[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6356 Introduced in House (IH)]







110th CONGRESS
  2d Session
                                H. R. 6356

To reform the collection and distribution of universal service support 
                 under the Communications Act of 1934.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 24, 2008

   Mr. Barton of Texas (for himself and Mr. Stearns) introduced the 
   following bill; which was referred to the Committee on Energy and 
                                Commerce

_______________________________________________________________________

                                 A BILL


 
To reform the collection and distribution of universal service support 
                 under the Communications Act of 1934.

    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, 
Accountability, and Efficiency Act of 2008''.

SEC. 2. UNIVERSAL SERVICE PRINCIPLES, SUPPORTED SERVICES, CONTRIBUTION 
              MECHANISM, AND SUPPORT.

    (a) In General.--Section 254 of the Communications Act of 1934 (47 
U.S.C. 254) is amended by striking subsections (b) through (e) and 
inserting the following:
    ``(b) Universal Service Principles.--The Commission and the Joint 
Board shall base policies to advance the goal of universal service 
while reforming the universal service support and contribution 
mechanisms on all of the following principles:
            ``(1) Affordability.--Voice communications service shall be 
        available to low-income households and households in high cost 
        areas at rates that are affordable to such households.
            ``(2) Efficiency.--Universal service support and 
        contribution mechanisms for the provision of services described 
        in subsection (c) shall impose the lowest possible costs on 
        telecommunications service subscribers and users.
            ``(3) Contribution and distribution requirements.--Neither 
        the provision of universal service support nor the contribution 
        mechanisms for the provision of universal service shall favor 
        any particular provider of voice communications service or any 
        particular technology used to provide voice communications 
        service.
            ``(4) Transparency.--The rules governing both the provision 
        of and contribution to universal service support shall--
                    ``(A) be clear and enforceable; and
                    ``(B) clearly define, and require the annual 
                measurement of, the goals and outcomes of universal 
                service, including the performance measures developed 
                under section 4 of the Universal Service Reform, 
                Accountability, and Efficiency Act of 2008.
            ``(5) Consumer focused.--The paramount goal of the 
        universal service program shall be to support the availability 
        of affordable voice communications service for consumers in 
        low-income households and households in high cost areas 
        throughout the United States, rather than to provide financial 
        support to any new or existing carrier, service provider, or 
        vendor.
            ``(6) Access to advanced telecommunications services for 
        schools, libraries, and rural health care providers.--
        Elementary and secondary schools, libraries, and rural health 
        care providers should have access to advanced 
        telecommunications and information services as described in 
        subsection (h).
    ``(c) Definition of Services Supported.--
            ``(1) Voice communications service support.--
                    ``(A) In general.--Except as provided in paragraph 
                (2), universal service support is to be used solely to 
                provide voice communications service to consumers in 
                households in high cost areas throughout the United 
                States and to consumers in low-income households.
                    ``(B) Definitions.--For purposes of this section, 
                the following definitions apply:
                            ``(i) High cost area.--The Commission shall 
                        define the meaning of the term `high cost 
                        area'.
                            ``(ii) Voice communications service.--The 
                        term `voice communications service' includes 
                        any service using any technology that provides 
                        real-time interactive communications by voice 
                        utilizing the public switched telephone 
                        network, including IP-enabled voice service.
                            ``(iii) IP-enabled voice service.--The term 
                        IP-enabled voice service means the provision of 
                        real-time voice communications offered to the 
                        public, or such classes of users as to be 
                        effectively available to the public, 
                        transmitted through customer premises equipment 
                        using Internet protocol, or a successor 
                        protocol, with interconnection capability such 
                        that the service can originate traffic to, or 
                        terminate traffic from, the public switched 
                        telephone network.
            ``(2) Special services.--In addition to the services 
        supported under paragraph (1), the Commission may designate 
        additional services to receive universal service support for 
        use by schools, libraries, and health care providers in 
        accordance with subsection (h).
    ``(d) Contributions.--
            ``(1) Basis for contributions.--In establishing under the 
