I 

110TH CONGRESS 

1ST SESSION H. R. 2054 

To reform the universal service provisions of the Communications Act of 

1934, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 26, 2007 

Mr. BOUCHER (for himself, Mr. TERRY, Mr. FILNER, Mrs. CAPITO, Mr. 

GRAVES, Mrs. CUBIN, Mr. FORTENBERRY, Mr. MANZULLO, Mr. KING of 

Iowa, and Mr. RADANOVICH) introduced the following bill; which was referred to the Committee on Energy and Commerce 

A BILL 

To reform the universal service provisions of the 

Communications Act of 1934, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Universal Service Re5 form Act of 2007’’. 

6 SEC. 2. DEFINITIONS. 

7 Section 3(a) of the Communications Act of 1934 (47 

8 U.S.C. 153(a)) is amended— 


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1 (1) by redesignating paragraphs (20) through 

2 (52) as paragraphs (22) through (54); 

3 (2) by redesignating paragraphs (11) through 

4 (19) as paragraphs (12) through (20), respectively; 

5 (3) by inserting after paragraph (10) the fol6 lowing new paragraph: 

7 ‘‘(11) COMMUNICATIONS SERVICE PROVIDER.— 

8 The term ‘communications service provider’ means 

9 any entity that— 

10 ‘‘(A) contributes to or receives universal 

11 service support for the most recent calendar 

12 quarter ending before the date of enactment of 

13 the Universal Service Reform Act of 2007; 

14 ‘‘(B) uses telephone numbers or Internet 

15 protocol addresses, or their functional equiva16 lents or successors, to offer a service or a capa17 bility— 

18 ‘‘(i) that provides or enables real-time 

19 2-way voice communications; and 

20 ‘‘(ii) in which the voice component is 

21 the primary function; or 

22 ‘‘(C) offers, directly to the public, or to 

23 such classes of users as to be effectively avail24 able directly to the public, a physical trans25 mission facility, whether circuit-switched, packVerDate Aug 31 2005 04:26 Apr 27, 2007 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2054.IH H2054

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1 et-switched, a leased line, or using radio fre2 quency transmissions, regardless of the form, 

3 protocol, or statutory classification of the serv4 ice, that allows an end user to obtain access, 

5 from a particular end user location, to a net6 work that permits the end user to engage in 

7 electronic communications (including tele8 communications) with the public.’’; and 

9 (4) by inserting after paragraph (20) (as redes10 ignated by paragraph (2) of this section) the fol11 lowing new paragraph: 

12 ‘‘(21) HIGH-SPEED BROADBAND SERVICE.— 

13 ‘‘(A) DEFINITION.—The term ‘high-speed 

14 broadband service’ means a two way network 

15 that uses the Internet protocol or a successor 

16 protocol, and the associated capabilities and 

17 functionalities, services, and applications pro18 vided over an Internet protocol platform or for 

19 which an Internet protocol capability is an inte20 gral component, and services, facilities, equip21 ment, and applications that enable an end-user 

22 to receive communications in Internet protocol 

23 format, regardless of whether the communica24 tions are voice, data, video, or any other form, 


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1 at a download receiving rate of 1 megabit per 

2 second or greater. 

3 ‘‘(B) COMMISSION SPEED ADJUSTMENT

4 REQUIREMENTS.—The Commission shall review 

5 the speed requirement in subparagraph (A) 

6 every other year beginning the sixth year after 

7 implementation of the Universal Service Reform 

8 Act of 2007 and shall make the necessary ad9 justments to move to higher speeds as deploy10 ment and advancement of new technology al11 lows communications service providers to pro12 vide higher speed broadband to end users in an 

13 economically efficient manner. 

14 ‘‘(C) INTERNET PROTOCOL.—The term 

15 ‘Internet protocol’ means the Transmission 

16 Control Protocol/Internet Protocol, or any pred17 ecessor or successor protocols to such pro18 tocol.’’. 

19 SEC. 3. UNIVERSAL SERVICE REFORM. 

20 (a) IN GENERAL.— 

21 Section 254 of the Communications Act of 

22 1934 (47 U.S.C. 254) is amended by amending sub23 sections (a) through (e) to read as follows: 

24 ‘‘(a) PROCEDURES TO REFORM UNIVERSAL SERV25 ICE.— 


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1 ‘‘(1) FEDERAL-STATE JOINT BOARD ON UNI2 VERSAL SERVICE.—Within one month after the date 

