# Presentation: 759023

## Support For Rural America

**William Maher**
**Chief, Wireline Competition Bureau**
**July 2, 2003**

**Universal Service and The FCC**

## What is Universal Service?

- 	An evolving level of telecommunications service at affordable rates, defined by the FCC with input from the states, that is supported by the Universal Service Fund.

## Universal Service History

- A major goal -- Communications Act of 1934
- 1996 Telecommunications Act codified and expanded FCC’s historical commitment
- Movement from implicit to explicit support

## Guiding Principles of the Act

- 	-- Explicit support
- 	-- Affordable rates
- 	-- Specific, predictable and sufficient support
- 	-- Equitable and non-discriminatory  	contributions
**    ****Additional principles of the FCC:**
- -- Competitive neutrality
- -- Portability of support

## Who Promotes Universal Service?

- Carriers and their customers contribute
- Recipients implement
- Federal and State regulators develop policy
- A third party administrator (USAC) administers the Universal Service Fund under direction from the FCC

## Four Major Fund Components

- High Cost:  Access to telecommunications services in rural or high cost areas at rates comparable to urban rates
- Low Income:  Support for low-income customers
- Rural Health Care: Discounted service for rural health care facilities
- Schools and Libraries:  Discounted service

## Contributors

- Interstate telecommunications carriers (interpreted to include providers of both interstate and international telecommunications)
- Other providers of interstate telecommunications, if the public interest so requires (as determined by the FCC)
*De minimis* exemption: carriers whose annual contribution to universal service is less than $10,000 (many rural carriers meet this criteria)

## Contributions

**Snapshot of  2002:**
- About 2,500 Contributors
- Interexchange carriers responsible for about 59% of the contributions
- Local exchange carriers -- about 26%
- Wireless – about 15%

## Support

**Total 2002 Support: About $5.9 Billion**
- High Cost  ($2.9 billion)
- Schools and Libraries  ($2.2 billion)
- Low Income  ($681 million)
- Rural Health Care  ($27 million)

## Definition of Supported Service

- Single-party service
- Voice grade access to the public telecom network
- Dual tone multi-frequency signaling
- Access to emergency, operator, and interexchange services, and directory assistance
- Toll limitation services for qualifying low-income consumers
- FCC is reviewing this definition

## High Cost Support – Six Components

- High Cost Loop Support
- Local Switching Support
- Long Term Support
- Interstate Common Line Support
- High Cost Model Support
- Interstate Access Support

## Schools and Libraries

- Eligible schools and libraries apply for discounts on telecommunications services, Internet services, and internal connections.
- Discount based on percent of students eligible for the school lunch program.
- Discounts vary between rural and urban areas. Rural applicants are eligible for a an additional 10% discount  up to a maximum of  90%.

## Schools and Libraries

- Provider reimbursed for discounts from 20-90%.
- Schools and libraries must competitively bid for services and apply every year.
- Combating waste, fraud, and abuse.

## Low Income

**Components of Low Income Support**
**Link Up **discount on installation (up to $30)
**Lifeline** discount on monthly service (up to $9.50)

## Rural Health Care

- Eligible health care providers apply for discounts on telecommunications services.  Eligible entities include: teaching hospitals, medical schools, community health centers, not-for-profit hospitals and rural health clinics.
- Rural health care provider must apply every year.

## Rural Health Care

- Health care providers may receive support for up to 30 hours ($180) per month of toll charges to reach the internet, if no local dial-up access is available.
- Disbursements capped at $400 million dollars annually
- Historically, only a fraction of the eligible providers have participated for a variety of reasons. RHC disbursed $27 million in 2002.

## Competition in Rural Areas :Eligible Telecommunications Carrier Designations 

- In general, wireline and wireless competitors may qualify to receive support from the federal universal service mechanisms.
- Must be designated eligible telecommunications carriers (ETC) by the relevant state commission or the FCC.

## Eligible Telecommunications Carrier Designations

- Competitive ETCs generally receive the same per-line amount of high-cost support that the incumbent would receive for serving a given customer.  Support for competitive ETCs generally is based on the incumbent’s costs.
- Competitive ETCs receive low-income support based on the same criteria that are applied to the incumbent.

## Thank You

- 	Contact Information:
- 	William Maher
- 	_[wmaher@fcc.gov](mailto:wmaher@fcc.gov)_
- 	(202) 418-1500
- 	Further Information:
- 	_[www.universalservice.org](http://www.universalservice.org/)_
- 	_[www.fcc.gov](http://www.fcc.gov/)_