munications service providers qualified to bid. 
In rural, insular, or high cost areas where there 
are not at least 3 mobile wireless communica-
tions service providers qualified to bid, the 
Commission shall continue to provide support 
at the per-line level in effect as of the day be-
fore the date of enactment of the Universal 
Service Reform Act of 2010, subject to adjust-
ment over time pursuant to the interim cap on 
support to competitive eligible telecommuni-
cations carriers adopted by the Commission 
prior to such date of enactment. 
‘‘(D) Prior to soliciting competitive bids, 
the Commission shall issue a request for pro-
posals identifying the area a winning bidder 
must serve and the minimum requirements for 
serving such area. In determining the appro-
priate service area for competitive bidding, the 
Commission shall take into account existing 
service areas for providing mobile wireless com-
munications service, including the areas where 
mobile wireless communications service pro-
viders are licensed to provide service. 
‘‘(E) No more than 2 mobile wireless com-
munications service providers shall be selected 
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by the Commission to receive high-cost support 
in each service area based on the Commission’s 
evaluation of the competitive bids received for 
each service area. In evaluating competitive bids 
received for each service area, the amount of 
the bid and the minimum broadband speeds 
proposed by each mobile wireless communica-
tions service provider shall be primary factors 
in selecting a winning bid, but the Commission 
may take into account other factors, including 
timing of service buildout. 
‘‘(F) When awarding bids to mobile wire-
less communications service providers, the Com-
mission shall prioritize funding as follows: 
‘‘(i) First, to service areas where no 
mobile wireless communications service 
provider offers voice service. 
‘‘(ii) Second, to service areas where no 
mobile wireless communications service 
provider offers high-speed broadband serv-
ice. 
‘‘(iii) Third, to all other service areas. 
‘‘(G) If the Commission selects a bid from 
a mobile wireless communications service pro-
vider that has not been designated as an eligible 
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communications service provider in that service 
area, the mobile wireless communications serv-
ice provider shall apply for such designation 
within 1 month after the date the Commission 
selects its bid. The Commission or applicable 
State commission shall act on such application 
within 6 months after the date of its receipt. 
‘‘(H) Each mobile wireless communications 
service provider selected as a Federal universal 
service provider for a service area shall receive 
high-cost support based on each mobile wireless 
communications service provider’s respective bid 
for a multi-year period, up to 10 years, as de-
termined by the Commission to be appropriate, 
after which time the area shall be rebid. 
‘‘(I) If high-cost support is made available 
to a second mobile wireless communications 
service provider in an area that is subject to 
competitive bidding, the amount of such sup-
port shall be based on that mobile wireless com-
munications service provider’s bid and shall be 
no more than the amount of high-cost support 
awarded by the Commission to the first mobile 
wireless communications service provider in 
such area. 
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‘‘(J) Each mobile wireless communications 
service provider that is selected to serve each 
service area shall execute a service contract 
with the Commission. 
‘‘(K) The Commission shall provide for a 
transition to competitive bidding from the cur-
rent system of high-cost support for wireless 
providers that shall last no longer than 3 years 
after the date of enactment of the Universal 
Service Reform Act of 2010. As of the date the 
Commission implements competitive bidding, 
provider-specific Federal universal service ad-
justments to wireless support imposed by the 
Commission in effect as of the date of enact-
ment of the Universal Service Reform Act of 
2010 shall also be superseded.’’. 
(b) DEFINITIONS.—Paragraph (5) of section 214(e) 
is amended to read as follows: 
‘‘(5) SERVICE AREA DEFINED.—As used in this 
subsection, the term ‘service area’ means a targeted 
geographic area determined by the Commission as 
requiring universal service support and used by the 
Commission for the purpose of determining universal 
service obligations and support mechanisms for eligi-
ble communications service providers except that an 
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eligible communications service provider’s service 
area shall not include geographic areas that the pro-
vider is not authorized to serve. In the case of an 
area served by a rural local exchange carrier, such 
term means such carrier’s ‘study area’ or the li-
censed or authorized service area of any other com-
munications service provider serving an area that 
overlaps with the service area of a rural local ex-
change carrier.’’. 
