SECTION 1. SHORT TITLE.

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

SEC. 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.

SEC. 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.

SEC. 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.

SEC. 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:

``SEC. 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.''.

SEC. 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.
Universal Service for the 21st Century Act - Amends the Communications Act of 1934 to require all telecommunications carriers (currently, only those providing interstate telecommunications services) to contribute to the universal service fund (a fund whose goal is to provide advanced telecommunications services to all areas of the country). Requires the Federal Communications Commission (FCC) to establish a permanent mechanism to support universal service that will preserve and enhance its long-term financial stability. Gives the FCC exclusive jurisdiction to establish rates for inter-carrier compensation payments, including compensation for the origination and termination of intrastate telecommunications traffic.

Establishes within the universal service fund the Broadband for Unserved Areas Account, to provide financial assistance for the deployment of broadband (high-speed) communications services to unserved areas throughout the United States. Allows assistance to be provided only to: (1) facilities-based providers of broadband communications service; and (2) one facility-based provider in any unserved area.
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.