        principles set forth in subsection (b) the contribution 
        mechanism for the support of universal service, the Commission 
        shall evaluate its current contribution mechanism and consider 
        alternative mechanisms. The Commission shall have the authority 
        to select any contribution mechanism that is consistent with 
        the principles set forth in subsection (b), but such 
        mechanism--
                    ``(A) shall be based exclusively upon the provision 
                of voice communications service;
                    ``(B) shall not assess broadband transmission or 
                internet access services; and
                    ``(C) shall include an exemption from universal 
                service contributions for low-income households.
            ``(2) Cap on contributions.--In establishing under the 
        principles set forth in subsection (b) the level for the 
        contribution for the support of universal service, the 
        Commission shall require that the total amount of universal 
        service support for all universal service support mechanisms 
        shall not exceed the total amount that was collected from all 
        sources for all universal service support mechanisms in the 
        last year prior to the date of enactment of the Universal 
        Service Reform, Accountability, and Efficiency Act of 2008 and 
        shall decline over time.
            ``(3) Anti-deficiency act compliance.--
                    ``(A) In general.--In designing the contribution 
                mechanism for the support of universal service, the 
                Commission shall take such steps as are necessary to 
                reform such contribution mechanism so that compliance 
                with the requirements of section 3679 of the Revised 
                Statutes (31 U.S.C. 1341; commonly known as the Anti-
                Deficiency Act) will not cause a disruption in the 
                administration of universal service support.
                    ``(B) Report to congressional committees.--The 
                Commission shall determine the earliest time that 
                complying with such section will not cause a disruption 
                in the administration of universal service support, and 
                the Commission shall report that determination promptly 
                to the Committee on Energy and Commerce of the House of 
                Representatives and the Committee on Commerce, Science, 
                and Transportation of the Senate.
    ``(e) Universal Service Support.--
            ``(1) In general.--
                    ``(A) After the date specified in subparagraph (B), 
                only an eligible telecommunications provider designated 
                under section 214(e), as such section is amended by the 
                Universal Service Reform, Accountability, and 
                Efficiency Act of 2008, shall be eligible to receive 
                specific Federal universal service support for the 
                provision of voice communications service in high cost 
                areas.
                    ``(B) The date specified in this subparagraph is 
                the date on which the first set of auctions required 
                under subsection (m) is completed.
            ``(2) Exception to universal service support.--The 
        Commission shall develop a mechanism to prohibit the receipt of 
        universal service support for the provision of voice 
        communications services to consumers in households in high cost 
        areas where the Commission determines, based on publicly 
        available information, that a service area has a substantially 
        high percentage of households with income at or above the 95th 
        percentile of national household income levels or develops an 
        equivalent measurement.''.
    (b) Implementation of Reform Measures.--Section 254(a) of such Act 
(47 U.S.C. 254(a)) is amended by adding at the end the following new 
paragraph:
            ``(3) Procedures to reform universal service support 
        system.--Notwithstanding paragraphs (1) and (2), within 9 
        months after the date of enactment of the Universal Service 
        Reform, Accountability, and Efficiency Act of 2008, the 
        Commission shall implement reform of the universal service 
        system in accordance with this section, as amended by such Act, 
        and section 4 of such Act. The Federal-State Joint Board may 
        submit comments in any proceeding carried out by the Commission 
        pursuant to this section.''.
    (c) State Universal Service Programs Not Preempted.--
            (1) In general.--Nothing in this Act, or in any of the 
        amendments made by this Act, shall preempt or be construed to 
        preempt any State from adopting laws, rules, or regulations to 
        ensure that voice communications service, as defined by section 
        254(c)(1)(B)(ii) of the Communications Act of 1934 (as amended 
        by subsection (a) of this Act), are universally available to 
        all low-income households and households in high cost areas at 
        affordable rates, so long as such laws, rules, or regulations 
        are consistent with, and not in violation of, the principles 
        established under the applicable provisions of this Act and the 
        amendments made by this Act.
            (2) States are preempted from assessing interstate 
        services.--Notwithstanding paragraph (1), a State may not 
        assess interstate services, including interstate 
        telecommunications services, information services, or voice 
        communications services, in order to fund a State's universal 
        service program.

SEC. 3. DISTRIBUTION MECHANISM REFORM FOR HIGH COST SUPPORT.

