I 

109TH CONGRESS 

2D SESSION H. R. 5072 

To reform the universal service provisions of the Communications Act of 

1934, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 30, 2006 

Mr. TERRY (for himself and Mr. BOUCHER) 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 2006’’. 

6 SEC. 2. FINDINGS AND PURPOSES. 

7 (a) FINDINGS.—The Congress finds the following: 

8 (1) The current State and Federal mechanisms 

9 used to collect and distribute universal service supVerDate Aug 31 2005 21:27 Apr 04, 2006 Jkt 049196 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H5072.IH H5072

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1 port are not sustainable in a competitive and rapidly 

2 changing technological environment. 

3 (2) Voice-over-Internet-Protocol, wireless voice 

4 services, and popular flat rate, all-distance pricing 

5 plans for voice services have rendered meaningless 

6 the distinctions between and among interstate tele7 communications and information services, and be8 tween and among intrastate telecommunications 

9 services and information services, thus making uni10 versal service support mechanisms based upon such 

11 jurisdictional concepts unsustainable. 

12 (3) Providing unlimited universal service sup13 port to multiple competing telecommunications car14 riers in the same service area results in an excessive 

15 demand for universal service support. 

16 (4) Implicit support mechanisms were the uni17 versal service support mechanisms of choice for 

18 State commissions and during the natural monopoly 

19 era that preceded the Telecommunications Act of 

20 1996. Implicit support mechanisms are effective in 

21 monopoly environments; however, they are incon22 sistent with the competitive environment fostered by 

23 the 1996 Act, and they should be eliminated. 

24 (5) The Commission was required by the Tele25 communications Act of 1996 to make all Federal 


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1 universal service support mechanisms explicit. Ex2 plicit universal service support mechanisms are ap3 propriate in the competitive telecommunications 

4 marketplace of the 21st century. 

5 (6) Universal service support mechanisms 

6 should preserve incentives for continued investment 

7 in and enhancements to the public switched tele8 phone network and to increase the availability of 

9 broadband services. 

10 (7) Maintaining predictable, sufficient, and sus11 tainable universal service support will require that 

12 support be collected from a broad base of service 

13 providers and in a more competitively and tech14 nology neutral manner. 

15 (8) The aggregate amount of universal service 

16 support is increasing annually and as a result, tele17 communications carriers have had to pay an in18 creased percentage of their total revenues to support 

19 universal service support mechanisms. By law, tele20 communications carriers may pass through these 

21 costs to their subscribers, increasing the amount 

22 consumers are required to pay to maintain the con23 tinued growth of universal service support. 

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1 able telecommunications services to rural areas that 

2 are reasonably comparable to those in urban areas. 

3 Existing Federal universal service support mecha4 nisms have helped to bring telecommunications serv5 ices to approximately 95 percent of United States 

6 households. 

7 (b) PURPOSES.—The purposes of this Act are to re8 form State and Federal universal service support contribu9 tion and distribution mechanisms by— 

10 (1) targeting universal service support specifi11 cally to eligible telecommunications carriers in high12 cost geographic areas to ensure that communications 

13 services and high-speed broadband services are made 

14 available throughout all of the States of the United 

15 States in a fair and equitable manner; 

16 (2) constraining the growth of universal service 

17 support by extending the current cap on the portion 

18 of the high cost loop support mechanism that is dis19 tributed to rural incumbent local exchange carrier 

20 study areas to all eligible telecommunications car21 riers receiving support from the high cost support 

22 mechanism; 

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1 sessment methodology determined by the Federal 

2 Communications Commission applicable to any enti3 ty that currently contributes to universal service 

4 support, provides real-time voice communications, 

5 over any platform, in which the voice component is 

6 the primary function, or offers a connection to the 

7 network over any platform; 

8 (4) strengthening the criteria for eligible recipi9 ents of universal service support: and 

10 (5) ensuring that the United States becomes a 

11 world leader in broadband deployment by making 

12 high-speed broadband services and facilities eligible 

13 for universal service support. 