3 of enactment of the Universal Service Reform Act of 

4 2007, the Commission shall institute and refer to 

5 the Federal-State Joint Board under section 410(c) 

6 of this title a proceeding to recommend changes to 

7 any of its regulations in order to implement section 

8 214(e) of this title and this section (as amended by 

9 the Universal Service Reform Act of 2007), includ10 ing the definition of the services that are supported 

11 by Federal universal service support mechanisms 

12 and a specific timetable for completion of such rec13 ommendations. In addition to the members of the 

14 Joint Board required under section 410(c) of this 

15 title, one member of such Joint Board shall be a 

16 State-appointed utility consumer advocate nominated 

17 by a national organization of State utility consumer 

18 advocates. The Joint Board shall, after notice and 

19 opportunity for public comment, make its rec20 ommendations to the Commission within 9 months 

21 after the date of enactment of the Universal Service 

22 Reform Act of 2007. 

23 ‘‘(2) COMMISSION ACTION.—The Commission 

24 shall initiate a single proceeding to consider the rec25 ommendations from the Joint Board required by 


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1 paragraph (1) and shall complete such proceeding 

2 within 18 months after the date of enactment of the 

3 Universal Service Reform Act of 2007. The rules es4 tablished by such proceeding shall include a defini5 tion of the services that are supported by Federal 

6 universal service support mechanisms and a specific 

7 timetable for implementation. 

8 ‘‘(b) UNIVERSAL SERVICE PRINCIPLES.—The Joint 

9 Board and the Commission shall base policies for the pres10 ervation and advancement of universal service on the fol11 lowing principles: 

12 ‘‘(1) QUALITY AND RATES.—Quality services 

13 should be available at just, reasonable, and afford14 able rates. 

15 ‘‘(2) ACCESS TO ADVANCED SERVICES.—Access 

16 to advanced telecommunications and information 

17 services should be provided in all regions of the Na18 tion. 

19 ‘‘(3) ACCESS IN RURAL AND HIGH COST

20 AREAS.—Consumers in all regions of the Nation, in21 cluding low-income consumers and those in rural, in22 sular, and high cost areas, should have access to the 

23 services the Commission determines to be universal 

24 services in accordance with subsection (c), including 

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1 cations and information services, that are reasonably 

2 comparable to those services provided in urban areas 

3 and that are available at rates that are reasonably 

4 comparable to rates charged for similar services in 

5 urban areas. 

6 ‘‘(4) EQUITABLE AND NONDISCRIMINATORY

7 CONTRIBUTIONS.—All communications service pro8 viders should make equitable and nondiscriminatory 

9 contributions to the preservation and advancement 

10 of universal service. 

11 ‘‘(5) EXPLICIT, SPECIFIC, AND PREDICTABLE

12 SUPPORT MECHANISMS.—There should be explicit, 

13 specific, predictable, and sufficient Federal and 

14 State mechanisms to preserve and advance universal 

15 service. 

16 ‘‘(6) COMPETITIVE NEUTRALITY.—Federal and 

17 State mechanisms to preserve and advance universal 

18 service should be competitively neutral, so that those 

19 mechanisms neither unfairly advantage nor dis20 advantage one communications service provider over 

21 another, and neither unfairly favor nor disfavor one 

22 technology over another. 

23 ‘‘(7) ACCESS TO ADVANCED TELECOMMUNI24 CATIONS SERVICES FOR SCHOOLS, HEALTH CARE, 

25 AND LIBRARIES.—Elementary and secondary schools 


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1 and classrooms, health care providers, and libraries 

2 should have access to advanced telecommunications 

3 services as described in subsection (h). 

4 ‘‘(8) ADDITIONAL PRINCIPLES.—Such other 

5 principles as the Joint Board and the Commission 

6 determine are necessary and appropriate for the pro7 tection of the public interest, convenience, and ne8 cessity and are consistent with this Act. 

9 ‘‘(c) DEFINITION.— 

10 ‘‘(1) IN GENERAL.—Universal service includes 

11 the services defined on the date of enactment of the 

12 Universal Service Reform Act of 2007 as universal 

13 services, as modified by the Commission as nec14 essary to implement the provisions of this Act, high15 speed broadband services, and an evolving level of 

16 telecommunications and information services that 

17 the Commission shall establish periodically under 

18 this section, taking into account advances in tele19 communications and information technologies and 

20 services. The Joint Board in recommending, and the 

21 Commission in establishing, the definition of the 

22 services that are supported by Federal universal 

23 service support mechanisms shall consider the extent 

24 to which such services— 


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1 ‘‘(A) are essential to education, public 

2 health, or public safety; 

3 ‘‘(B) are being deployed in public tele4 communications networks by communications 

5 service providers; and 

6 ‘‘(C) are consistent with the public inter7 est, convenience, and necessity. 

