Universal Service Reform, Accountability, 
and Efficiency Act of 2008, reserve prices 
that, in the aggregate, do not exceed the 
total amount of support for high cost areas 
provided in the year prior to the date of 
enactment of the Universal Service Re-
form, Accountability, and Efficiency Act of 
2008 and which take into account that 
support shall not be provided to more than 
one entity per area; 
‘‘(viii) reserve prices for succeeding 
auctions (to be carried out periodically at 
the discretion of the Commission) that, in 
each service area, are no greater than the 
winning bid in the previous auction for 
each such service area; and 
‘‘(ix) avoiding, to the greatest extent 
practicable, conducting auctions in which 
only 1 firm participates. 
‘‘(C) ESTABLISHING RESERVE PRICES.—In 
any high cost area in which support is provided 
by a subsidy that is determined pursuant to 
this paragraph, the Commission— 
‘‘(i) shall ensure that the reserve price 
of the auction only takes into account the 
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difference in the cost of providing voice 
communications service in a high cost area 
compared to a non-high cost area; 
‘‘(ii) shall take any action necessary 
to remove excessive support pursuant to 
the principle established in subsection 
(b)(2); 
‘‘(iii) shall only consider costs directly 
related to the provision of voice commu-
nications service; and 
‘‘(iv) shall not consider the costs asso-
ciated with any of the following: 
‘‘(I) Artwork. 
‘‘(II) Cafeterias, lunch rooms, 
and vending facilities. 
‘‘(III) Patent rights. 
‘‘(IV) Government franchises. 
‘‘(V) Charitable contributions. 
‘‘(VI) Penalties or fines for viola-
tions of statutes. 
‘‘(VII) Membership fees and dues 
in 
social, 
political, 
service, 
rec-
reational, or athletic clubs or organi-
zations. 
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‘‘(VIII) Lobbying or public rela-
tions. 
‘‘(IX) Performing personnel ad-
ministration activities. 
‘‘(X) Legal services. 
‘‘(XI) Janitorial service, cleaning 
supplies, or guard service. 
‘‘(XII) Sewage or water utilities 
or services. 
‘‘(D) SERVICE AREAS.— 
‘‘(i) IN
GENERAL.—In carrying out 
the requirements of subparagraph (A), the 
Commission, within 9 months after the 
date of enactment of the Universal Service 
Reform, Accountability, and Efficiency Act 
of 2008, shall define service areas at the 
smallest geographic level practicable based 
on a new study, conducted at the smallest 
geographic level practicable, of those high 
cost areas throughout the United States 
that require universal service support to 
comply with the principles of universal 
service in subsection (b). The Commission 
shall not define service areas based on 
study areas in existence as of the date of 
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enactment of the Universal Service Re-
form, Accountability, and Efficiency Act of 
2008. 
‘‘(ii) SUBSEQUENT AUCTIONS.— 
‘‘(I) RE-EVALUATION
OF
NEED 
FOR UNIVERSAL SERVICE SUPPORT.— 
In advance of each subsequent auction 
of a service area, the Commission 
shall evaluate whether such service 
area still meets the criteria under 
clause (i) to determine whether uni-
versal service support should be pro-
vided. 
‘‘(II) PROHIBITION.—The Com-
mission shall not provide support in a 
subsequent auction to a service area 
in which, in the absence of a sub-
sidized 
provider-of-last-resort, 
con-
sumers would have access to afford-
able voice communications service by 
1 or more unsubsidized providers. 
‘‘(III) VOUCHERS.—The Com-
mission shall have the authority to 
issue vouchers to consumers if needed 
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to complete the transition away from 
subsidizing a provider-of-last-resort. 
‘‘(E) CHARACTERISTICS
OF
AUCTIONED 
AUTHORITY.— 
‘‘(i) IN GENERAL.—Before conducting 
each auction, the Commission shall pre-
scribe the obligations and privileges of the 
winner of each auction as the provider-of- 
last-resort for each service area (defined 
pursuant to paragraph (1)(D)(i)). In pre-
scribing such obligations and privileges, 
the Commission shall describe the min-
imum quality of voice communications 
service to be provided (as defined by the 
Commission 
pursuant 
to 
paragraph 
(1)(B)(i)) and shall take into consideration 
the principles of universal service in sub-
section (b). 
‘‘(ii) BONDING
REQUIREMENT.—The 
Commission shall require all auction win-
ners to be bonded (or to provide other as-
surance as deemed appropriate by the 
Commission) prior to being designated as 
the eligible telecommunications provider 
for a service area to ensure that such pro-
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vider complies with the obligations estab-
lished under clause (i) for the period cov-
ered by the auction. 
‘‘(iii) STATE PREEMPTION.—Any eligi-
ble telecommunications carrier that is des-
ignated as the carrier-of-last-resort by a 
State and that does not win an auction for 
a service area shall be released from all ob-
ligations imposed as a carrier-of-last-resort 
by such State. 
‘‘(2) DUPLICATE SUBSIDIES PROHIBITED.—The 
Commission shall designate only 1 eligible tele-
communications provider per service area to receive 
universal service support for providing the services 
described in subsection (c)(1).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) 
ELIGIBLE
TELECOMMUNICATIONS
PRO-
VIDERS.— 
(A) IN
GENERAL.—Section 214 of the 
Communications Act of 1934 (47 U.S.C. 