    (a) In General.--Section 254 of the Communications Act of 1934 (47 
U.S.C. 254) is further amended by adding at the end the following:
    ``(m) Distribution Mechanism for High Cost Support.--
            ``(1) Establishment of reverse auction design.--
                    ``(A) In general.--Not later than 9 months after 
                the date of enactment of the Universal Service Reform, 
                Accountability, and Efficiency Act of 2008, the 
                Commission shall develop, and shall promulgate 
                regulations to implement, a reverse auction plan to be 
                used to distribute universal service support for voice 
                communications service in high cost areas, in which 
                each auction winner shall have the privileges and 
                obligations of a provider-of-last-resort, as determined 
                by the Commission.
                    ``(B) Auction design parameters.--In carrying out 
                the requirements of subparagraph (A), the Commission 
                shall ensure that the auction design provides for--
                            ``(i) the provision of quality voice 
                        communications service, as defined by the 
                        Commission by regulation prescribed after the 
                        date of enactment of the Universal Service 
                        Reform, Accountability, and Efficiency Act of 
                        2008, consistent with clause (iv);
                            ``(ii) cost-constraining benefits;
                            ``(iii) competitive neutrality;
                            ``(iv) technological neutrality;
                            ``(v) incentives for providers of voice 
                        communications service to become more 
                        efficient;
                            ``(vi) conducting the auctions at 
                        appropriately gauged intervals that take into 
                        account new information about changes in the 
                        marketplace, so that universal service support 
                        based on current technology does not become a 
                        barrier to entry for service providers using 
                        new technologies;
                            ``(vii) in the first set of auctions, which 
                        shall be conducted not later than 15 months 
                        after the date of enactment of the Universal 
                        Service Reform, Accountability, and Efficiency 
                        Act of 2008, reserve prices that, in the 
                        aggregate, do not exceed the total amount of 
                        support for high cost areas provided in the 
                        year prior to the date of enactment of the 
                        Universal Service Reform, Accountability, and 
                        Efficiency Act of 2008 and which take into 
                        account that support shall not be provided to 
                        more than one entity per area;
                            ``(viii) reserve prices for succeeding 
                        auctions (to be carried out periodically at the 
                        discretion of the Commission) that, in each 
                        service area, are no greater than the winning 
                        bid in the previous auction for each such 
                        service area; and
                            ``(ix) avoiding, to the greatest extent 
                        practicable, conducting auctions in which only 
                        1 firm participates.
                    ``(C) Establishing reserve prices.--In any high 
                cost area in which support is provided by a subsidy 
                that is determined pursuant to this paragraph, the 
                Commission--
                            ``(i) shall ensure that the reserve price 
                        of the auction only takes into account the 
                        difference in the cost of providing voice 
                        communications service in a high cost area 
                        compared to a non-high cost area;
                            ``(ii) shall take any action necessary to 
                        remove excessive support pursuant to the 
                        principle established in subsection (b)(2);
                            ``(iii) shall only consider costs directly 
                        related to the provision of voice 
                        communications service; and
                            ``(iv) shall not consider the costs 
                        associated with any of the following:
                                    ``(I) Artwork.
                                    ``(II) Cafeterias, lunch rooms, and 
                                vending facilities.
                                    ``(III) Patent rights.
                                    ``(IV) Government franchises.
                                    ``(V) Charitable contributions.
                                    ``(VI) Penalties or fines for 
                                violations of statutes.
                                    ``(VII) Membership fees and dues in 
                                social, political, service, 
                                recreational, or athletic clubs or 
                                organizations.
                                    ``(VIII) Lobbying or public 
                                relations.
                                    ``(IX) Performing personnel 
                                administration activities.
                                    ``(X) Legal services.
                                    ``(XI) Janitorial service, cleaning 
                                supplies, or guard service.
                                    ``(XII) Sewage or water utilities 
                                or services.
                    ``(D) Service areas.--
                            ``(i) In general.--In carrying out the 
                        requirements of subparagraph (A), the 
                        Commission, within 9 months after the date of 
                        enactment of the Universal Service Reform, 
                        Accountability, and Efficiency Act of 2008, 
