II 110th CONGRESS 1st Session S. 711 IN THE SENATE OF THE UNITED STATES February 28, 2007 Mr. Smith (for himself, Mr. Dorgan, and Mr. Pryor) introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation A BILL To amend the Communications Act of 1934 to expand the contribution base for universal service, establish a separate account within the universal service fund to support the deployment of broadband service in unserved areas of the United States, and for other purposes.

1.

Short title

This Act may be cited as the Universal Service for the 21st Century Act.

2.

Findings

The Congress finds the following: (1)The preservation and advancement of universal service is a fundamental goal of the Communications Act of 1934 and the Telecommunications Act of 1996. (2)Access throughout the Nation to high-quality and advanced telecommunications and information services is essential to secure the many benefits of our modern society. (3)As the Internet becomes a critical element of any economic and social growth, universal service should shift from sustaining voice grade infrastructure promoting the development of efficient and advanced networks that can sustain advanced communications services. (4)The current structure established by the Federal Communications Commission has placed the burden of universal service support on only a limited class of carriers, causing inequities in the system, incentives to avoid contribution, and a threat to the long term sustainability of the universal service fund. (5)Current fund contributors are paying an increasing portion of their interstate and international service revenue into the universal service fund. (6)Any fund contribution system should be equitable, nondiscriminatory and competitively neutral, and the funding mechanism must be sufficient to ensure affordable communications services for all.

3.

Universal Service fund contribution requirements

(a)

Inclusion of Intrastate Revenues

Section 254(d) of the Communications Act of 1934 (47 U.S.C. 254(d)) is amended— (1)by striking Every and inserting Notwithstanding section 2(b) of this Act, a; (2)by striking interstate each place it appears; and (3)by adding at the end Nothing in this subsection precludes a State from adopting rules or regulations to preserve and advance universal service within that State as permitted by section 2(b) and subsections (b) and (f) of this section.. (b)

Universal Service Proceeding

(1)

Proceeding

The Federal Communications Commission shall initiate a proceeding, or take action pursuant to any proceeding on universal service existing on the date of enactment of this Act, to establish a permanent mechanism to support universal service, that will preserve and enhance the long term financial stability of universal service, and will promote the public interest. (2)

Criteria

In establishing such a permanent mechanism, the Commission may include collection methodologies such as total telecommunications revenues, the assignment of telephone numbers and any successor identifier, connections (which could include carriers with a retail connection to a customer), and any combination thereof if the methodology— (A)promotes competitive neutrality among providers and technologies; (B)to the greatest extent possible ensures that all communications services that are capable of supporting 2-way voice communications be included in the assessable base for universal service support; (C)takes into account the impact on low volume users, and proportionately assesses high volume users, through a capacity analysis or some other means; and (D)ensures that a carrier is not required to contribute more than once for the same transaction, activity, or service. (3)

Excluded providers

If a provider of communications services that are capable of supporting 2-way voice communications would not contribute under the methodology established by the Commission, the Commission shall require such a provider to contribute to universal service under an equitable alternative methodology if exclusion of the provider from the contribution base would jeopardize the preservation, enhancement, and long term sustainability of universal service. (4)

Deadline

The Commission shall complete the proceeding and issue a final rule not more than 6 months after the date of enactment of this Act.

4.

Intercarrier Compensation

(a)

Jurisdiction

Notwithstanding section 2(b) of the Communications Act of 1934 (47 U.S.C. 152(b)), the Federal Communications Commission shall have exclusive jurisdiction to establish rates for inter-carrier compensation payments and shall establish rules providing a comprehensive, unified system of inter-carrier compensation, including compensation for the origination and termination of intrastate telecommunications traffic. (b)

Criteria

In establishing these rules, and in conjunction with its action in its universal service proceeding under section 3, the Commission, in consultation with the Federal-State Joint Board on Universal Service, shall— (1)ensure that the costs associated with the provision of interstate and intrastate telecommunications services are fully recoverable; (2)examine whether sufficient requirements exist to ensure traffic contains necessary identifiers for the purposes of inter-carrier compensation; and (3)to the greatest extent possible, minimize opportunities for arbitrage. (c)

Sufficient Support

The Commission should, to the greatest extent possible, ensure that as a result of its universal service and inter-carrier compensation proceedings, the aggregate amount of universal service support and inter-carrier compensation provided to local exchange carriers with fewer than 2 percent of the Nation’s subscriber lines will be sufficient to meet the just and reasonable costs of such local exchange carriers. (d)

Negotiated Agreements

Nothing in this section precludes carriers from negotiating their own inter-carrier compensation agreements. (e)

Deadline

The Commission shall complete the pending Intercarrier Compensation proceeding in Docket No. 01–92 and issue a final rule not more than 6 months after the date of enactment of this Act.