14 SEC. 3. DEFINITIONS. 

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

16 U.S.C. 153(a)) is amended— 

17 (1) by redesignating paragraphs (20) through 

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

19 (2) by redesignating paragraphs (11) through 

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

21 (3) by inserting after paragraph (10) the fol22 lowing new paragraph: 

23 ‘‘(11) COMMUNICATIONS SERVICE PROVIDER.— 

24 The term ‘communications service provider’ means 

25 any entity that— 


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1 ‘‘(A) contributes to or receives universal 

2 service support for the most recent calendar 

3 quarter ending before the date of enactment of 

4 the Universal Service Reform Act of 2006; 

5 ‘‘(B) uses telephone numbers or Internet 

6 protocol addresses, or their functional equiva7 lents or successors, to offer a service or a capa8 bility— 

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

10 2-way voice communications; and 

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

12 the primary function; or 

13 ‘‘(C) offers for a fee, directly to the public, 

14 or to such classes of users as to be effectively 

15 available directly to the public, a physical trans16 mission facility, whether circuit-switched, pack17 et-switched, a leased line, or using radio fre18 quency transmissions, regardless of the form, 

19 protocol, or statutory classification of the serv20 ice, that allows an end user to obtain access, 

21 from a particular end user location, to a net22 work that permits the end user to engage in 

23 electronic communications (including tele24 communications) with the public.’’; and 


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1 (4) by inserting after paragraph (20) (as redes2 ignated by paragraph (2) of this section) the fol3 lowing new paragraph: 

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

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

6 broadband service’ means a two way network 

7 that uses the Internet protocol or a successor 

8 protocol, and the associated capabilities and 

9 functionalities, services, and applications pro10 vided over an Internet protocol platform or for 

11 which an Internet protocol capability is an inte12 gral component, and services, facilities, equip13 ment, and applications that enable an end-user 

14 to receive communications in Internet protocol 

15 format, regardless of whether the communica16 tions are voice, data, video, or any other form, 

17 at a download receiving rate not lower than 1 

18 megabit per second. 

19 ‘‘(B) COMMISSION SPEED ADJUSTMENT

20 REQUIREMENTS.—The Commission shall review 

21 the speed requirement in subparagraph (A) 

22 every other year beginning the sixth year after 

23 implementation of the Universal Service Reform 

24 Act of 2006 and shall make the necessary ad25 justments to move to higher speeds as deployVerDate Aug 31 2005 21:27 Apr 04, 2006 Jkt 049196 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H5072.IH H5072

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1 ment and advancement of new technology al2 lows communications service providers to pro3 vide higher speed broadband to end users in an 

4 economically efficient manner. 

5 ‘‘(C) INTERNET PROTOCOL.—The term 

6 ‘Internet protocol’ means the Transmission 

7 Control Protocol/Internet Protocol, or any pred8 ecessor or successor protocols to such pro9 tocol.’’. 

10 SEC. 4. UNIVERSAL SERVICE REFORM. 

11 (a) IN GENERAL.—Section 254 of the Communica12 tions Act of 1934 (47 U.S.C. 254) is amended by amend13 ing subsections (a) through (e) to read as follows: 

14 ‘‘(a) PROCEDURES TO REFORM UNIVERSAL SERV15 ICE.— 

16 ‘‘(1) FEDERAL-STATE JOINT BOARD ON UNI17 VERSAL SERVICE.—Within one month after the date 

18 of enactment of the Universal Service Reform Act of 

19 2006, the Commission shall institute and refer to 

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

21 of this title a proceeding to recommend changes to 

22 any of its regulations in order to implement section 

23 214(e) of this title and this section (as amended by 

24 the Universal Service Reform Act of 2006), includ25 ing the definition of the services that are supported 


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1 by Federal universal service support mechanisms 

2 and a specific timetable for completion of such rec3 ommendations. In addition to the members of the 

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

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

6 State-appointed utility consumer advocate nominated 

7 by a national organization of State utility consumer 

8 advocates. The Joint Board shall, after notice and 

9 opportunity for public comment, make its rec10 ommendations to the Commission 9 months after 

11 the date of enactment of the Universal Service Re12 form Act of 2006. 

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

14 shall initiate a single proceeding to consider the rec15 ommendations from the Joint Board required by 

16 paragraph (1) and shall complete such proceeding 

17 within 18 months after the date of enactment of the 

18 Universal Service Reform Act of 2006. The rules es19 tablished by such proceeding shall include a defini20 tion of the services that are supported by Federal 

21 universal service support mechanisms and a specific 

22 timetable for implementation. 

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

24 Board and the Commission shall base policies for the presVerDate Aug 31 2005 21:27 Apr 04, 2006 Jkt 049196 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H5072.IH H5072

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1 ervation and advancement of universal service on the fol2 lowing principles: 

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

4 should be available at just, reasonable, and afford5 able rates. 

