II 

110TH CONGRESS 

1ST SESSION S. 711 

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. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 28, 2007 

Mr. SMITH (for himself, Mr. DORGAN, and Mr. PRYOR) introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation 

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. 

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 for 

5 the 21st Century Act’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 


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1 (1) The preservation and advancement of uni2 versal service is a fundamental goal of the Commu3 nications Act of 1934 and the Telecommunications 

4 Act of 1996. 

5 (2) Access throughout the Nation to high-qual6 ity and advanced telecommunications and informa7 tion services is essential to secure the many benefits 

8 of our modern society. 

9 (3) As the Internet becomes a critical element 

10 of any economic and social growth, universal service 

11 should shift from sustaining voice grade infrastruc12 ture promoting the development of efficient and ad13 vanced networks that can sustain advanced commu14 nications services. 

15 (4) The current structure established by the 

16 Federal Communications Commission has placed the 

17 burden of universal service support on only a limited 

18 class of carriers, causing inequities in the system, in19 centives to avoid contribution, and a threat to the 

20 long term sustainability of the universal service 

21 fund. 

22 (5) Current fund contributors are paying an in23 creasing portion of their interstate and international 

24 service revenue into the universal service fund. 


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1 (6) Any fund contribution system should be eq2 uitable, nondiscriminatory and competitively neutral, 

3 and the funding mechanism must be sufficient to en4 sure affordable communications services for all. 

5 SEC. 3. UNIVERSAL SERVICE FUND CONTRIBUTION RE6 QUIREMENTS. 

7 (a) INCLUSION OF INTRASTATE REVENUES.—Section 

8 254(d) of the Communications Act of 1934 (47 U.S.C. 

9 254(d)) is amended— 

10 (1) by striking ‘‘Every’’ and inserting ‘‘Not11 withstanding section 2(b) of this Act, a’’; 

12 (2) by striking ‘‘interstate’’ each place it ap13 pears; and 

14 (3) by adding at the end ‘‘Nothing in this sub15 section precludes a State from adopting rules or reg16 ulations to preserve and advance universal service 

17 within that State as permitted by section 2(b) and 

18 subsections (b) and (f) of this section.’’. 

19 (b) UNIVERSAL SERVICE PROCEEDING.— 

20 (1) PROCEEDING.—The Federal Communica21 tions Commission shall initiate a proceeding, or take 

22 action pursuant to any proceeding on universal serv23 ice existing on the date of enactment of this Act, to 

24 establish a permanent mechanism to support uni25 versal service, that will preserve and enhance the 


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1 long term financial stability of universal service, and 

2 will promote the public interest. 

3 (2) CRITERIA.—In establishing such a perma4 nent mechanism, the Commission may include collec5 tion methodologies such as total telecommunications 

6 revenues, the assignment of telephone numbers and 

7 any successor identifier, connections (which could in8 clude carriers with a retail connection to a cus9 tomer), and any combination thereof if the method10 ology— 

11 (A) promotes competitive neutrality among 

12 providers and technologies; 

13 (B) to the greatest extent possible ensures 

14 that all communications services that are capa15 ble of supporting 2-way voice communications 

16 be included in the assessable base for universal 

17 service support; 

18 (C) takes into account the impact on low 

19 volume users, and proportionately assesses high 

20 volume users, through a capacity analysis or 

21 some other means; and 

22 (D) ensures that a carrier is not required 

23 to contribute more than once for the same 

24 transaction, activity, or service. 


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1 (3) EXCLUDED PROVIDERS.—If a provider of 

2 communications services that are capable of sup3 porting 2-way voice communications would not con4 tribute under the methodology established by the 

5 Commission, the Commission shall require such a 

6 provider to contribute to universal service under an 

7 equitable alternative methodology if exclusion of the 

8 provider from the contribution base would jeopardize 

9 the preservation, enhancement, and long term sus10 tainability of universal service. 

11 (4) DEADLINE.—The Commission shall com12 plete the proceeding and issue a final rule not more 

13 than 6 months after the date of enactment of this 

14 Act. 

15 SEC. 4. INTERCARRIER COMPENSATION. 

16 (a) JURISDICTION.—Notwithstanding section 2(b) of 

17 the Communications Act of 1934 (47 U.S.C. 152(b)), the 

18 Federal Communications Commission shall have exclusive 

19 jurisdiction to establish rates for inter-carrier compensa20 tion payments and shall establish rules providing a com21 prehensive, unified system of inter-carrier compensation, 

22 including compensation for the origination and termi23 nation of intrastate telecommunications traffic. 

