectuates the principles described under this subsection, the Commission may employ a combination of any such methodologies. (C)

Revenue based methodology

Notwithstanding paragraph (2)(B)(ii), if the Commission determines that a revenues based methodology, by itself or in combination with another methodology or methodologies, effectuates the principles described under this subsection, the Commission may assess the interstate, intrastate, and international revenues of a provider of telecommunications, broadband service, or broadband voice service. (D)

Limitation

Nothing in this subsection precludes a State from establishing funding mechanisms to preserve and advance universal service within that State pursuant to subsection (f). (5)

Non-discriminatory eligibility requirement

A provider of telecommunications, broadband service, or broadband voice service is not exempted from the requirements of this subsection solely on the basis that such provider is not eligible to receive support under this section. (6)

Rulemaking

Not later than 180 days after the date of enactment of the Internet and Universal Service Act of 2006, the Commission shall complete a rulemaking proceeding to effectuate the provisions of this subsection. (7)

Billing Statement

A contributor to universal service mechanisms under this section shall— (A)be entitled, but not required, to place on any bill of a customer a separate line item charge that does not exceed the percentage that such contributor is required to contribute under this section; and (B)label such line item charge Federal Universal Service Fee. (8)

Definitions

In this subsection: (A)

Broadband service

The term broadband service means any service used for transmission of information of a user's choosing with a transmission speed of at least 200 kilobits per second in at least 1 direction, regardless of the transmission medium or technology employed, for a fee directly— (i)to the public; or (ii)to such classes of users as to be effectively available directly to the public, including— (I)digital subscriber line service; (II)cable modem service; (III)spectrum based broadband service; or (IV)any service providing such transmission speed that uses advanced telecommunications capability, as that term is defined in section 706(c) of the Telecommunications Act of 1996. (B)

Broadband voice service

The term broadband voice service means a 2-way voice service used for transmission of information of a user's choosing that is— (i)interconnected with a public switched network; or (ii)transmitted, in whole or in part, over the Internet, as that term is defined in section 231(e)(3), or over any successor protocol.

(2)

Conforming amendment

Section 254(b)(4) of the Communications Act of 1934 (47 U.S.C. 254(b)(4)) is amended by striking telecommunications services and inserting telecommunications, broadband service, or broadband voice service. (b)

Proper accounting of universal service contributions

(1)

From all budgets

Notwithstanding any other provision of law, the receipts and disbursements of the universal service contributions collected by the Federal Communications Commission under section 254 of the Communications Act of 1934 (47 U.S.C. 254) shall not be counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of— (A)the budget of the United States Government as submitted by the President; (B)the congressional budget; (C)the Balanced Budget and Emergency Deficit Control Act of 1985; or (D)any other statute requiring budget sequesters. (2)

Additional exemptions

Section 1341, subchapter II of chapter 15, and sections 3302, 3321, 3322, and 3325 of title 31, United States Code, shall not apply to the— (A)collection and receipt of universal service contributions, including the interest earned on such contributions; or (B)disbursement or other obligation of such contributions authorized by the Commission under section 254 of the Communications Act of 1934 (47 U.S.C. 254). (c)

Effective date

This section, and the amendments made by this section, shall apply to all universal service contribution obligations due on or after the date of enactment of this Act.

Network traffic accountability standards

(a)

Network traffic identification accountability rules

Section 251 of the Communications Act of 1934 (47 U.S.C. 251) is amended by adding at the end the following:

(j)

Identification of traffic

(1)

In general

Not later than 120 days after the date of enactment of the Internet and Universal Service Act of 2006, the Commission shall issue and adopt rules to require each carrier to properly identify the traffic that such carrier originates or transmits in such a manner as to enable a terminating carrier to properly identify, measure, and charge for such traffic. (2)

Required content

(A)

Transmission rules

Any rule adopted under paragraph (1) shall require all carriers— (i)originating traffic to transmit information identifying the originating carrier, jurisdiction, and party from which such traffic originates; (ii)to transmit such identifying information without alteration or deletion; (iii)except originating carriers to transmit records identifying the originating carrier; and (iv)to route traffic in accordance with the local exchange routing guide established by the industry to ensure traffic is routed on trunk groups appropriate to the jurisdictional status of such carrier. (B)

Alternate routing arrangements

In fulfilling any requirement under subparagraph (A), a carrier may, if approved in writing by the terminating carrier, use alternate routing arrangements. (C)

Process rules

Notwithstanding subparagraph (A), any rule adopted under paragraph (1) shall also require the Commission to establish— (i)an expedited informal complaint process for the enforcement of such rule; and (ii)such remedies as may be appropriate to be imposed on carriers found to be in violation of such rule. (D)