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

7 to advanced telecommunications and information 

8 services should be provided in all regions of the Na9 tion. 

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

11 AREAS.—Consumers in all regions of the Nation, in12 cluding low-income consumers and those in rural, in13 sular, and high cost areas, should have access to the 

14 services the Commission determines to be universal 

15 services in accordance with subsection (c), including 

16 advanced telecommunications and information serv17 ices, that are reasonably comparable to those serv18 ices provided in urban areas and that are available 

19 at rates that are reasonably comparable to rates 

20 charged for similar services in urban areas. 

21 ‘‘(4) EQUITABLE AND NONDISCRIMINATORY

22 CONTRIBUTIONS.—All communications service pro23 viders should make equitable and nondiscriminatory 

24 contributions to the preservation and advancement 

25 of universal service. 


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1 ‘‘(5) SPECIFIC AND PREDICTABLE SUPPORT

2 MECHANISMS.—There should be specific, predictable 

3 and sufficient Federal and State mechanisms to pre4 serve and advance universal service. 

5 ‘‘(6) ACCESS TO ADVANCED TELECOMMUNI6 CATIONS SERVICES FOR SCHOOLS, HEALTH CARE, 

7 AND LIBRARIES.—Elementary and secondary schools 

8 and classrooms, health care providers, and libraries 

9 should have access to advanced telecommunications 

10 services as described in subsection (h). 

11 ‘‘(7) ADDITIONAL PRINCIPLES.—Such other 

12 principles as the Joint Board and the Commission 

13 determine are necessary and appropriate for the pro14 tection of the public interest, convenience, and ne15 cessity and are consistent with this Act. 

16 ‘‘(c) DEFINITION.— 

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

18 the services defined on the date of enactment of the 

19 Universal Service Reform Act of 2006 as universal 

20 services, high-speed broadband services, and an 

21 evolving level of telecommunications and information 

22 services that the Commission shall establish periodi23 cally under this section, taking into account ad24 vances in telecommunications and information tech25 nologies and services. The Joint Board in recomVerDate Aug 31 2005 21:27 Apr 04, 2006 Jkt 049196 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H5072.IH H5072

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1 mending, and the Commission in establishing, the 

2 definition of the services that are supported by Fed3 eral universal service support mechanisms shall con4 sider the extent to which such services— 

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

6 health, or public safety; 

7 ‘‘(B) are being deployed in public tele8 communications networks by communications 

9 service providers; and 

10 ‘‘(C) are consistent with the public inter11 est, convenience, and necessity. 

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

13 Joint Board shall consider whether to recommend to 

14 the Commission modifications in the definition of 

15 the services that are supported by Federal universal 

16 service support mechanisms no less than once every 

17 5 years. 

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

19 services included in the definition of universal serv20 ice under paragraph (1), the Commission may des21 ignate additional services for such support mecha22 nisms for schools, libraries, and health care pro23 viders for the purposes of subsection (h). 

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

25 definition of universal service shall not be construed 


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1 to exclude eligible communications service providers 

2 from using universal service funding for the provi3 sion, maintenance, and upgrading of high-speed 

4 broadband service. 

5 ‘‘(d) UNIVERSAL SERVICE SUPPORT CONTRIBU6 TIONS.— 

7 ‘‘(1) CALCULATING UNIVERSAL SERVICE SUP8 PORT CONTRIBUTIONS.— 

9 ‘‘(A) IN GENERAL.—The Commission shall 

10 assess contributions to universal service support 

11 mechanisms from communications service pro12 viders. The Commission shall assess such con13 tributions in a manner that is equitable and 

14 competitively neutral, is nondiscriminatory in 

15 nature, and ensures that communications serv16 ice providers are subject to similar obligations. 

17 The Commission may employ any methodology 

18 to assess such contributions, including consider19 ation of— 

20 ‘‘(i) revenues derived from the provi21 sion of intrastate, interstate, and foreign 

22 communications services by communica23 tions service providers; 

24 ‘‘(ii) working telephone numbers used 

25 by communications service providers; or 


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1 ‘‘(iii) any other current or successor 

2 identifier protocols or connections to the 

3 network used by communications service 

4 providers. 