(c) PAYPHONE SERVICE.—Nothing in this Act or in 
the amendments made by this Act shall limit the authority 
of the Joint Board established under section 254 of the 
Communications Act of 1934 (47 U.S.C. 254) to rec-
ommend or of the Federal Communications Commission 
to define payphone service as a service supported by Fed-
eral universal service support mechanisms under such sec-
tion as such authority existed on the day before the date 
of enactment of this Act. 
SEC. 105. REMOVAL OF IMPEDIMENTS TO SUFFICIENT SUP-
PORT MECHANISMS. 
Section 254 of the Communications Act of 1934 (47 
U.S.C. 254) is further amended by adding at the end the 
following new subsection: 
‘‘(m) REMOVAL
OF LIMITATIONS
ON UNIVERSAL 
SUPPORT MECHANISMS.—The limitations on universal 
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service support contained in section 54.305 of the Com-
mission’s regulations (47 CFR 54.305) and the individual 
caps imposed upon carriers contained in section 36.631 
of the Commission’s regulations (47 CFR 36.631) shall 
cease to be effective on the date of enactment of the Uni-
versal Service Reform Act of 2010.’’. 
SEC. 106. SCOPE OF SUPPORT. 
Section 254 of the Communications Act of 1934 (47 
U.S.C. 254) is further amended by adding after subsection 
(m), as added by section 105 of this Act, the following 
new subsection: 
‘‘(n) SCOPE OF SUPPORT.—The Commission, in im-
plementing the requirements of this section (as amended 
by the Universal Service Reform Act of 2010 with respect 
to the distribution and use of high-cost support), shall not 
limit the distribution and use of high-cost support to a 
single connection or primary line, and all residential and 
business lines served by an eligible communications service 
provider shall be eligible for high-cost support.’’. 
SEC. 107. APPLICATION OF ANTIDEFICIENCY ACT; INVEST-
MENT OF CONTRIBUTIONS. 
Section 254 of the Communications Act of 1934 (47 
U.S.C. 254) is further amended by adding after subsection 
(n), as added by section 106 of this Act, the following new 
subsections: 
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‘‘(o) PROPER ACCOUNTING OF UNIVERSAL SERVICE 
CONTRIBUTIONS.— 
‘‘(1) FROM
ALL
BUDGETS.—Notwithstanding 
any other provision of law, the receipts and disburse-
ments of universal service contributions under this 
section shall not be counted as new budget author-
ity, outlays, receipts, deficit, or surplus for purposes 
of— 
‘‘(A) the budget of the United States Gov-
ernment as submitted by the President; 
‘‘(B) the Congressional budget; 
‘‘(C) the Balanced Budget and Emergency 
Deficit Control Act of 1985; or 
‘‘(D) any other law requiring budget se-
questers. 
‘‘(2) ADDITIONAL EXEMPTIONS.—Section 1341, 
subchapter II of chapter 15, and sections 3302, 
3321, 3322, and 3325 of title 31, United States 
Code, shall not apply to— 
‘‘(A) the collection and receipt of universal 
service contributions, including the interest 
earned on such contributions; or 
‘‘(B) disbursements or other obligations 
authorized by the Commission under this sec-
tion. 
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‘‘(p) INVESTMENT OF UNIVERSAL SERVICE SUPPORT 
CONTRIBUTIONS.—Notwithstanding any other provision 
of law, including sections 3302, 3321, 3322, and 3325 of 
title 31, United States Code, the cash balance of receipts 
of universal service support contributions collected pursu-
ant to this section shall be invested by the Commission 
or its designee in conservative, liquid, interest-bearing in-
vestment vehicles of Government backed securities until 
such time as such receipts are disbursed pursuant to this 
section.’’. 
SEC. 108. STATE AUTHORITY. 
Section 254(f) of the Communications Act of 1934 
(47 U.S.C. 254(f)) is amended to read as follows: 
‘‘(f) STATE AUTHORITY.— 
‘‘(1) IN GENERAL.—A State may adopt regula-
tions not inconsistent with the Commission’s rules to 
preserve and advance universal service. In adopting 
those rules, a State may require communications 
service providers to contribute to universal service on 
the basis of a billing address or service address as-
signed to that State for— 
‘‘(A) revenues derived from the provision 
of intrastate telecommunications services by 
communications service providers; 
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‘‘(B) working telephone numbers used by 
communications service providers; or 
‘‘(C) any other current or successor identi-
fier protocols or connections to the network 
used by communications service providers. 
