FCC To Adopt USF/Intercarrier Compensation Reform


Last week Chairman Genachowski announced that he is circulating to the Commission an order that will implement a comprehensive reform of the current Universal Service Fund (“USF”) and existing intercarrier compensation (“ICC”) regime.  The order is on the Commission’s Agenda for consideration at its October 27, 2001 meeting.

According to the Chairman’s statements and the Commission’s New Release, the USF reform proposal will transition the current USF to the Connect America Fund (“CAF”) and Mobility Fund to support deployment of broadband solutions throughout the country, while constraining the growth of the fund through a competitive bidding process for fund distribution.

The ICC reform will: (1) immediately address arbitrage loopholes such as phantom traffic, traffic pumping and CMRS-in-the-middle; (2) provide certainty regarding the treatment of VoIP; (3) phase down ICC charges over a transition period, starting with reducing intrastate access rates to interstate levels; and (4) include a recovery mechanism, with accompanying broadband obligations, to provide transitional support from the CAF to some carriers.

The Chairman noted that the reform proposal is not a wholesale adoption of any of the various “consensus” proposals submitted to the FCC.  Instead, it contains elements of each of these plans as well as the core elements presented in the National Broadband Plan.

Clients that are interested in a detailed analysis of the order and accompanying rules or that have any questions should contact their assigned  attorney.

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