                        shall define service areas at the smallest 
                        geographic level practicable based on a new 
                        study, conducted at the smallest geographic 
                        level practicable, of those high cost areas 
                        throughout the United States that require 
                        universal service support to comply with the 
                        principles of universal service in subsection 
                        (b). The Commission shall not define service 
                        areas based on study areas in existence as of 
                        the date of enactment of the Universal Service 
                        Reform, Accountability, and Efficiency Act of 
                        2008.
                            ``(ii) Subsequent auctions.--
                                    ``(I) Re-evaluation of need for 
                                universal service support.--In advance 
                                of each subsequent auction of a service 
                                area, the Commission shall evaluate 
                                whether such service area still meets 
                                the criteria under clause (i) to 
                                determine whether universal service 
                                support should be provided.
                                    ``(II) Prohibition.--The Commission 
                                shall not provide support in a 
                                subsequent auction to a service area in 
                                which, in the absence of a subsidized 
                                provider-of-last-resort, consumers 
                                would have access to affordable voice 
                                communications service by 1 or more 
                                unsubsidized providers.
                                    ``(III) Vouchers.--The Commission 
                                shall have the authority to issue 
                                vouchers to consumers if needed to 
                                complete the transition away from 
                                subsidizing a provider-of-last-resort.
                    ``(E) Characteristics of auctioned authority.--
                            ``(i) In general.--Before conducting each 
                        auction, the Commission shall prescribe the 
                        obligations and privileges of the winner of 
                        each auction as the provider-of-last-resort for 
                        each service area (defined pursuant to 
                        paragraph (1)(D)(i)). In prescribing such 
                        obligations and privileges, the Commission 
                        shall describe the minimum quality of voice 
                        communications service to be provided (as 
                        defined by the Commission pursuant to paragraph 
                        (1)(B)(i)) and shall take into consideration 
                        the principles of universal service in 
                        subsection (b).
                            ``(ii) Bonding requirement.--The Commission 
                        shall require all auction winners to be bonded 
                        (or to provide other assurance as deemed 
                        appropriate by the Commission) prior to being 
                        designated as the eligible telecommunications 
                        provider for a service area to ensure that such 
                        provider complies with the obligations 
                        established under clause (i) for the period 
                        covered by the auction.
                            ``(iii) State preemption.--Any eligible 
                        telecommunications carrier that is designated 
                        as the carrier-of-last-resort by a State and 
                        that does not win an auction for a service area 
                        shall be released from all obligations imposed 
                        as a carrier-of-last-resort by such State.
            ``(2) Duplicate subsidies prohibited.--The Commission shall 
        designate only 1 eligible telecommunications provider per 
        service area to receive universal service support for providing 
        the services described in subsection (c)(1).''.
    (b) Conforming Amendments.--
            (1) Eligible telecommunications providers.--
                    (A) In general.--Section 214 of the Communications 
                Act of 1934 (47 U.S.C. 214(e)) is amended by striking 
                subsection (e) and inserting the following new 
                subsection:
    ``(e) Universal Service Support Via Eligible Telecommunications 
Providers.--The Commission shall deem the winner of an auction under 
section 254(m)(1)(A) as the eligible telecommunications provider for a 
service area, defined in accordance with section 254(m)(1)(C). Such 
provider shall, throughout the service area for which the designation 
is received--
            ``(1) offer the voice communications service that is 
        supported by Federal universal service support mechanisms under 
        section 254(c)(1), either using its own facilities or a 
        combination of its own facilities and resale of another 
        provider's services;
            ``(2) meet or exceed the service quality standards 
        developed by the Commission pursuant to section 254(m)(1)(E); 
        and
            ``(3) advertise the availability of such service and the 
        charges therefor using media of general distribution.''.
                    (B) Effective date.--The amendment made by 
                subparagraph (A) shall take effect 15 months after the 
                date of enactment of this Act.
            (2) Rural telephone exemption conforming amendment.--
        Section 251(f)(1)(A) of the Communications Act of 1934 (47 
        U.S.C. 251(f)(1)(A)) is amended by striking ``section 254'' and 
        all that follows and inserting ``section 254.''
            (3) Additional conforming amendment.--Section 254(h)(1)(B) 
        of such Act (47 U.S.C. 254(h)(1)(B)) is amended by striking 
        ``subsection (c)(3)'' and inserting ``subsection (c)(2)''.