214(e)) is amended by striking subsection (e) 
and inserting the following new subsection: 
‘‘(e) UNIVERSAL SERVICE SUPPORT VIA ELIGIBLE 
TELECOMMUNICATIONS
PROVIDERS.—The Commission 
shall deem the winner of an auction under section 
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254(m)(1)(A) as the eligible telecommunications provider 
for a service area, defined in accordance with section 
254(m)(1)(C). Such provider shall, throughout the service 
area for which the designation is received— 
‘‘(1) offer the voice communications service that 
is supported by Federal universal service support 
mechanisms under section 254(c)(1), either using its 
own facilities or a combination of its own facilities 
and resale of another provider’s services; 
‘‘(2) meet or exceed the service quality stand-
ards developed by the Commission pursuant to sec-
tion 254(m)(1)(E); and 
‘‘(3) advertise the availability of such service 
and the charges therefor using media of general dis-
tribution.’’. 
(B) EFFECTIVE
DATE.—The amendment 
made by subparagraph (A) shall take effect 15 
months after the date of enactment of this Act. 
(2) RURAL
TELEPHONE
EXEMPTION
CON-
FORMING AMENDMENT.—Section 251(f)(1)(A) of the 
Communications 
Act 
of 
1934 
(47 
U.S.C. 
251(f)(1)(A)) is amended by striking ‘‘section 254’’ 
and all that follows and inserting ‘‘section 254.’’ 
(3) ADDITIONAL CONFORMING AMENDMENT.— 
Section 254(h)(1)(B) of such Act (47 U.S.C. 
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254(h)(1)(B)) is amended by striking ‘‘subsection 
(c)(3)’’ and inserting ‘‘subsection (c)(2)’’. 
SEC. 4. ACCOUNTABILITY. 
(a) IN GENERAL.—The Federal Communications 
Commission (in this Act referred to as the ‘‘Commission’’) 
shall take such steps as are necessary to make the reforms 
described in this section. 
(b) FEDERAL-STATE JOINT BOARD ON UNIVERSAL 
SERVICE REFORM.— 
(1) ECONOMIC ANALYSIS REQUIRED.—Not later 
than 180 days after the date of enactment of this 
Act, the Commission shall require that the Federal- 
State Joint Board on Universal Service (in this Act 
referred to as the ‘‘Joint Board’’) include an eco-
nomic analysis in all of its decisions and rec-
ommendations that explains how such decisions and 
recommendations comply with the principles in sec-
tion 254(b) of the Communications Act of 1934, as 
amended by this Act. 
(2) DIVESTITURE
OF
FINANCIAL
INTERESTS 
BEFORE SERVING.—Not later than 60 days after the 
date of enactment of this Act and within 60 days 
after the appointment of each new member of the 
Joint Board, the Commission shall review any finan-
cial interests of any member of the Joint Board and 
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shall take necessary actions to eliminate any con-
flicts of interest. 
(c) UNIVERSAL SERVICE ADMINISTRATOR’S BOARD 
OF DIRECTORS.— 
(1) NEW REQUIREMENTS FOR SERVICE.—The 
Commission shall reconstitute the board of directors 
of the Commission’s designated administrator of the 
universal service fund to ensure that all board mem-
bers have professional training and expertise in pub-
lic administration and no financial interest or affili-
ation with any organization or company that may re-
ceive universal service support. 
(2) ADVISORY BOARD.—The Commission, at its 
discretion, may establish a non-voting advisory board 
that includes individuals who do not meet the re-
quirements of paragraph (1). 
(d) PERFORMANCE MEASURES.— 
(1) IN GENERAL.—The Commission shall de-
sign and implement performance measures, which 
shall include specific goals, outcome measures, and 
efficiency measures, to determine whether the goals 
of advancing universal service are being achieved in 
an economically efficient way. 
(2) PRINCIPLES.—In developing performance 
measures under paragraph (1), the Commission shall 
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consider independent research on the consequences 
and effectiveness of universal service programs. The 
following principles shall govern the development of 
these performance measures: 
(A) Outcome measures shall reflect both 
proposed progress and actual benefits to the 
public produced by universal service support. 
(B) Efficiency measures shall identify the 
cost per unit of a successful outcome, rather 
than the cost per unit of output. 
(C) The relevant measure of costs shall in-
clude the full economic effect, including any 
economic inefficiencies, of the universal service 
program’s expenditures. 
(3) MINIMUM REQUIREMENTS FOR PERFORM-
ANCE MEASURES.— 
(A) HIGH COST AREAS AND LOW INCOME 
PROGRAM.—In order to ensure the existence of 
an affordably priced service option for voice 
communications service for consumers in high 
cost areas and consumers in low-income house-
holds, the Commission shall monitor avail-
ability, price, and subscription rates for such 
consumers. The Commission shall measure, per 
million dollars spent, the change in penetration 
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rate or number of subscribers and the avail-
ability of voice communications service. 
(B) SCHOOLS AND LIBRARIES.—In order 
to ensure that the program carried out under 
section 254(h)(1)(B) of the Communications 
Act of 1934 (47 U.S.C. 254(h)(1)(B)) has led 
to an increase in access to the Internet by 
schools and libraries and that improved edu-
cational outcomes are directly attributable to 
such increased access, the Commission shall 
measure, per million dollars spent, the improve-
ment in educational outcomes attributable to in-
creased Internet access. 
(C) RURAL HEALTH.—In order to ensure 
that increased access to advanced services by 
rural health care providers under section 
254(h)(1)(A) of the Communications Act of 
1934 (47 U.S.C. 254(h)(1)(A)) has directly 
contributed to improved health outcomes and 
the reduced cost of maintaining a healthy popu-
lation, the Commission— 
(i) shall ascertain the extent to which 
universal service support increases the use 
of various communications services by 
health care providers serving rural areas, 
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