8 ‘‘(2) ALTERATIONS AND MODIFICATIONS.—The 

9 Joint Board shall consider whether to recommend to 

10 the Commission modifications in the definition of 

11 the services that are supported by Federal universal 

12 service support mechanisms no less than once every 

13 5 years. 

14 ‘‘(3) SPECIAL SERVICES.—In addition to the 

15 services included in the definition of universal serv16 ice under paragraph (1), the Commission may des17 ignate additional services for such support mecha18 nisms for schools, libraries, and health care pro19 viders for the purposes of subsection (h). 

20 ‘‘(4) HIGH-SPEED BROADBAND SERVICE.—The 

21 definition of universal service shall not be construed 

22 to exclude eligible communications service providers 

23 from using universal service funding for the provi24 sion, maintenance, and upgrading of high-speed 

25 broadband service. 


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1 ‘‘(d) UNIVERSAL SERVICE SUPPORT CONTRIBU2 TIONS.— 

3 ‘‘(1) CALCULATING UNIVERSAL SERVICE SUP4 PORT CONTRIBUTIONS.— 

5 ‘‘(A) IN GENERAL.—To preserve and ad6 vance universal service in accordance with the 

7 principles in section (b), the Commission shall 

8 assess contributions to universal service support 

9 mechanisms from communications service pro10 viders in a manner that is equitable, competi11 tively neutral, and nondiscriminatory, and en12 sures that communications service providers are 

13 subject to similar obligations. The Commission 

14 may employ any methodology to assess such 

15 contributions, including consideration of— 

16 ‘‘(i) revenues derived from the provi17 sion of intrastate, interstate, and foreign 

18 communications services by communica19 tions service providers; 

20 ‘‘(ii) working telephone numbers used 

21 by communications service providers; or 

22 ‘‘(iii) any other current or successor 

23 identifier protocols or connections to the 

24 network used by communications service 

25 providers. 


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1 ‘‘(B) USE OF MORE THAN ONE METHOD2 OLOGY.—If no one methodology designated 

3 under subparagraph (A) effectuates the prin4 ciples described in this Act, the Commission 

5 may employ a combination of any such meth6 odologies. 

7 ‘‘(C) LOW VOLUME EXCEPTION.—The 

8 Commission shall not materially increase the 

9 contributions of communications service pro10 viders whose customers typically make a low 

11 volume of calls on a monthly basis. 

12 ‘‘(D) DE MINIMIS EXCEPTION.—The Com13 mission may exempt a communications service 

14 provider from the requirements of this sub15 section if the communications activities of such 

16 provider are limited to such an extent that the 

17 level of contributions of such provider to the 

18 preservation and advancement of universal serv19 ice would be de minimis. 

20 ‘‘(E) GROUP PLAN EXCEPTION.—If the 

21 Commission uses a methodology under subpara22 graph (A) based in whole or in part on working 

23 telephone numbers, it may provide a discount 

24 for additional numbers provided under a group 


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1 or family pricing plan for residential customers 

2 provided in one bill. 

3 ‘‘(2) REPORTS.—The Commission shall estab4 lish annual reporting requirements for all commu5 nications service providers contributing to universal 

6 service support mechanisms or receiving universal 

7 service support. The reporting requirements shall 

8 not impose unnecessary burdens, and shall be tech9 nology and provider neutral. The Commission shall 

10 periodically review the reporting requirements to en11 sure that universal service support is used for the 

12 provision, maintenance, and upgrading of the facili13 ties for which support is intended. 

14 ‘‘(3) UNIVERSAL SERVICE SUPPORT CONTRIBU15 TION LIMITS.— 

16 ‘‘(A) LIMITATION.—The total amount of 

17 universal service support for all universal serv18 ice support mechanisms other than support for 

19 schools, libraries, rural health care, life-line, 

20 link-up, and toll limitation shall not exceed the 

21 total amount that was collected from all sources 

22 for all universal service support mechanisms 

23 other than schools, libraries, rural health care, 

24 life-line, link-up, and toll limitation in the last 

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1 versal Service Reform Act of 2007, as ad2 justed— 

3 ‘‘(i) annually by a growth factor; and 

4 ‘‘(ii) once, within one year of the date 

5 of enactment of the Universal Service Re6 form Act of 2007, by the amounts that the 

7 adjustments in subsections (e)(3) and (m) 

8 increase demand for universal service sup9 port. 