24 (b) CRITERIA.—In establishing these rules, and in 

25 conjunction with its action in its universal service proVerDate Aug 31 2005 00:22 Mar 03, 2007 Jkt 059196 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S711.IS S711

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1 ceeding under section 3, the Commission, in consultation 

2 with the Federal-State Joint Board on Universal Service, 

3 shall— 

4 (1) ensure that the costs associated with the 

5 provision of interstate and intrastate telecommuni6 cations services are fully recoverable; 

7 (2) examine whether sufficient requirements 

8 exist to ensure traffic contains necessary identifiers 

9 for the purposes of inter-carrier compensation; and 

10 (3) to the greatest extent possible, minimize op11 portunities for arbitrage. 

12 (c) SUFFICIENT SUPPORT.—The Commission should, 

13 to the greatest extent possible, ensure that as a result of 

14 its universal service and inter-carrier compensation pro15 ceedings, the aggregate amount of universal service sup16 port and inter-carrier compensation provided to local ex17 change carriers with fewer than 2 percent of the Nation’s 

18 subscriber lines will be sufficient to meet the just and rea19 sonable costs of such local exchange carriers. 

20 (d) NEGOTIATED AGREEMENTS.—Nothing in this 

21 section precludes carriers from negotiating their own 

22 inter-carrier compensation agreements. 

23 (e) DEADLINE.—The Commission shall complete the 

24 pending Intercarrier Compensation proceeding in Docket 


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1 No. 01–92 and issue a final rule not more than 6 months 

2 after the date of enactment of this Act. 

3 SEC. 5. ESTABLISHMENT OF BROADBAND ACCOUNT WITHIN 

4 UNIVERSAL SERVICE FUND. 

5 Part I of title II of the Communications Act of 1934 

6 (47 U.S.C. 201 et seq.) is amended by inserting after sec7 tion 254 the following: 

8 ‘‘SEC. 254A. BROADBAND FOR UNSERVED AREAS ACCOUNT. 

9 ‘‘(a) ACCOUNT ESTABLISHED.— 

10 ‘‘(1) IN GENERAL.—There shall be, within the 

11 universal service fund established pursuant to sec12 tion 254, a separate account to be known as the 

13 ‘Broadband for Unserved Areas Account’. 

14 ‘‘(2) PURPOSE.—The purpose of the account is 

15 to provide financial assistance for the deployment of 

16 broadband communications services to unserved 

17 areas throughout the United States. 

18 ‘‘(b) IMPLEMENTATION.— 

19 ‘‘(1) IN GENERAL.—The Commission shall by 

20 rule establish— 

21 ‘‘(A) guidelines for determining which 

22 areas may be considered to be unserved areas 

23 for purposes of this section; 

24 ‘‘(B) criteria for determining which facili25 ties-based providers of broadband communicaVerDate Aug 31 2005 00:22 Mar 03, 2007 Jkt 059196 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S711.IS S711

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1 tions service, and which projects, are eligible for 

2 support from the account; 

3 ‘‘(C) procedural guidelines for awarding 

4 assistance from the account on a merit-based 

5 and competitive basis; 

6 ‘‘(D) guidelines for application procedures, 

7 accounting and reporting requirements, and 

8 other appropriate fiscal controls for assistance 

9 made available from the account; and 

10 ‘‘(E) a procedure for making funds in the 

11 account available among the several States on 

12 an equitable basis. 

13 ‘‘(2) STUDY AND ANNUAL REPORTS ON

14 UNSERVED AREAS.— 

15 ‘‘(A) IN GENERAL.—Within 6 months after 

16 the date of enactment of the Universal Service 

17 for the 21st Century Act, the Commission shall 

18 conduct a study to determine which areas of the 

19 United States may be considered to be 

20 ‘unserved areas’ for purposes of this section. 

21 For purposes of the study and for purposes of 

22 the guidelines to be established under sub23 section (a)(1), the availability of broadband 

24 communications services by satellite in an area 

25 shall not preclude designation of that area as 


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1 unserved if the Commission determines that 

2 subscribership to the service in that area is de 

3 minimis. 

