III 109th CONGRESS 1st Session S. 284 IN THE SENATE OF THE UNITED STATES February 3, 2005 Mr. Smith (for himself, Mr. Bayh, Mr. Allen, Mr. Wyden, Mr. McCain, Mr. Levin, Mr. Crapo, Mr. Dayton, Mr. Hagel, Mr. Baucus, Mr. Coleman, Mr. Hatch, Mr. Bennett, Mr. Thomas, Mr. Enzi, Mr. Kyl, Mr. Grassley, Mr. Craig, Mr. Lugar, and Mr. Domenici) introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation A BILL To distribute universal service support equitably throughout rural America, and for other purposes.

1.

Short title

This Act may be cited as the Rural Universal Service Equity Act of 2005.

2.

Findings and purpose

(a)

Findings

Congress makes the following findings: (1) The Federal Communications Commission’s high-cost model support program for certain carriers provides no Federal support to 40 States. (2) Federal universal service support should be calculated and targeted to small geographic regions within a State to provide greater assistance to the rural consumers most in need of support. (3) Local telephone competition and emerging technologies are threatening the viability of Federal universal service support. (b)

Purposes

The purposes of this Act are as follows: (1) To begin consideration of universal service reform. (2) To spread the benefits of the existing Federal high-cost model support mechanism more equitably across the nation.

3.

Comptroller General report on need to reform high-cost support mechanism

Not later than one year after the date of the enactment of this Act, the Comptroller General shall submit to Congress a report on the need to reform the high-cost support mechanism for rural, insular, and high-cost areas. As part of the report, the Comptroller General shall provide an overview and discuss whether— (1) existing Federal and State high-cost support mechanisms ensure rate comparability between urban and rural areas; (2) the Federal Communications Commission and the States have taken the necessary steps to remove implicit support; (3) the existing high-cost support mechanism has affected the development of local competition in urban and rural areas; and (4) amendments to section 254 of the Communications Act of 1934 (47 U.S.C. 254) are necessary to preserve and advance universal service.

4.

Eligibility for universal service support for high-cost areas

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

Universal service support for high-cost areas

(1)

Calculating support

In calculating Federal universal service support for eligible telecommunications carriers that serve rural, insular, and high-cost areas, the Commission shall, subject to paragraphs (2) and (3), revise the Commission’s support mechanism for 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 the national average cost per line by such amount as the Commission determines appropriate for the purpose of ensuring the equitable distribution of universal service support throughout the United States. (2)

Hold harmless support

In implementing this subsection, the Commission shall ensure that no State receives less Federal support calculated under paragraph (1) than the State would have received, up to 10 percent of the total support distributed, under the Commission’s support mechanism for high-cost areas as in effect on the date of the enactment of this subsection. (3)

Limitation on total support to be provided

The total amount of support for all States, as calculated under paragraphs (1) and (2), shall be equivalent to the total support calculated under the Commission’s support mechanism for high-cost areas as in effect on the date of the enactment of this subsection. (4)

Construction of limitation

The limitation in paragraph (3) shall not be construed to preclude fluctuations in support on the basis of changes in the data used to make such calculations. (5)

Implementation

Not later than 180 days after the date of the enactment of this subsection, the Commission shall complete the actions (including prescribing or amending regulations) necessary to implement the requirements of this subsection. (6)

Definition

In this subsection, the term Commission’s support mechanism for high-cost areas means section 54.309 of title 47, Code of Federal Regulations and the regulations referred to in such section. .

5.

No effect on rural telephone companies

Nothing in this Act shall be construed to affect the support provided to an eligible telecommunications carrier under section 214(e) of the Communications Act of 1934 (47 U.S.C. 214(e)) that is a rural telephone company (as defined in section 3 of such Act (47 U.S.C. 153)).