10 ‘‘(B) GROWTH FACTOR.—The growth fac11 tor shall be the annual percentage change in 

12 the Gross Domestic Product–Chained Price 

13 Index (GDP–CPI), or any successor general in14 flationary factor that the Bureau of Economic 

15 Analysis of the Department of Commerce deter16 mines shall supersede such index, plus the an17 nual percentage change in the total number of 

18 incumbent local exchange carrier working loops 

19 in rural, insular, and high cost areas, if that 

20 percentage change is greater than zero. 

21 ‘‘(C) INTERCARRIER COMPENSATION RE22 COVERY MECHANISM.—If at any time after the 

23 date of enactment of the Universal Service Re24 form Act of 2007 the Commission mandates 

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1 covered through an alternative revenue recovery 

2 mechanism, such alternative revenue recovery 

3 mechanism shall be included in the limitation 

4 set forth in subparagraph (A), and the Commis5 sion shall adjust such limitation by the amount 

6 that such alternated revenue recovery mecha7 nism increases demand for universal service 

8 support. 

9 ‘‘(e) DISTRIBUTION AND USE OF UNIVERSAL SERV10 ICE SUPPORT.— 

11 ‘‘(1) IN GENERAL.—Only an eligible tele12 communications carrier designated under section 

13 214(e) shall be eligible to receive specific Federal 

14 universal service support. A carrier that receives 

15 such support shall use that support only for the pro16 vision, maintenance, and upgrading of facilities and 

17 facilities-based services for which the support is in18 tended. Any such support should be explicit and suf19 ficient to achieve the purposes of this section. 

20 ‘‘(2) USES OF UNIVERSAL SERVICE SUPPORT.— 

21 The use of universal service support for all rural, in22 sular, and high cost areas— 

23 ‘‘(A) should be expanded to include high24 speed broadband services; 


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1 ‘‘(B) should be based on actual costs rea2 sonably incurred in providing such facilities3 based services in a service area, exclusive of the 

4 cost of acquiring spectrum, except that an eligi5 ble telecommunications carrier that is an in6 cumbent local exchange carrier may elect to 

7 have the Commission calculate the amount of 

8 universal service support payable to such car9 rier pursuant to section 54.309 of title 47, Code 

10 of Federal Regulations (as in effect on the date 

11 of the enactment of the Universal Service Re12 form Act of 2007); and 

13 ‘‘(C) should be available to communica14 tions service providers that are determined to 

15 be eligible telecommunications carriers under 

16 section 214(e). 

17 ‘‘(3) SUPPORT FOR NON-RURAL CARRIERS PRO18 VIDING SERVICE IN RURAL, INSULAR, AND HIGH

19 COST AREAS.— 

20 ‘‘(A) CALCULATING SUPPORT.—Except 

21 with respect to non-rural carriers serving insu22 lar areas, in calculating the need for and dis23 tribution of Federal universal service support 

24 for eligible telecommunications carriers that 

25 serve rural, insular, and high cost areas and 


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1 that are either non-rural carriers, or (after a 

2 one-time election) rural carriers subject to Fed3 eral incentive regulation, the Commission shall 

4 revise the Commission’s support mechanism for 

5 rural, insular, and high cost areas to provide 

6 support to each wire center to the extent the in7 cumbent local exchange carrier’s average for8 ward-looking cost per line for such wire center 

9 exceeds 2.75 times the national average cost per 

10 line. 

11 ‘‘(B) HOLD HARMLESS.—In implementing 

12 this paragraph, the Commission shall ensure 

13 that no non-rural carrier receives less Federal 

14 support calculated under paragraph (1) than 

15 the non-rural carrier would have received under 

16 the Commission’s support mechanism for rural, 

17 insular, and high cost areas as in effect on the 

18 day before the date of the enactment of the 

19 Universal Service Reform Act of 2007. 

20 ‘‘(4) ADMINISTRATION: ACCOUNTABILITY

21 STANDARDS.— 

22 ‘‘(A) NETWORK TRAFFIC IDENTIFICATION

23 ACCOUNTABILITY STANDARDS.— 

24 ‘‘(i) NETWORK TRAFFIC IDENTIFICA25 TION STANDARDS.—A communications 


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1 service provider shall ensure, to the degree 

2 technically possible, that all traffic that 

3 originates on its network contains, or, in 

4 the case of non-originated traffic, pre5 serves, sufficient information in call sig6 naling to allow for traffic identification by 

7 other communications service providers 

8 that transport or terminate such traffic, 

9 including telephone number information of 

10 the calling and called parties and such 

11 other information as the Commission 

12 deems appropriate. Except as otherwise 

13 permitted by the Commission, to the de14 gree technically possible, a communications 

15 service provider that transports traffic be16 tween communications service providers 

17 shall signal-forward without altering call 

18 signaling information it receives from an19 other communications service provider. 