Available remedies

A remedy described under subparagraph (C)(ii) may include— (i)the imposition of damages in accordance with section 209; (ii)the imposition of a forfeiture in accordance with section 501; (iii)permitting the terminating carrier that receives telecommunications traffic not accompanied by the information required in this subsection to bill the carrier that delivered the traffic to the terminating carrier the charges that would have applied if the Commission finds that the failure of such carrier to provide such information caused or contributed to the inability of the terminating carrier to bill the proper carrier; or (iv)such other remedy as the Commission determines appropriate. (3)

Definition of carrier

As used in this section, the term carrier means any telecommunications carrier including any broadband, broadband voice, CMRS provider, and any other entity that directly or indirectly obtains telephone numbers, or any successor identifier, from the numbering administrator, or any successor administrator, established under this section.

(b)

Separations freeze

All separations allocations for telecommunications carriers authorized under section 410(c) of the Communications Act of 1934 (47 U.S.C. 410(c)) shall be frozen until such time as the Commission completes a rulemaking under this subsection establishing a comprehensive system of intercarrier compensation for all telecommunications and information services carried on the network of more than 1 carrier.

Ensuring integrity and accountability in the schools and libraries program

Title IV of the Communications Act of 1934 (47 U.S.C. 401 et seq.) is amended by adding at the end the following:

417.

Universal Service Administrator

(a)

Appointment of USAC as permanent administrator

The Universal Service Administrative Company is appointed the permanent Administrator of the universal service support mechanisms established under section 254. (b)

Oversight

The Administrator shall be subject to oversight by the Commission. (c)

Duties of the Administrator

The Commission shall define the duties and responsibilities of the Administrator. (d)

Accountability and enforcement

The Commission, in consultation with the Administrator, shall— (1)ensure the integrity and accountability of all programs established under section 254(h); and (2)not later than 180 days after the date of enactment of the Internet and Universal Service Act of 2006, establish rules— (A)identifying appropriate fiscal controls and accountability standards that apply to the Schools and Libraries Program under section 254(h); (B)including a memorandum of understanding, or including contractual relationships, as the Commission determines appropriate, defining the administrative structure and processes by which the Universal Service Administrative Company administers the Schools and Libraries Program under section 254(h); (C)creating performance goals and measures for the Schools and Libraries Program under section 254(h), such goals and measures shall be used by the Commission to determine— (i)how efficiently and cost-effectively funds are spent in supporting the telecommunications needs of schools and libraries; and (ii)areas for improved operations; and (D)establishing appropriate enforcement actions, including imposition of sanctions on applicants and vendors who repeatedly and knowingly violate program rules set forth in section 254(h), such as debarment from the program for individuals convicted of crimes or held civilly liable for actions taken in connection with the Schools and Libraries Program.

Improving effectiveness of rural health care support mechanism

Section 254(h) of the Communications Act of 1934 (47 U.S.C. 2549h)) is amended— (1)in paragraph (1), by striking subparagraph (A) and inserting the following:

(A)

Health care providers for rural areas

(i)

Discounts

A telecommunications carrier, or other provider of communications services shall, upon receiving a bona fide request, provide telecommunications 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 in that State at a discounted rate that is 25 percent of the lowest rate available in that State. (ii)

Limitation

The discount required under clause (i) shall be available only to a public or nonprofit health care provider located in a rural area. (iii)

Definition

For purposes of this subparagraph, the term rural area means— (I)any incorporated or unincorporated area in the United Sates, or in the territories or insular possession of the United States, including any area within the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau, that has not more than 20,000 inhabitants based on the most recent available population statistics published in the most recent decennial census issued by the Census Bureau; (II)any area located outside the boundaries of any incorporated or unincorporated city, village, or borough that has more than 20,000 inhabitants based on the most recent available population statistics published in the most recent decennial census issued by the Census Bureau; or (III)any area that qualified as a rural area under the rules of the Commission in effect on December 1, 2004.

; and

(2)in paragraph (7)— (A)in clause (vi), by striking ; and and inserting a semicolon; and (B)by striking clause (vii) and inserting the following:

(vii)not-for-profit nursing homes or skilled nursing facilities; (viii)critical access hospitals; (ix)emergency medical services facilities; (x)hospice providers; (xi)rural dialysis facilities; (xii)tribal health clinics; (xiii)not-for-profit dental offices; (xiv)school health clinics; (xv)residential treatment facilities; (xvi)consortia of health care providers consisting of 1 or more entities described in clauses (i) through (xv); and (xvii)any other entity the Commission determines— (I)eligible to receive discounted telecommunications service under paragraph (1)(A); and (II)essential to the health, education, or safety of the public.