5.

Establishment of Broadband account within Universal Service fund

Part I of title II of the Communications Act of 1934 (47 U.S.C. 201 et seq.) is amended by inserting after section 254 the following:

254A.

Broadband for Unserved Areas Account

(a)

Account Established

(1)

In general

There shall be, within the universal service fund established pursuant to section 254, a separate account to be known as the Broadband for Unserved Areas Account. (2)

Purpose

The purpose of the account is to provide financial assistance for the deployment of broadband communications services to unserved areas throughout the United States. (b)

Implementation

(1)

In general

The Commission shall by rule establish— (A)guidelines for determining which areas may be considered to be unserved areas for purposes of this section; (B)criteria for determining which facilities-based providers of broadband communications service, and which projects, are eligible for support from the account; (C)procedural guidelines for awarding assistance from the account on a merit-based and competitive basis; (D)guidelines for application procedures, accounting and reporting requirements, and other appropriate fiscal controls for assistance made available from the account; and (E)a procedure for making funds in the account available among the several States on an equitable basis. (2)

Study and annual reports on unserved areas

(A)

In general

Within 6 months after the date of enactment of the Universal Service for the 21st Century Act, the Commission shall conduct a study to determine which areas of the United States may be considered to be unserved areas for purposes of this section. For purposes of the study and for purposes of the guidelines to be established under subsection (a)(1), the availability of broadband communications services by satellite in an area shall not preclude designation of that area as unserved if the Commission determines that subscribership to the service in that area is de minimis. (B)

Annual updates

The Commission shall update the study annually. (C)

Report

The Commission shall transmit a report to the Senate Committee on Commerce, Science, and Transportation and the House of Representatives Committee on Energy and Commerce setting forth the findings and conclusions of the Commission for the study and each update under this paragraph and making recommendations for an increase or decrease, if necessary, in the amounts credited to the account under this section. (3)

State involvement

The Commission may delegate the distribution of funding under this section to States subject to Commission guidelines and approval by the Commission. (c)

Limitations

(1)

Annual amount

Amounts obligated or expended under subsection (c) for any fiscal year may not exceed $500,000,000. (2)

Use of funds

To the extent that amounts in the account are not obligated or expended for financial assistance under this section, they shall be used to support universal service under section 254. (3)

Support limited to facilities-based single provider per unserved area

Assistance under this section may be provided only to— (A)facilities-based providers of broadband communications service; and (B)1 facility-based provider of broadband communications service in any unserved area. (d)

Application With Sections 214, 254, and 410

(1)

Section 214(e)

Section 214(e) shall not apply to the Broadband for Unserved Areas Account. (2)

Section 254

Section 254 shall be applied to the Broadband for Unserved Areas Account— (A)by disregarding— (i)subsections (a) and (e) thereof; and (ii)any other provision thereof determined by the Commission to be inappropriate or inapplicable to implementation of this section; and (B)by reconciling, to the maximum extent feasible and in accordance with guidelines prescribed by the Commission, the implementation of this section with the provisions of subsections (h) and (l) thereof. (3)

Section 410

Section 410 shall not apply to the Broadband for Unserved Areas Account. (e)

Definitions

In this section: (1)

Broadband

(A)

In general

The term broadband shall be defined by the Commission in accordance with the requirements of this paragraph. (B)

Revision of initial definition

Within 30 days after the date of enactment of the Universal Service for the 21st Century Act, the Commission shall revise its definition of broadband to require a data rate— (i)greater than the 200 kilobits per second standard established in its Section 706 Report (14 FCC Rec. 2406); and (ii)consistent with data rates for broadband communications services generally available to the public on the date of enactment of that Act. (C)

Annual review of definition

The Commission shall review its definition of broadband no less frequently than once each year and revise that definition as appropriate. (2)

Broadband communications service defined

The term broadband communications service means a high-speed communications capability that enables users to originate and receive high-quality voice, data, graphics, and video communications using any technology.

.

6.

Implementation of Section 254A

The Federal Communications Commission shall complete a proceeding and issue a final rule to implement section 254A of the Communications Act of 1934 not more than 6 months after the date of enactment of this Act.