5 ‘‘(B) USE OF MORE THAN ONE METHOD6 OLOGY.—If no one methodology designated 

7 under subparagraph (A) effectuates the prin8 ciples described in this Act, the Commission 

9 may employ a combination of any such meth10 odologies. 

11 ‘‘(C) LOW VOLUME EXCEPTION.—The 

12 Commission may limit the contributions of com13 munications service providers whose customers 

14 typically make a low volume of calls on a 

15 monthly basis. 

16 ‘‘(D) DE MINIMIS EXCEPTION.—The Com17 mission may exempt a communications service 

18 provider from the requirements of this sub19 section if the communications activities of such 

20 provider are limited to such an extent that the 

21 level of contributions of such provider to the 

22 preservation and advancement of universal serv23 ice would be de minimis. 

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1 nications service providers contributing to universal 

2 service support mechanisms or receiving universal 

3 service support. The reporting requirements shall 

4 not impose unnecessary burdens, and shall be tech5 nology and provider neutral. The Commission shall 

6 periodically review the reporting requirements to en7 sure that universal service support is used for the 

8 provision, maintenance, and upgrading of the facili9 ties for which support is intended. 

10 ‘‘(3) UNIVERSAL SERVICE SUPPORT CONTRIBU11 TION LIMITS.— 

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

13 universal service support for all universal serv14 ice support mechanisms other than support for 

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

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

17 total amount that was collected from all sources 

18 for all universal service support mechanisms 

19 other than schools, libraries, rural health care, 

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

21 year prior to the date of enactment of the Uni22 versal Service Reform Act of 2006, as adjusted 

23 annually by a growth factor and once, within 

24 one year of the date of enactment of the Uni25 versal Service Reform Act of 2006, by the 


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1 amounts that the adjustments in subsections 

2 (e)(3) and (m) increase demand for universal 

3 service support. 

4 ‘‘(B) GROWTH FACTOR.—The growth fac5 tor shall be the annual percentage change in 

6 the Gross Domestic Product–Chained Price 

7 Index (GDP–CPI), or any successor general in8 flationary factor that the Bureau of Economic 

9 Analysis of the Department of Commerce deter10 mines shall supersede such index, plus the an11 nual percentage change in the total number of 

12 rural incumbent local exchange carrier working 

13 loops, if that percentage change is greater than 

14 zero. 

15 ‘‘(C) INTERCARRIER COMPENSATION RE16 COVERY MECHANISM.—If at any time after the 

17 date of enactment of the Universal Service Re18 form Act of 2006 the Commission mandates 

19 that intercarrier compensation revenues be re20 covered through an alternative revenue recovery 

21 mechanism, such alternative revenue recovery 

22 mechanism shall be included in the limitation 

23 set forth in subparagraph (A), and the Commis24 sion shall adjust such limitation once, within 3 

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1 pensation revenues be recovered through an al2 ternative revenue recovery mechanism, by the 

3 amount that such revenue recovery mechanism 

4 increases demand for universal service support. 

5 ‘‘(e) DISTRIBUTION AND USE OF UNIVERSAL SERV6 ICE SUPPORT.— 

7 ‘‘(1) IN GENERAL.—Only an eligible tele8 communications carrier designated under section 

9 214(e) shall be eligible to receive specific Federal 

10 universal service support. A carrier that receives 

11 such support shall use that support only for the pro12 vision, maintenance, and upgrading of facilities and 

13 services for which the support is intended. Any such 

14 support should be explicit and sufficient to achieve 

15 the purposes of this section. 

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

17 The use of universal service support for all rural, in18 sular, and high cost areas— 

19 ‘‘(A) should be expanded to include high20 speed broadband services; 

21 ‘‘(B) should be based on actual costs rea22 sonably incurred in providing such services, ex23 clusive of the cost of acquiring spectrum, except 

24 that an eligible telecommunications carrier that 

25 is an incumbent local exchange carrier may 


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1 elect to have the Commission calculate the 

2 amount of universal service support payable to 

3 such carrier pursuant to section 54.309 of title 

4 47, Code of Federal Regulations (as in effect on 

5 the date of the enactment of the Universal 

6 Service Reform Act of 2006); and 

7 ‘‘(C) should be available to communica8 tions service providers that are determined to 

9 be eligible telecommunications carriers under 

10 section 214(e). 