20 ‘‘(ii) NETWORK TRAFFIC IDENTIFICA21 TION RULEMAKING.—The Commission, in 

22 consultation with the State commissions, 

23 shall initiate a single rulemaking no later 

24 than 180 days after the date of enactment 

25 of the Universal Service Reform Act of 


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1 2007 to establish rules and enforcement 

2 provisions for traffic identification. 

3 ‘‘(iii) NETWORK TRAFFIC IDENTIFICA4 TION ENFORCEMENT.—The Commission 

5 shall adopt and enforce clear penalties, 

6 fines, and sanctions under this section. 

7 ‘‘(B) UNIVERSAL SERVICE DISTRIBUTION

8 ACCOUNTABILITY STANDARDS.—To ensure fair9 ness and accountability in the distribution of 

10 universal service funding contributions, the 

11 Commission shall promulgate rules to calculate 

12 the level of universal service support to be dis13 tributed to all eligible recipients.’’. 

14 (b) RURAL HEALTH CARE SUPPORT MECHANISMS.— 

15 (1) AMENDMENT.—Subparagraph (A) of sec16 tion 254(h)(1) of the Communications Act of 1934 

17 (47 U.S.C. 254(h)(1)) is amended to read as follows: 

18 ‘‘(A) HEALTH CARE SERVICES FOR RURAL

19 AREAS.—Within 180 days after the date of en20 actment of the Universal Service Reform Act of 

21 2007, the Commission shall prescribe regula22 tions that provide that a communications serv23 ice provider shall, upon, receiving a bona fide 

24 request, provide covered services which are nec25 essary for the provision of health care services 


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1 in a State, including instruction relating to 

2 such services, to any public or nonprofit health 

3 care provider that serves persons who reside in 

4 rural areas in that State at rates that are rea5 sonably comparable to rates charged for similar 

6 services in urban areas in that State. A commu7 nications service provider providing service 

8 under this subparagraph shall be entitled to 

9 have an amount equal to the difference, if any, 

10 between the rates for services provided to health 

11 care providers for rural areas in a State and 

12 the rates for similar services in urban areas in 

13 that State treated as a service obligation as a 

14 part of its obligation to participate in the mech15 anisms to preserve and advance universal serv16 ice.’’. 

17 (2) DEFINITION OF HEALTH CARE PRO18 VIDER.—Subparagraph (B) of section 254(h)(7) of 

19 such Act (47 U.S.C. 254(h)(7)(B)) is amended to 

20 read as follows: 

21 ‘‘(B) HEALTH CARE PROVIDER.—The term 

22 ‘health care provider’ means— 

23 ‘‘(i) post-secondary educational insti24 tutions offering health care instruction, 

25 teaching hospitals, and medical schools; 


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1 ‘‘(ii) community health centers or 

2 health centers providing health care to mi3 grants; 

4 ‘‘(iii) local health departments or 

5 agencies; 

6 ‘‘(iv) community mental health cen7 ters; 

8 ‘‘(v) not-for-profit hospitals; 

9 ‘‘(vi) critical access hospitals; 

10 ‘‘(vii) rural hospitals with emergency 

11 rooms; 

12 ‘‘(viii) rural health clinics; 

13 ‘‘(ix) not-for-profit nursing homes or 

14 skilled nursing homes; 

15 ‘‘(x) hospice providers; 

16 ‘‘(xi) emergency medical services fa17 cilities; 

18 ‘‘(xii) rural dialysis facilities; 

19 ‘‘(xiii) elementary, secondary, and 

20 post-secondary school health clinics; and 

21 ‘‘(xiv) consortia of health care pro22 viders consisting of one or more entities 

23 described in clauses (i) through (xiii).’’. 