SEC. 4. ACCOUNTABILITY.

    (a) In General.--The Federal Communications Commission (in this Act 
referred to as the ``Commission'') shall take such steps as are 
necessary to make the reforms described in this section.
    (b) Federal-State Joint Board on Universal Service Reform.--
            (1) Economic analysis required.--Not later than 180 days 
        after the date of enactment of this Act, the Commission shall 
        require that the Federal-State Joint Board on Universal Service 
        (in this Act referred to as the ``Joint Board'') include an 
        economic analysis in all of its decisions and recommendations 
        that explains how such decisions and recommendations comply 
        with the principles in section 254(b) of the Communications Act 
        of 1934, as amended by this Act.
            (2) Divestiture of financial interests before serving.--Not 
        later than 60 days after the date of enactment of this Act and 
        within 60 days after the appointment of each new member of the 
        Joint Board, the Commission shall review any financial 
        interests of any member of the Joint Board and shall take 
        necessary actions to eliminate any conflicts of interest.
    (c) Universal Service Administrator's Board of Directors.--
            (1) New requirements for service.--The Commission shall 
        reconstitute the board of directors of the Commission's 
        designated administrator of the universal service fund to 
        ensure that all board members have professional training and 
        expertise in public administration and no financial interest or 
        affiliation with any organization or company that may receive 
        universal service support.
            (2) Advisory board.--The Commission, at its discretion, may 
        establish a non-voting advisory board that includes individuals 
        who do not meet the requirements of paragraph (1).
    (d) Performance Measures.--
            (1) In general.--The Commission shall design and implement 
        performance measures, which shall include specific goals, 
        outcome measures, and efficiency measures, to determine whether 
        the goals of advancing universal service are being achieved in 
        an economically efficient way.
            (2) Principles.--In developing performance measures under 
        paragraph (1), the Commission shall consider independent 
        research on the consequences and effectiveness of universal 
        service programs. The following principles shall govern the 
        development of these performance measures:
                    (A) Outcome measures shall reflect both proposed 
                progress and actual benefits to the public produced by 
                universal service support.
                    (B) Efficiency measures shall identify the cost per 
                unit of a successful outcome, rather than the cost per 
                unit of output.
                    (C) The relevant measure of costs shall include the 
                full economic effect, including any economic 
                inefficiencies, of the universal service program's 
                expenditures.
            (3) Minimum requirements for performance measures.--
                    (A) High cost areas and low income program.--In 
                order to ensure the existence of an affordably priced 
                service option for voice communications service for 
                consumers in high cost areas and consumers in low-
                income households, the Commission shall monitor 
                availability, price, and subscription rates for such 
                consumers. The Commission shall measure, per million 
                dollars spent, the change in penetration rate or number 
                of subscribers and the availability of voice 
                communications service.
                    (B) Schools and libraries.--In order to ensure that 
                the program carried out under section 254(h)(1)(B) of 
                the Communications Act of 1934 (47 U.S.C. 254(h)(1)(B)) 
                has led to an increase in access to the Internet by 
                schools and libraries and that improved educational 
                outcomes are directly attributable to such increased 
                access, the Commission shall measure, per million 
                dollars spent, the improvement in educational outcomes 
                attributable to increased Internet access.
                    (C) Rural health.--In order to ensure that 
                increased access to advanced services by rural health 
                care providers under section 254(h)(1)(A) of the 
                Communications Act of 1934 (47 U.S.C. 254(h)(1)(A)) has 
                directly contributed to improved health outcomes and 
                the reduced cost of maintaining a healthy population, 
                the Commission--
                            (i) shall ascertain the extent to which 
                        universal service support increases the use of 
                        various communications services by health care 
                        providers serving rural areas, compared to such 
                        use in the absence of universal service 
                        support; and
                            (ii) shall measure, per million dollars 
                        spent, whether, and by how much, the increased 
                        use of various communications services has 
                        improved health outcomes or reduced health care 
                        costs.
    (e) Report to Congress.--The Commission shall publish annually a 
report on whether, and to what extent, the goals of advancing universal 
service are being achieved in an economically efficient way, including 
an analysis of the performance measures implemented.
    (f) Annual Report Requirement.--The Commission shall require each 
eligible telecommunications provider, school, library, and rural health 
care provider who received universal service support in the previous 
fiscal year to file an annual report with the Commission about how such 
support funds were used during such year.
    (g) Audits.--The Commission shall strengthen the oversight 
structure of the universal service program and shall provide the 
Commission's Inspector General with appropriate resources to conduct 
regular and thorough audits and investigations.
    (h) Penalties.--The Commission shall permanently bar anyone who 
commits fraud related to the universal service program from receiving 
any future universal service support subsidies. The Commission shall 
also develop increased penalties for wrongdoing associated with the 
universal service fund.
                                 <all>