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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Universal Service Re-
form Act of 2006’’. 
SEC. 2. FINDINGS AND PURPOSES. 
(a) FINDINGS.—The Congress finds the following: 
(1) The current State and Federal mechanisms 
used to collect and distribute universal service sup-
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port are not sustainable in a competitive and rapidly 
changing technological environment. 
(2) Voice-over-Internet-Protocol, wireless voice 
services, and popular flat rate, all-distance pricing 
plans for voice services have rendered meaningless 
the distinctions between and among interstate tele-
communications and information services, and be-
tween and among intrastate telecommunications 
services and information services, thus making uni-
versal service support mechanisms based upon such 
jurisdictional concepts unsustainable. 
(3) Providing unlimited universal service sup-
port to multiple competing telecommunications car-
riers in the same service area results in an excessive 
demand for universal service support. 
(4) Implicit support mechanisms were the uni-
versal service support mechanisms of choice for 
State commissions and during the natural monopoly 
era that preceded the Telecommunications Act of 
1996. Implicit support mechanisms are effective in 
monopoly environments; however, they are incon-
sistent with the competitive environment fostered by 
the 1996 Act, and they should be eliminated. 
(5) The Commission was required by the Tele-
communications Act of 1996 to make all Federal 
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universal service support mechanisms explicit. Ex-
plicit universal service support mechanisms are ap-
propriate in the competitive telecommunications 
marketplace of the 21st century. 
(6) Universal service support mechanisms 
should preserve incentives for continued investment 
in and enhancements to the public switched tele-
phone network and to increase the availability of 
broadband services. 
(7) Maintaining predictable, sufficient, and sus-
tainable universal service support will require that 
support be collected from a broad base of service 
providers and in a more competitively and tech-
nology neutral manner. 
(8) The aggregate amount of universal service 
support is increasing annually and as a result, tele-
communications carriers have had to pay an in-
creased percentage of their total revenues to support 
universal service support mechanisms. By law, tele-
communications carriers may pass through these 
costs to their subscribers, increasing the amount 
consumers are required to pay to maintain the con-
tinued growth of universal service support. 
(9) Federal universal service support mecha-
nisms have succeeded in bringing quality and afford-
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able telecommunications services to rural areas that 
are reasonably comparable to those in urban areas. 
Existing Federal universal service support mecha-
nisms have helped to bring telecommunications serv-
ices to approximately 95 percent of United States 
households. 
(b) PURPOSES.—The purposes of this Act are to re-
form State and Federal universal service support contribu-
tion and distribution mechanisms by— 
(1) targeting universal service support specifi-
cally to eligible telecommunications carriers in high- 
cost geographic areas to ensure that communications 
services and high-speed broadband services are made 
available throughout all of the States of the United 
States in a fair and equitable manner; 
(2) constraining the growth of universal service 
support by extending the current cap on the portion 
of the high cost loop support mechanism that is dis-
tributed to rural incumbent local exchange carrier 
study areas to all eligible telecommunications car-
riers receiving support from the high cost support 
mechanism; 
(3) ensuring universal service support contribu-
tions are assessed fairly, equitably, and in a competi-
tively neutral manner by means of a contribution as-
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sessment methodology determined by the Federal 
Communications Commission applicable to any enti-
ty that currently contributes to universal service 
support, provides real-time voice communications, 
over any platform, in which the voice component is 
the primary function, or offers a connection to the 
network over any platform; 
(4) strengthening the criteria for eligible recipi-
ents of universal service support: and 
(5) ensuring that the United States becomes a 
world leader in broadband deployment by making 
high-speed broadband services and facilities eligible 
for universal service support. 
SEC. 3. DEFINITIONS. 
Section 3(a) of the Communications Act of 1934 (47 
U.S.C. 153(a)) is amended— 
(1) by redesignating paragraphs (20) through 
(52) as paragraphs (22) through (54); 
(2) by redesignating paragraphs (11) through 
(19) as paragraphs (12) through (20), respectively; 
(3) by inserting after paragraph (10) the fol-
lowing new paragraph: 
‘‘(11) COMMUNICATIONS SERVICE PROVIDER.— 
The term ‘communications service provider’ means 
any entity that— 
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‘‘(A) contributes to or receives universal 
service support for the most recent calendar 
quarter ending before the date of enactment of 
the Universal Service Reform Act of 2006; 
‘‘(B) uses telephone numbers or Internet 
protocol addresses, or their functional equiva-
lents or successors, to offer a service or a capa-
bility— 
‘‘(i) that provides or enables real-time 
2-way voice communications; and 
‘‘(ii) in which the voice component is 
the primary function; or 
‘‘(C) offers for a fee, directly to the public, 
or to such classes of users as to be effectively 
available directly to the public, a physical trans-
mission facility, whether circuit-switched, pack-
et-switched, a leased line, or using radio fre-
quency transmissions, regardless of the form, 
protocol, or statutory classification of the serv-
ice, that allows an end user to obtain access, 
from a particular end user location, to a net-
work that permits the end user to engage in 
electronic 
communications 
(including 
tele-
communications) with the public.’’; and 
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(4) by inserting after paragraph (20) (as redes-
ignated by paragraph (2) of this section) the fol-
lowing new paragraph: 
‘‘(21) HIGH-SPEED BROADBAND SERVICE.— 
‘‘(A) DEFINITION.—The term ‘high-speed 
broadband service’ means a two way network 
that uses the Internet protocol or a successor 
protocol, and the associated capabilities and 
functionalities, services, and applications pro-
vided over an Internet protocol platform or for 
which an Internet protocol capability is an inte-
gral component, and services, facilities, equip-
ment, and applications that enable an end-user 
to receive communications in Internet protocol 
format, regardless of whether the communica-
tions are voice, data, video, or any other form, 
at a download receiving rate not lower than 1 
megabit per second. 