‘‘(2) DISREGARD
OF
INTERSTATE
COMPO-
NENT.—With respect to a combination of services 
that includes interstate services, the Commission 
shall determine how States may calculate the pro-
portion of intrastate services for which they are per-
mitted to make an assessment. 
‘‘(3) GUIDELINES.—Regulations adopted by a 
State under this subsection shall result in a specific, 
predictable, and sufficient mechanism to support 
universal service and shall be competitively and tech-
nologically 
neutral, 
equitable, 
and 
nondiscrim-
inatory.’’. 
SEC. 109. MINIMUM DATA RATE REQUIREMENTS. 
Section 254 of the Communications Act of 1934 (47 
U.S.C. 254) is further amended by adding after subsection 
(p), as added by section 107 of this Act, the following new 
subsection: 
‘‘(q) MINIMUM DATA RATE REQUIREMENTS.— 
‘‘(1) IN GENERAL.—Within 90 days after the 
date of enactment of the Universal Service Reform 
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Act of 2010, the Commission shall adopt a minimum 
data rate requirement for high-speed broadband 
service. 
‘‘(2) COMMISSION
SPEED
ADJUSTMENT
RE-
QUIREMENTS.—Beginning in the sixth year after the 
date of enactment of the Universal Service Reform 
Act of 2010 and periodically thereafter, the Commis-
sion shall review the minimum data rate requirement 
in paragraph (1) and shall make adjustments, if nec-
essary, as the advancement and deployment of tech-
nology allows eligible communications service pro-
viders to provide broadband service at increased 
minimum data rates to end users in an economically 
rational manner.’’. 
TITLE II—ACCOUNTABILITY 
SEC. 201. PERFORMANCE MEASURES. 
Within 1 year after the date of enactment of this Act, 
the Federal Communications Commission shall establish 
and implement outcome-oriented performance goals and 
measures for each universal service support program. 
SEC. 202. AUDITS. 
The Federal Communications Commission shall, 
within 270 days after the date of enactment of this Act, 
establish rules to— 
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(1) determine the appropriate audit method-
ology for audits of recipients of Federal universal 
service support; 
(2) ensure that universal service support audi-
tors are trained in universal service support program 
compliance and audit only in connection with such 
compliance; 
(3) provide that auditors may not penalize re-
cipients of universal service support by requesting 
and auditing for program compliance records, in-
cluding copies of invoices for equipment purchased 
or maintained with program disbursements, that are 
older than records that recipients of universal service 
support are required to retain pursuant to the Fed-
eral Communications Commission’s rules; and 
(4) provide that any appeal of a finding by the 
Universal Service Administrative Company or any 
successor organization in connection with a program 
audit is resolved by the Federal Communications 
Commission within 180 days after the date of filing 
of such appeal. 
SEC. 203. REPORT TO CONGRESS. 
The Federal Communications Commission shall, not 
later than 3 years after the date of enactment of this Act 
and triennially thereafter, report to Congress regarding 
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the availability of the services designated by the Commis-
sion as universal services, including the availability of such 
services to schools, libraries, rural health care providers, 
and low income consumers. Such report shall include the 
outcome-oriented performance goals and measures for 
each universal service support program, an analysis of the 
implementation of such goals and measures, and an anal-
ysis of the progress towards meeting such goals and meas-
ures. 
TITLE III—INTERCARRIER 
COMPENSATION REFORM 
SEC. 301. INTERCARRIER COMPENSATION REFORM. 
(a) AUTHORITY.— 
(1) IN GENERAL.—Notwithstanding any other 
provision of law, the Federal Communications Com-
mission shall have authority to reform intercarrier 
compensation systems for both interstate and intra-
state traffic. 
(2) DEADLINE.—The Federal Communications 
Commission shall complete an initial intercarrier 
compensation reform proceeding within 1 year after 
the date of enactment of this Act. 
(3) PRIVATE
ARRANGEMENTS.—Entities that 
are required to participate in intercarrier compensa-
tion shall be permitted to enter into arrangements 
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