4 ‘‘(B) ANNUAL UPDATES.—The Commis5 sion shall update the study annually. 

6 ‘‘(C) REPORT.—The Commission shall 

7 transmit a report to the Senate Committee on 

8 Commerce, Science, and Transportation and the 

9 House of Representatives Committee on Energy 

10 and Commerce setting forth the findings and 

11 conclusions of the Commission for the study 

12 and each update under this paragraph and 

13 making recommendations for an increase or de14 crease, if necessary, in the amounts credited to 

15 the account under this section. 

16 ‘‘(3) STATE INVOLVEMENT.—The Commission 

17 may delegate the distribution of funding under this 

18 section to States subject to Commission guidelines 

19 and approval by the Commission. 

20 ‘‘(c) LIMITATIONS.— 

21 ‘‘(1) ANNUAL AMOUNT.—Amounts obligated or 

22 expended under subsection (c) for any fiscal year 

23 may not exceed $500,000,000. 

24 ‘‘(2) USE OF FUNDS.—To the extent that 

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1 pended for financial assistance under this section, 

2 they shall be used to support universal service under 

3 section 254. 

4 ‘‘(3) SUPPORT LIMITED TO FACILITIES-BASED

5 SINGLE PROVIDER PER UNSERVED AREA.—Assist6 ance under this section may be provided only to— 

7 ‘‘(A) facilities-based providers of 

8 broadband communications service; and 

9 ‘‘(B) 1 facility-based provider of broadband 

10 communications service in any unserved area. 

11 ‘‘(d) APPLICATION WITH SECTIONS 214, 254, AND

12 410.— 

13 ‘‘(1) SECTION 214(e).—Section 214(e) shall not 

14 apply to the Broadband for Unserved Areas Ac15 count. 

16 ‘‘(2) SECTION 254.—Section 254 shall be ap17 plied to the Broadband for Unserved Areas Ac18 count— 

19 ‘‘(A) by disregarding— 

20 ‘‘(i) subsections (a) and (e) thereof; 

21 and 

22 ‘‘(ii) any other provision thereof deter23 mined by the Commission to be inappro24 priate or inapplicable to implementation of 

25 this section; and 


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1 ‘‘(B) by reconciling, to the maximum ex2 tent feasible and in accordance with guidelines 

3 prescribed by the Commission, the implementa4 tion of this section with the provisions of sub5 sections (h) and (l) thereof. 

6 ‘‘(3) SECTION 410.—Section 410 shall not apply 

7 to the Broadband for Unserved Areas Account. 

8 ‘‘(e) DEFINITIONS.—In this section: 

9 ‘‘(1) BROADBAND.— 

10 ‘‘(A) IN GENERAL.—The term ‘broadband’ 

11 shall be defined by the Commission in accord12 ance with the requirements of this paragraph. 

13 ‘‘(B) REVISION OF INITIAL DEFINITION.— 

14 Within 30 days after the date of enactment of 

15 the Universal Service for the 21st Century Act, 

16 the Commission shall revise its definition of 

17 broadband to require a data rate— 

18 ‘‘(i) greater than the 200 kilobits per 

19 second standard established in its Section 

20 706 Report (14 FCC Rec. 2406); and 

21 ‘‘(ii) consistent with data rates for 

22 broadband communications services gen23 erally available to the public on the date of 

24 enactment of that Act. 


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1 ‘‘(C) ANNUAL REVIEW OF DEFINITION.— 

2 The Commission shall review its definition of 

3 broadband no less frequently than once each 

4 year and revise that definition as appropriate. 

5 ‘‘(2) BROADBAND COMMUNICATIONS SERVICE

6 DEFINED.—The term ‘broadband communications 

7 service’ means a high-speed communications capa8 bility that enables users to originate and receive 

9 high-quality voice, data, graphics, and video commu10 nications using any technology.’’. 

11 SEC. 6. IMPLEMENTATION OF SECTION 254A. 

12 The Federal Communications Commission shall com13 plete a proceeding and issue a final rule to implement sec14 tion 254A of the Communications Act of 1934 not more 

15 than 6 months after the date of enactment of this Act. 

Æ 


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