11 ‘‘(3) SUPPORT FOR NON-RURAL CARRIERS PRO12 VIDING SERVICE IN RURAL, INSULAR, AND HIGH

13 COST AREAS.— 

14 ‘‘(A) CALCULATING SUPPORT.—Except 

15 with respect to non-rural carriers serving insu16 lar areas, in calculating Federal universal serv17 ice support for eligible telecommunications car18 riers that serve rural, insular, and high cost 

19 areas and that are not rural telephone compa20 nies, the Commission shall, subject to the provi21 sions of subparagraph (B), revise the Commis22 sion’s support mechanism for rural, insular, 

23 and high cost areas to provide support to each 

24 wire center in which the incumbent local ex25 change carrier’s average cost per line for such 


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1 wire center exceeds 3.75 times the national av2 erage cost per line. 

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

4 this paragraph, the Commission shall ensure 

5 that no non-rural carrier receives less Federal 

6 support calculated under paragraph (1) than 

7 the non-rural carrier would have received under 

8 the Commission’s support mechanism for rural, 

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

10 day before the date of the enactment of the 

11 Universal Service Reform Act of 2006. 

12 ‘‘(4) ADMINISTRATION: ACCOUNTABILITY

13 STANDARDS.— 

14 ‘‘(A) NETWORK TRAFFIC IDENTIFICATION

15 ACCOUNTABILITY STANDARDS.— 

16 ‘‘(i) NETWORK TRAFFIC IDENTIFICA17 TION STANDARDS.—Communications serv18 ice providers shall ensure that all traffic 

19 that originates on their networks contains 

20 sufficient information to allow for traffic 

21 identification by other communications 

22 service providers that transport, transit, or 

23 terminate such traffic, including informa24 tion on the identity of the originating pro25 vider, the calling and called parties, and 


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1 the jurisdiction in which the traffic origi2 nates. 

3 ‘‘(ii) NETWORK TRAFFIC IDENTIFICA4 TION RULEMAKING.—The Commission, in 

5 consultation with the States, shall initiate 

6 a single rulemaking no later than 180 days 

7 after the date of enactment of the Uni8 versal Service Reform Act of 2006 to es9 tablish rules and enforcement provisions 

10 for traffic identification. Such rules shall 

11 include mandatory requirements for identi12 fication of all traffic by the originating 

13 provider and shall require that such traffic 

14 identification information is transferred to 

15 transporting, transiting, and terminating 

16 providers unchanged and unaltered. The 

17 rules shall also establish procedures for 

18 carriers to contest insufficiently labeled 

19 traffic in a prompt manner and shall es20 tablish appropriate enforcement and pen21 alty provisions for carriers that insuffi22 ciently label traffic. The processes to adju23 dicate insufficiently labeled traffic shall re24 quire the relevant providers to demonstrate 


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1 their compliance with the Commission’s 

2 traffic labeling standards. 

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

5 shall adopt clear penalties, fines, and sanc6 tions for insufficiently labeled traffic. The 

7 penalties, fines, and sanctions established 

8 by the Commission shall provide— 

9 ‘‘(I) adequate retroactive mone10 tary reimbursement to the defrauded 

11 provider or providers equal to the rate 

12 differential between accurately and in13 accurately labeled traffic; 

14 ‘‘(II) monetary fines determined 

15 by the Commission; 

16 ‘‘(III) a deterrence penalty for 

17 those offenders who do not resolve 

18 their violations or remit the required 

19 reimbursements to defrauded provider 

20 or providers; 

21 ‘‘(IV) an adequate deterrence 

22 penalty against frivolous accusations; 

23 ‘‘(V) the ability of network traffic 

24 operators to block inaccurately labeled 

25 traffic; 


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1 ‘‘(VI) the decertification of re2 peat offenders or those providers un3 willing to comply with the established 

4 rules and penalties; and 

5 ‘‘(VII) specific and clear time 

6 frames for the investigation and sub7 sequent penalty, fines, and sanctions 

8 of offending providers, to ensure prop9 er accountability. 

10 ‘‘(iv) ACCOUNTABILITY FOR NETWORK

11 TRAFFIC EXCHANGE.—To ensure that all 

12 communications service providers are ac13 countable for the volume of traffic the pro14 viders terminate on other carriers’ net15 works, the Commission shall ensure that 

16 all providers are compensated for the use 

17 of their networks by other providers. 