24 (3) DEFINITION OF RURAL FOR HEALTH CARE

25 SUPPORT.—Section 254(h)(7) of such Act is further 


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1 amended by adding at the end the following new 

2 subparagraph: 

3 ‘‘(J) RURAL AREA.—Within 180 days after 

4 the date of enactment of the Universal Service 

5 Reform Act of 2007, the Commission shall pre6 scribe regulations that provide that, for pur7 poses of the rural health care universal service 

8 support mechanisms established pursuant to 

9 this subsection, a ‘rural area’ is— 

10 ‘‘(i) any incorporated or unincor11 porated place in the United States, its ter12 ritories and insular possessions (including 

13 any area within the Federated States of 

14 Micronesia, the Republic of the Marshall 

15 Islands and the Republic of Palau) that 

16 has no more than 20,000 inhabitants 

17 based on the most recent available popu18 lation statistics from the Census Bureau; 

19 ‘‘(ii) any area located outside of the 

20 boundaries of any incorporated or unincor21 porated city, village, or borough having a 

22 population exceeding 20,000; 

23 ‘‘(iii) any area with a population den24 sity of fewer than 250 persons per square 

25 mile; or 


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1 ‘‘(iv) any place that qualified as a 

2 ‘rural area’ and received support from the 

3 rural health care support mechanism pur4 suant to the Commission’s rules in effect 

5 prior to December 1, 2004, and that con6 tinues to qualify as a ‘rural area’ pursuant 

7 to such rules.’’. 

8 (c) SCHOOLS, LIBRARIES, RURAL HEALTH CARE, 

9 LIFE-LINE, LINK-UP, AND TOLL LIMITATION HOLD

10 HARMLESS.—Except as provided in subsections (h)(1)(A), 

11 (h)(7)(B), and (h)(7)(J) of section 254 of the Communica12 tions Act of 1934 (47 U.S.C. 254), as amended by sub13 section (b)— 

14 (1) nothing in this Act (and the amendments 

15 made by this Act) shall be construed as limiting, 

16 changing, modifying, or altering the amount of sup17 port or means of distribution for the schools, librar18 ies, rural health care, life-line, link-up, and toll limi19 tation programs; and 

20 (2) the Federal Communications Commission 

21 shall ensure that such amendments do not result in 

22 a decrease of such support to a level below the level 

23 for the fiscal year preceding the fiscal year in which 

24 this Act is enacted. 


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1 SEC. 4. ELIGIBLE RECIPIENTS OF UNIVERSAL SERVICE 

2 SUPPORT. 

3 (a) AMENDMENT.—Section 214(e) of the Commu4 nications Act of 1934 (47 U.S.C. 214(e)) is amended— 

5 (1) by redesignating paragraphs (3), (4), (5), 

6 and (6) as paragraphs (6), (7), (9), and (8), respec7 tively, and reordering such paragraphs in numerical 

8 order; and 

9 (2) by striking paragraphs (1) and (2) and in10 serting the following: 

11 ‘‘(1) ELIGIBILITY TO RECEIVE UNIVERSAL

12 SERVICE SUPPORT.—A communications service pro13 vider shall be eligible to receive universal service 

14 support in accordance with the requirements of this 

15 subsection only if such communications service pro16 vider— 

17 ‘‘(A) uses its own facilities in whole or in 

18 part to make available throughout a service 

19 area the services that have been determined by 

20 the Commission to be universal services pursu21 ant to section 254(c), and adheres to the State 

22 carrier-of-last-resort requirements that are im23 posed on incumbent carriers serving the area; 

24 ‘‘(B) advertises the supported services and 

25 their associated charges throughout the service 

26 area using media of general distribution, and 


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1 advertises the availability of life-line and link-up 

2 services in a manner reasonably designed to 

3 reach those likely to qualify for those services; 

4 ‘‘(C) demonstrates the ability to remain 

5 functional in emergency situations; 

6 ‘‘(D) satisfies consumer protection and 

7 service quality standards; and 

8 ‘‘(E) meets the basic requirements for the 

9 deployment of high-speed broadband service, 

10 and provides high-speed broadband service, ex11 cept that the Commission shall establish a proc12 ess— 

13 ‘‘(i) whereby a determination can be 

14 made to waive the requirements of this 

15 subparagraph for 3 years upon application 

16 of a communications service provider dem17 onstrating that the deployment and provi18 sion of high-speed broadband service is not 

19 technically feasible or would materially im20 pair the communications service provider’s 

21 ability to continue to provide local ex22 change service throughout its service area, 

23 except that a waiver shall be deemed auto24 matically granted under this clause for a 

