[Congressional Record Volume 149, Number 100 (Wednesday, July 9, 2003)]
[Senate]
[Pages S9121-S9122]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SMITH (for himself, Mr. Bayh, Mr. Allen, Mr. Crapo, Mr. 
        Hagel, Mr. Coleman, Mr. Bennett, Mr. Hatch, Mr. Enzi, Mr. 
        Thomas, and Mr. Fitzgerald):
  S. 1380. A bill to distribute universal service support equitably 
throughout rural America, and for other purposes; to the Committee on 
Commerce, Science, and Transportation.
  Mr. SMITH. Mr. President, today I rise in support of fairness for 
rural America and introduce the Rural Universal Service Equity Act of 
2003.
  Universal service is a decades old Federal program intended to keep 
telephone service available and affordable across America. The Federal 
Universal Service Program has been a tremendous success. America's 
telephone network is the envy of the world. However, the program faces 
challenges, and it is imperfect.
  The Rural Universal Service Equity Act addresses an inequity in the 
way Universal Service support is distributed to rural customers served 
by larger phone companies. Under the program, only eight States receive 
funding. Three of those States receive more than 80 percent of the 
funds and one State receives more than half of all dollars available 
under the program.
  Yet many of the most rural States in America the very States the 
program was intended to assist--receive no funding at all. North 
Dakota, South Dakota, Idaho, Iowa, Utah, Kansas, Oklahoma, New Mexico, 
Nebraska and other rural States receive no funding under this program.
  My State of Oregon is an example of the unfairness of the program. 
Oregon has an average of 36 residents per square mile, according to 
U.S. Census Bureau data. Oregon has many rural and remote areas but 
does not receive any funding under this program for larger carriers. 
However, States with between 60 and 101 residents per square mile or 
more than twice the density of Oregon--receive 90 percent of the 
funding.
  How could this happen? When the FCC created this program in 1999, it 
determined which States would be eligible for funding by comparing the 
average cost of providing telephone service per line in each State to a 
benchmark tied to the national average cost per line. If a State's 
average cost of service per line exceeded the benchmark, that State 
would be eligible for funding. If the average cost was below the 
national benchmark, it would not be eligible.
  This method is skewed, in part, because telephone service in a 
metropolitan area is less expensive to provide than service in a rural 
area. Customers in cities are closer to one another, and the same 
facilities can serve more people at a lower cost.
  As a consequence, if you are served by a larger carrier and you live 
in a State with a city--no matter how rural an area, or no matter how 
far from the city you live--your State probably receives no support.
  This problem is exacerbated because the FCC formula also doesn't 
fully account for the actual cost of providing service in rural areas 
with natural obstacles such as mountains, lakes and rivers.
  In short, the formula is flawed, and the result is unfair to millions 
in rural America: Three States that are not among the 15 least 
populated States--receive more than 80 percent of the fund.
  The Rural Universal Service Equity Act of 2003 would make this 
program fair. The Act directs the FCC to replace the current state-wide 
average formula with a new formula that distributes funds to telephone 
company wire centers with the highest cost.
  Wire centers are the telephone facilities where all of the telephone 
lines in a given area converge. And because funds would be directed to 
high-cost wire centers, as opposed to States with the highest average 
costs, rural residents would no longer be penalized if they lived in a 
State with a city hundreds of miles away.
  The Act also: directs the FCC to develop rules to implement a program 
that is equitable among States; delegates to the FCC the determination 
of what an appropriate benchmark for what a high cost wire center 
should be; directs the FCC to not increase the size of the current 
program for high cost carriers; ensures a minimum level of support for 
States that currently receive funding under the program; and

[[Page S9122]]

requires GAO to study and report back to Congress on the need for 
comprehensive universal service reform.
  Finally, I am concerned that the Universal Service Program has 
challenges beyond the inequities of the program for larger carriers. I 
look forward to participating in the broader debate on how to reform 
the Universal Service Program and ensure its long term viability and 
effectiveness. This bill will help further that debate.
  However, broadly reforming the Universal Service Program is complex 
and divisive. It may take years. And I do not believe the inequities of 
the program for larger carriers should be allowed to continue while 
Congress grapples with the broader issues. Millions of rural Americans 
are being disserved, and we can solve this one problem today.
  I urge my colleagues to join me and support the Rural Universal 
Service Equity Act of 2003. I ask unanimous consent that the text of 
the legislation be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1380

       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 ``Rural Universal Service 
     Equity Act of 2003''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress makes the following findings:
       (1) The Federal Communications Commission's high cost 
     program for certain carriers provides no Federal support to 
     42 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 support mechanism more equitably across the nation.

     SEC. 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.

     SEC. 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 
     sections 54.309 and 54.311 of the Commission's regulations 
     (47 CFR 54.309, 54.311), and regulations referred to in such 
     sections.''.

     SEC. 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)).
                                 ______