18 ‘‘(B) UNIVERSAL SERVICE DISTRIBUTION

19 ACCOUNTABILITY STANDARDS.—To ensure fair20 ness and accountability in the distribution of 

21 universal service funding contributions, the 

22 Commission shall promulgate rules to calculate 

23 the level of universal service support to be dis24 tributed to all eligible recipients.’’. 

25 (b) RURAL HEALTH CARE SUPPORT MECHANISMS.— 


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1 (1) AMENDMENT.—Subparagraph (A) of sec2 tion 254(h)(1) of the Communications Act of 1934 

3 (47 U.S.C. 254(h)(1)) is amended to read as follows: 

4 ‘‘(A) HEALTH CARE SERVICES FOR RURAL

5 AREAS.—Within 180 days after the date of en6 actment of the Universal Service Reform Act of 

7 2006, the Commission shall prescribe regula8 tions that provide that a communications serv9 ice provider shall, upon, receiving a bona fide 

10 request, provide covered services which are nec11 essary for the provision of health care services 

12 in a State, including instruction relating to 

13 such services, to any public or nonprofit health 

14 care provider that serves persons who reside in 

15 rural areas in that State at rates that are rea16 sonably comparable to rates charged for similar 

17 services in urban areas in that State. A commu18 nications service provider providing service 

19 under this subparagraph shall be entitled to 

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

21 between the rates for services provided to health 

22 care providers for rural areas in a State and 

23 the rates for similar services in urban areas in 

24 that State treated as a service obligation as a 

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1 anisms to preserve and advance universal serv2 ice.’’. 

3 (2) DEFINITION OF HEALTH CARE PRO4 VIDER.—Subparagraph (B) of section 254(h)(7) of 

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

6 read as follows: 

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

8 ‘health care provider’ means— 

9 ‘‘(i) post-secondary educational insti10 tutions offering health care instruction, 

11 teaching hospitals, and medical schools; 

12 ‘‘(ii) community health centers or 

13 health centers providing health care to mi14 grants; 

15 ‘‘(iii) local health departments or 

16 agencies; 

17 ‘‘(iv) community mental health cen18 ters; 

19 ‘‘(v) not-for-profit hospitals; 

20 ‘‘(vi) critical access hospitals; 

21 ‘‘(vii) rural hospitals with emergency 

22 rooms; 

23 ‘‘(viii) rural health clinics; 

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

25 skilled nursing homes; 


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1 ‘‘(x) hospice providers; 

2 ‘‘(xi) emergency medical services fa3 cilities; 

4 ‘‘(xii) rural dialysis facilities; 

5 ‘‘(xiii) elementary, secondary, and 

6 post-secondary school health clinics; and 

7 ‘‘(xiv) consortia of health care pro8 viders consisting of one or more entities 

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

10 (3) DEFINITION OF RURAL FOR HEALTH CARE

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

12 amended by adding at the end the following new 

13 subparagraph: 

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

15 the date of enactment of the Universal Service 

16 Reform Act of 2006, the Commission shall pre17 scribe regulations that provide that, for pur18 poses of the rural health care universal service 

19 support mechanisms established pursuant to 

20 this subsection, a ‘rural area’ is— 

21 ‘‘(i) any incorporated or unincor22 porated place in the United States, its ter23 ritories and insular possessions (including 

24 any area within the Federated States of 

25 Micronesia, the Republic of the Marshall 


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1 Islands and the Republic of Palau) that 

2 has no more than 20,000 inhabitants 

3 based on the most recent available popu4 lation statistics from the Census Bureau; 

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

6 boundaries of any incorporated or unincor7 porated city, village, or borough having a 

8 population exceeding 20,000; 

9 ‘‘(iii) any area with a population den10 sity of fewer than 250 persons per square 

11 mile; or 

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

13 ‘rural area’ and received support from the 

14 rural health care support mechanism pur15 suant to the Commission’s rules in effect 

16 prior to December 1, 2004, and that con17 tinues to qualify as a ‘rural area’ pursuant 

18 to such rules.’’. 

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

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

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

22 (h)(7)(B), and (h)(7)(J) of section 254 of the Communica23 tions Act of 1934 (47 U.S.C. 254), as amended by sub24 section (b)— 


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

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

3 changing, modifying, or altering the amount of sup4 port or means of distribution for the schools, librar5 ies, rural health care, life-line, link-up, and toll limi6 tation programs; and 

7 (2) the Federal Communications Commission 

8 shall ensure that such amendments do not result in 

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

10 for the fiscal year preceding the fiscal year in which 

11 this Act is enacted. 

