To equitably distribute universal service support throughout rural America, and for other purposes.

Summary: Universal Service Fairness Act of 2003 - Amends the Communications Act of 1934 to require the Federal Communications Commission (FCC), in calculating Federal universal service support for eligible telecommunications carriers that serve rural, insular, and high cost areas, to revise its 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 center exceeds 3.75 times the national average cost per line. Requires the FCC to provide support for each State equal to the greater of the amount calculated under the FCC's current support mechanism for high cost areas or the amount calculated above. Limits per State support and total support for all States.Requires the Comptroller General to report to Congress on the need to reform the high cost support mechanism for rural, insular, and high cost areas.States that nothing in this Act shall affect the support provided to rural telephone companies.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Universal Service Fairness Act of 
2003''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds the following:
            (1) Consumers living in rural, insular, and high cost areas 
        should have access to universal services at affordable rates.
            (2) Under the Federal Communication Commission's high cost 
        support program for certain carriers, two states receive 
        approximately 70 percent of the Federal support, while 42 
        states receive no support.
            (3) Calculating Federal universal service support 
        exclusively on a statewide average basis improperly places 
        responsibility on most State governments to support high cost 
        areas with minimal assistance from the Federal Government.
            (4) 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.
            (5) Federal and State support mechanisms for high cost 
        areas must be reviewed to determine the extent to which high 
        cost support reform is necessary.
    (b) Purposes.--It is therefore the purpose of this Act to provide 
Federal universal service support to consumers living in rural, 
insular, and high cost areas by--
            (1) spreading the benefits of the existing Federal support 
        mechanism more equitably across the nation;
            (2) facilitating removal of implicit State support; and
            (3) ensuring that the Federal Communications Commission 
        develops a Federal support mechanism that will promote rate 
        comparability between rural and urban areas.

SEC. 3. 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 the provisions of 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 3.75 times the national average cost 
        per line.
            ``(2) Hold harmless support.--In implementing this 
        subsection, the Commission shall provide support for each State 
        equal to the greater of--
                    ``(A) the amount calculated under the Commission's 
                support mechanism for high cost areas as in effect on 
                the date of the enactment of this subsection; or
                    ``(B) the amount calculated pursuant to paragraph 
                (1).
            ``(3) Limitation on support to be provided.--
        Notwithstanding paragraph (2)--
                    ``(A) no State shall receive support that exceeds 5 
                percent of the total support calculated under the 
                Commission's support mechanism for high cost areas as 
                in effect on such date of enactment; and
                    ``(B) the total amount of support for all States 
                shall not exceed the total support calculated under the 
                Commission's support mechanism for high cost areas as 
                in effect on such date of enactment.
        The limitations in subparagraphs (A) and (B) shall not be 
        construed to preclude fluctuations in support on the basis of 
        changes in the data used to make such calculations.
            ``(4) 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.
            ``(5) Definition.--For purposes of this subsection, the 
        term `Commission's support mechanism for high cost areas' means 
        section 54.309 of the Commission's regulations (47 CFR 54.309), 
        and regulations referred to in such section.''.

SEC. 4. GAO REPORT ON NEED TO REFORM HIGH COST SUPPORT MECHANISM.

    Not later than one year after the date of enactment of this Act, 
the Comptroller General shall report to Congress on the need to reform 
the high cost support mechanism for rural, insular, and high cost 
areas. As part of this report, the General Accounting Office 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 such Act are necessary to 
        preserve and advance universal service.

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)).