25 communications service provider which can 


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1 demonstrate that the cost per line of de2 ploying and providing high-speed 

3 broadband service is at least three times 

4 the average cost of providing high-speed 

5 broadband service among all recipients of 

6 universal service support, subject to the re7 newal provisions set forth in clause (ii); 

8 ‘‘(ii) whereby the communications 

9 service provider may seek renewal of such 

10 waiver every 3 years for as long as the de11 ployment and provision of high-speed 

12 broadband service is not technically fea13 sible or would materially impair the com14 munications service provider’s ability to 

15 continue to provide local exchange service 

16 throughout its service area; and 

17 ‘‘(iii) whereby any application of a 

18 communications service provider for a 

19 waiver pursuant to clause (i) on which the 

20 Commission has not taken final action 

21 within 60 days of the date of submission to 

22 the Commission shall be deemed granted. 

23 ‘‘(2) ELIGIBILITY CRITERIA.—In addition to the 

24 criteria specified in paragraph (1), the Commission 

25 shall establish such additional eligibility criteria for 


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1 the receipt of universal service support by commu2 nications service providers as it deems necessary and 

3 in the public interest. The criteria established in 

4 paragraph (1) and the criteria established by the 

5 Commission pursuant to this paragraph shall be 

6 used by State commissions in determining which 

7 providers shall be designated as eligible recipients of 

8 universal service support for the purpose of para9 graph (3). 

10 ‘‘(3) DESIGNATION OF ELIGIBLE RECIPIENTS.— 

11 A State commission shall, upon its own motion or 

12 upon request, designate as an eligible recipient of 

13 universal service support only those providers meet14 ing the requirements of paragraphs (1) and (2). 

15 ‘‘(4) GRANDFATHER PROVISION.—Recipients of 

16 universal service support in any service area prior to 

17 the date of enactment of the Universal Service Re18 form Act of 2007 shall meet the eligibility require19 ments for eligible recipients of universal service sup20 port— 

21 ‘‘(A) as described in paragraphs (1)(A) 

22 through (D), within one year of the date of en23 actment of the Universal Service Reform Act of 

24 2007; and 


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1 ‘‘(B) as described in paragraph (1)(E), 

2 within 5 years after the date of enactment of 

3 the Universal Service Reform Act of 2007. 

4 Failure of such an eligible recipient of universal 

5 service support to maintain and meet the eligibility 

6 requirements within the period required by subpara7 graph (A) or (B) after the date of enactment of the 

8 Universal Service Reform Act of 2007 shall require 

9 the automatic termination of Federal universal serv10 ice support to that recipient. This paragraph shall 

11 not be construed to prohibit such a recipient from 

12 obtaining a waiver under paragraph (1)(E).’’. 

13 (b) DEFINITIONS.—Paragraph (9) of section 214(e) 

14 (as redesignated by subsection (a)) is amended to read as 

15 follows: 

16 ‘‘(9) DEFINITIONS.—As used in this subsection, 

17 the term ‘service area’ means a geographic area that 

18 aligns with the area in which a communications 

19 service provider is licensed or authorized to provide 

20 service for the purpose of determining universal 

21 service obligations and support mechanisms. In the 

22 case of an area served by a rural telephone company, 

23 ‘service area’ means such company’s ‘study area’ or 

24 the licensed or authorized service area of any other 

25 communications service provider serving an area 


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1 that overlaps with the service area of a rural tele2 phone company. In the case of an area served by a 

3 wireless service provider, ‘service area’ means such 

4 company’s basic trading area.’’. 

5 SEC. 5. REMOVAL OF IMPEDIMENTS TO SUFFICIENT SUP6 PORT MECHANISMS. 

7 Section 254 of the Communications Act of 1934 is 

8 amended by adding at the end the following new sub9 section: 

10 ‘‘(m) REMOVAL OF LIMITATIONS ON HIGH COST

11 SUPPORT MECHANISMS.—The limitations on universal 

12 service support contained in section 54.305 of the Com13 mission’s regulations (47 CFR 54.305), and the individual 

14 caps imposed upon carriers contained in section 36.631 

15 of the Commission’s regulations (47 CFR 36.631), shall 

16 cease to be effective on the date of enactment of the Uni17 versal Service Reform Act of 2007. The Commission shall 

18 not, on or after such date of enactment, enforce or reim19 pose limitations on support mechanisms for rural tele20 phone companies or exchanges they acquire.’’. 