12 SEC. 5. ELIGIBLE RECIPIENTS OF UNIVERSAL SERVICE 

13 SUPPORT. 

14 (a) AMENDMENT.—Section 214(e) of the Commu15 nications Act of 1934 (47 U.S.C. 214(e)) is amended— 

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

17 and (6) as paragraphs (6), (7), (9), and (8), respec18 tively, and reordering such paragraphs in numerical 

19 order; and 

20 (2) by striking paragraphs (1) and (2) and in21 serting the following: 

22 ‘‘(1) ELIGIBILITY TO RECEIVE UNIVERSAL

23 SERVICE SUPPORT.—A communications service pro24 vider shall be eligible to receive universal service 

25 support in accordance with the requirements of this 


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1 subsection only if such communications service pro2 vider— 

3 ‘‘(A) uses its own facilities to make avail4 able in a service area the services that have 

5 been determined by the Commission to be uni6 versal services pursuant to section 254(c), and 

7 responds to reasonable requests for service from 

8 persons located anywhere in such service area 

9 consistent with carrier-of-last-resort require10 ments in the State in which the requesting per11 son is located; 

12 ‘‘(B) advertises the supported services and 

13 their associated charges throughout the service 

14 area using media of general distribution, and 

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

16 services in a manner reasonably designed to 

17 reach those likely to qualify for those services; 

18 ‘‘(C) demonstrates the ability to remain 

19 functional in emergency situations; 

20 ‘‘(D) satisfies consumer protection and 

21 service quality standards; and 

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

23 deployment of high-speed broadband service, 

24 and provides high-speed broadband service, exVerDate Aug 31 2005 21:27 Apr 04, 2006 Jkt 049196 PO 00000 Frm 00028 Fmt 6652 Sfmt 6201 E:\BILLS\H5072.IH H5072

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1 cept that the Commission shall establish a proc2 ess— 

3 ‘‘(i) whereby a determination can be 

4 made to waive the requirements of this 

5 subparagraph for 3 years upon application 

6 of a communications service provider dem7 onstrating that the deployment and provi8 sion of high-speed broadband service is not 

9 technically feasible or would materially im10 pair the communications service provider’s 

11 ability to continue to provide local ex12 change service throughout its service area, 

13 except that a waiver shall be deemed auto14 matically granted under this clause for a 

15 communications service provider which can 

16 demonstrate that the cost per line of de17 ploying and providing high-speed 

18 broadband service is at least three times 

19 the average cost of providing high-speed 

20 broadband service among all recipients of 

21 universal service support, subject to the re22 newal provisions set forth in clause (ii); 

23 ‘‘(ii) whereby the communications 

24 service provider may seek renewal of such 

25 waiver every 3 years for as long as the deVerDate Aug 31 2005 21:27 Apr 04, 2006 Jkt 049196 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\H5072.IH H5072

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1 ployment and provision of high-speed 

2 broadband service is not technically fea3 sible or would materially impair the com4 munications service provider’s ability to 

5 continue to provide local exchange service 

6 throughout its service area; and 

7 ‘‘(iii) whereby any application of a 

8 communications service provider for a 

9 waiver pursuant to clause (i) on which the 

10 Commission has not taken final action 

11 within 60 days of the date of submission to 

12 the Commission shall be deemed granted. 

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

14 criteria specified in paragraph (1), the Commission 

15 shall establish such additional eligibility criteria for 

16 the receipt of universal service support by commu17 nications service providers as it deems necessary and 

18 in the public interest. The criteria established in 

19 paragraph (1) and the criteria established by the 

20 Commission pursuant to this paragraph shall be 

21 used by State commissions in determining which 

22 providers shall be designated as eligible recipients of 

23 universal service support for the purpose of para24 graph (3). 


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

2 A State commission shall, upon its own motion or 

3 upon request, designate as an eligible recipient of 

4 universal service support only those providers meet5 ing the requirements of paragraphs (1) and (2). 

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

7 universal service support in any service area prior to 

8 the date of enactment of the Universal Service Re9 form Act of 2006 shall meet the eligibility require10 ments for eligible recipients of universal service sup11 port— 

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

13 through (D) within one year of the date of en14 actment of the Universal Service Reform Act of 

15 2006; and 

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

17 within 5 years after the date of enactment of 

18 the Universal Service Reform Act of 2006. 