‘‘(B) COMMISSION
SPEED
ADJUSTMENT 
REQUIREMENTS.—The Commission shall review 
the speed requirement in subparagraph (A) 
every other year beginning the sixth year after 
implementation of the Universal Service Reform 
Act of 2006 and shall make the necessary ad-
justments to move to higher speeds as deploy-
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ment and advancement of new technology al-
lows communications service providers to pro-
vide higher speed broadband to end users in an 
economically efficient manner. 
‘‘(C) INTERNET
PROTOCOL.—The term 
‘Internet protocol’ means the Transmission 
Control Protocol/Internet Protocol, or any pred-
ecessor or successor protocols to such pro-
tocol.’’. 
SEC. 4. UNIVERSAL SERVICE REFORM. 
(a) IN GENERAL.—Section 254 of the Communica-
tions Act of 1934 (47 U.S.C. 254) is amended by amend-
ing subsections (a) through (e) to read as follows: 
‘‘(a) PROCEDURES TO REFORM UNIVERSAL SERV-
ICE.— 
‘‘(1) FEDERAL-STATE
JOINT
BOARD
ON
UNI-
VERSAL SERVICE.—Within one month after the date 
of enactment of the Universal Service Reform Act of 
2006, the Commission shall institute and refer to 
the Federal-State Joint Board under section 410(c) 
of this title a proceeding to recommend changes to 
any of its regulations in order to implement section 
214(e) of this title and this section (as amended by 
the Universal Service Reform Act of 2006), includ-
ing the definition of the services that are supported 
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by Federal universal service support mechanisms 
and a specific timetable for completion of such rec-
ommendations. In addition to the members of the 
Joint Board required under section 410(c) of this 
title, one member of such Joint Board shall be a 
State-appointed utility consumer advocate nominated 
by a national organization of State utility consumer 
advocates. The Joint Board shall, after notice and 
opportunity for public comment, make its rec-
ommendations to the Commission 9 months after 
the date of enactment of the Universal Service Re-
form Act of 2006. 
‘‘(2) COMMISSION
ACTION.—The Commission 
shall initiate a single proceeding to consider the rec-
ommendations from the Joint Board required by 
paragraph (1) and shall complete such proceeding 
within 18 months after the date of enactment of the 
Universal Service Reform Act of 2006. The rules es-
tablished by such proceeding shall include a defini-
tion of the services that are supported by Federal 
universal service support mechanisms and a specific 
timetable for implementation. 
‘‘(b) UNIVERSAL SERVICE PRINCIPLES.—The Joint 
Board and the Commission shall base policies for the pres-
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ervation and advancement of universal service on the fol-
lowing principles: 
‘‘(1) QUALITY
AND
RATES.—Quality services 
should be available at just, reasonable, and afford-
able rates. 
‘‘(2) ACCESS TO ADVANCED SERVICES.—Access 
to advanced telecommunications and information 
services should be provided in all regions of the Na-
tion. 
‘‘(3) ACCESS
IN
RURAL
AND
HIGH
COST 
AREAS.—Consumers in all regions of the Nation, in-
cluding low-income consumers and those in rural, in-
sular, and high cost areas, should have access to the 
services the Commission determines to be universal 
services in accordance with subsection (c), including 
advanced telecommunications and information serv-
ices, that are reasonably comparable to those serv-
ices provided in urban areas and that are available 
at rates that are reasonably comparable to rates 
charged for similar services in urban areas. 
‘‘(4) EQUITABLE
AND
NONDISCRIMINATORY 
CONTRIBUTIONS.—All communications service pro-
viders should make equitable and nondiscriminatory 
contributions to the preservation and advancement 
of universal service. 