21 SEC. 6. SCOPE OF SUPPORT. 

22 Section 254 of the Communications Act of 1934 (47 

23 U.S.C. 254) is further amended by adding at the end the 

24 following new subsection: 


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1 ‘‘(n) SCOPE OF SUPPORT.—The Commission in im2 plementing the requirements of this section as amended 

3 by the Universal Service Reform Act of 2007 with respect 

4 to the distribution and use of Federal universal service 

5 support shall not limit such distribution and use to a sin6 gle connection or primary line, and all residential and 

7 business lines served by an eligible telecommunications 

8 carrier shall be eligible for Federal universal service sup9 port.’’. 

10 SEC. 7. APPLICATION OF ANTIDEFICIENCY ACT; INVEST11 MENT OF CONTRIBUTIONS. 

12 Section 254 of the Communications Act of 1934 (47 

13 U.S.C. 254) is further amended by adding at the end the 

14 following new subsections: 

15 ‘‘(o) PROPER ACCOUNTING OF UNIVERSAL SERVICE

16 CONTRIBUTIONS.— 

17 ‘‘(1) FROM ALL BUDGETS.—Notwithstanding 

18 any other provision of law, the receipts and disburse19 ments of universal service contributions under sec20 tion 254 of the Communications Act of 1934 (47 

21 U.S.C. 254) shall not be counted as new budget au22 thority, outlays, receipts, or deficit or surplus for 

23 purposes of— 

24 ‘‘(A) the budget of the United States Gov25 ernment as submitted by the President; 


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1 ‘‘(B) the Congressional budget; 

2 ‘‘(C) the Balanced Budget and Emergency 

3 Deficit Control Act of 1985; or 

4 ‘‘(D) any other law requiring budget se5 questers. 

6 ‘‘(2) ADDITIONAL EXEMPTIONS.—Section 1341, 

7 subchapter II of chapter 15, and sections 3302, 

8 3321, 3322, and 3325 of title 31, United States 

9 Code, shall not apply to— 

10 ‘‘(A) the collection and receipt of universal 

11 service contributions, including the interest 

12 earned on such contributions; or 

13 ‘‘(B) disbursements or other obligations 

14 authorized by the Federal Communications 

15 Commission under section 254 of the Commu16 nications Act of 1934 (47 U.S.C. 254). 

17 ‘‘(p) INVESTMENT OF UNIVERSAL SERVICE FUND

18 CONTRIBUTIONS.—Notwithstanding any other provision 

19 of law, including sections 3302, 3321, 3322, and 3325 of 

20 title 31, United States Code, the cash balance of receipts 

21 of universal service contributions collected pursuant to this 

22 section shall be invested by the Commission or its designee 

23 in conservative, liquid, interest-bearing investment vehicles 

24 of government backed securities until such time as such 

25 receipts are disbursed pursuant to this section 254.’’. 


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1 SEC. 8. STATE AUTHORITY. 

2 Section 254(f) of the Communications Act of 1934 

3 (47 U.S.C. 254(f)) is amended to read as follows: 

4 ‘‘(f) STATE AUTHORITY.— 

5 ‘‘(1) IN GENERAL.—A State may adopt regula6 tions not inconsistent with the Commission’s rules to 

7 preserve and advance universal service. In adopting 

8 those rules, a State may require communications 

9 service providers to contribute to universal service on 

10 the basis of— 

11 ‘‘(A) revenues derived from the provision 

12 of intrastate, interstate, and foreign commu13 nications services by communications service 

14 providers; 

15 ‘‘(B) working telephone numbers used by 

16 communications service providers; or 

17 ‘‘(C) any other current or successor identi18 fier protocols or connections to the network 

19 used by communications service providers. 

20 ‘‘(2) DISREGARD OF INTERSTATE COMPO21 NENT.—A State may require communications service 

22 providers to contribute under paragraph (1) regard23 less of whether the service contains an interstate 

24 component. 

25 ‘‘(3) GUIDELINES.—Regulations adopted by a 

26 State under this subsection shall result in a specific, 


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1 predictable, and sufficient mechanism to support 

2 universal service and shall be competitively and tech3 nologically neutral, equitable, and nondiscrim4 inatory.’’. 

5 SEC. 9. REPORT TO CONGRESS. 

6 The Commission shall, not later than 3 years after 

7 the date of enactment of this Act and triennially there8 after, report to Congress regarding the availability of the 

9 services designated by the Commission as universal serv10 ices to all Americans, including schools, libraries, rural 

11 health care providers, and low income consumers. 

Æ 


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