19 Failure of such an eligible recipient of universal 

20 service support to maintain and meet the eligibility 

21 requirements within the period required by subpara22 graph (A) or (B) after the date of enactment of the 

23 Universal Service Reform Act of 2006 shall require 

24 the automatic termination of Federal universal serv25 ice support to that recipient. This paragraph shall 


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1 not be construed to prohibit such a recipient from 

2 obtaining a waiver under paragraph (1)(E). 

3 ‘‘(5) STATE AUTHORITY.—Nothing in this Act 

4 or the Universal Service Reform Act of 2006 pre5 cludes a State from establishing funding mecha6 nisms to preserve and advance universal service 

7 within that State pursuant to section 254(f) of this 

8 Act.’’. 

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

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

11 follows: 

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

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

14 aligns with the area in which a communications 

15 service provider is licensed or authorized to provide 

16 service for the purpose of determining universal 

17 service obligations and support mechanisms. In the 

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

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

20 the licensed or authorized service area of any other 

21 communications service provider serving an area 

22 that overlaps with the service area of a rural tele23 phone company.’’. 


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1 SEC. 6. REMOVAL OF IMPEDIMENTS TO SUFFICIENT SUP2 PORT MECHANISMS. 

3 Section 254 of the Communications Act of 1934 is 

4 amended by adding at the end the following new sub5 section: 

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

7 SUPPORT MECHANISMS.—The limitations on universal 

8 service support contained in section 54.305 of the Com9 mission’s regulations (47 C.F.R. 54.305), and the indi10 vidual caps imposed upon carriers contained in section 

11 36.631 of the Commission’s regulations (47 C.F.R. 

12 36.631), shall cease to be effective on the date of enact13 ment of the Universal Service Reform Act of 2006. The 

14 Commission shall not, on or after such date of enactment, 

15 enforce or reimpose limitations on support mechanisms for 

16 rural telephone companies or exchanges they acquire 

17 based on fund size or other considerations unrelated to 

18 the sufficiency of support to achieve the purposes of this 

19 section.’’. 

20 SEC. 7. APPLICATION OF ANTIDEFICIENCY ACT. 

21 (a) MAKING ANTIDEFICIENCY ACT EXEMPTION PER22 MANENT.—Section 254 of the Communications Act of 

23 1934 (47 U.S.C. 254) is amended by adding the following 

24 subsection (n): 


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1 ‘‘(n) APPLICATION OF ANTIDEFICIENCY ACT.—Sec2 tion 1341 and subchapter II of chapter 15 of title 31, 

3 United States Code, do not apply— 

4 ‘‘(1) to any amount collected or received as 

5 Federal universal service contributions required by 

6 this section, including any interest earned on such 

7 contributions; nor 

8 ‘‘(2) to the expenditure or obligation of 

9 amounts attributable to such contributions for uni10 versal service support programs established pursuant 

11 to this section.’’. 

12 (b) INVESTMENT OF UNIVERSAL SERVICE FUND

13 CONTRIBUTIONS.—Notwithstanding any other provision 

14 of law, including but not limited to sections 3302, 3321, 

15 3322, and 3325 of title 31, United States Code, the cash 

16 balance of receipts of universal service contributions col17 lected pursuant to section 254 of the Communications Act 

18 of 1934 (47 U.S.C. 254) shall be invested by the Commis19 sion or its designee in conservative, liquid, interest-bearing 

20 investment vehicles of government backed securities until 

21 such time as such receipts are disbursed pursuant to sec22 tion 254 of the Communications Act of 1934 (47 U.S.C. 

23 254). 


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1 SEC. 8. SCOPE OF SUPPORT. 

2 The Commission in implementing the requirements of 

3 this Act with respect to the distribution and use of Federal 

4 universal service support shall not limit such distribution 

5 and use to a single connection or primary line, and all 

6 residential and business lines served by an eligible tele7 communications carrier shall be eligible for Federal uni8 versal service support. 

9 SEC. 9. REPORT TO CONGRESS. 

10 The Commission shall, not later than 3 years after 

11 the date of enactment of this Act and triennially there12 after, report to Congress regarding the availability of the 

13 services designated by the Commission as universal serv14 ices to all Americans, including schools, libraries, rural 

15 health care providers, and low income consumers. 

Æ 


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