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‘‘(5) SPECIFIC
AND
PREDICTABLE
SUPPORT 
MECHANISMS.—There should be specific, predictable 
and sufficient Federal and State mechanisms to pre-
serve and advance universal service. 
‘‘(6) ACCESS
TO
ADVANCED
TELECOMMUNI-
CATIONS
SERVICES
FOR
SCHOOLS, HEALTH
CARE, 
AND LIBRARIES.—Elementary and secondary schools 
and classrooms, health care providers, and libraries 
should have access to advanced telecommunications 
services as described in subsection (h). 
‘‘(7) ADDITIONAL
PRINCIPLES.—Such other 
principles as the Joint Board and the Commission 
determine are necessary and appropriate for the pro-
tection of the public interest, convenience, and ne-
cessity and are consistent with this Act. 
‘‘(c) DEFINITION.— 
‘‘(1) IN GENERAL.—Universal service includes 
the services defined on the date of enactment of the 
Universal Service Reform Act of 2006 as universal 
services, high-speed broadband services, and an 
evolving level of telecommunications and information 
services that the Commission shall establish periodi-
cally under this section, taking into account ad-
vances in telecommunications and information tech-
nologies and services. The Joint Board in recom-
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mending, and the Commission in establishing, the 
definition of the services that are supported by Fed-
eral universal service support mechanisms shall con-
sider the extent to which such services— 
‘‘(A) are essential to education, public 
health, or public safety; 
‘‘(B) are being deployed in public tele-
communications networks by communications 
service providers; and 
‘‘(C) are consistent with the public inter-
est, convenience, and necessity. 
‘‘(2) ALTERATIONS AND MODIFICATIONS.—The 
Joint Board shall consider whether to recommend to 
the Commission modifications in the definition of 
the services that are supported by Federal universal 
service support mechanisms no less than once every 
5 years. 
‘‘(3) SPECIAL
SERVICES.—In addition to the 
services included in the definition of universal serv-
ice under paragraph (1), the Commission may des-
ignate additional services for such support mecha-
nisms for schools, libraries, and health care pro-
viders for the purposes of subsection (h). 
‘‘(4) HIGH-SPEED BROADBAND SERVICE.—The 
definition of universal service shall not be construed 
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to exclude eligible communications service providers 
from using universal service funding for the provi-
sion, maintenance, and upgrading of high-speed 
broadband service. 
‘‘(d) UNIVERSAL
SERVICE
SUPPORT
CONTRIBU-
TIONS.— 
‘‘(1) CALCULATING UNIVERSAL SERVICE SUP-
PORT CONTRIBUTIONS.— 
‘‘(A) IN GENERAL.—The Commission shall 
assess contributions to universal service support 
mechanisms from communications service pro-
viders. The Commission shall assess such con-
tributions in a manner that is equitable and 
competitively neutral, is nondiscriminatory in 
nature, and ensures that communications serv-
ice providers are subject to similar obligations. 
The Commission may employ any methodology 
to assess such contributions, including consider-
ation of— 
‘‘(i) revenues derived from the provi-
sion of intrastate, interstate, and foreign 
communications services by communica-
tions service providers; 
‘‘(ii) working telephone numbers used 
by communications service providers; or 
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‘‘(iii) any other current or successor 
identifier protocols or connections to the 
network used by communications service 
providers. 
‘‘(B) USE OF MORE THAN ONE METHOD-
OLOGY.—If no one methodology designated 
under subparagraph (A) effectuates the prin-
ciples described in this Act, the Commission 
may employ a combination of any such meth-
odologies. 
‘‘(C) 
LOW
VOLUME
EXCEPTION.—The 
Commission may limit the contributions of com-
munications service providers whose customers 
typically make a low volume of calls on a 
monthly basis. 
‘‘(D) DE MINIMIS EXCEPTION.—The Com-
mission may exempt a communications service 
provider from the requirements of this sub-
section if the communications activities of such 
provider are limited to such an extent that the 
level of contributions of such provider to the 
preservation and advancement of universal serv-
ice would be de minimis. 
‘‘(2) REPORTS.—The Commission shall estab-
lish annual reporting requirements for all commu-
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nications service providers contributing to universal 
service support mechanisms or receiving universal 
service support. The reporting requirements shall 
not impose unnecessary burdens, and shall be tech-
nology and provider neutral. The Commission shall 
periodically review the reporting requirements to en-
sure that universal service support is used for the 
provision, maintenance, and upgrading of the facili-
ties for which support is intended. 
‘‘(3) UNIVERSAL SERVICE SUPPORT CONTRIBU-
TION LIMITS.— 
‘‘(A) LIMITATION.—The total amount of 
universal service support for all universal serv-
ice support mechanisms other than support for 
schools, libraries, rural health care, life-line, 
link-up, and toll limitation shall not exceed the 
total amount that was collected from all sources 
for all universal service support mechanisms 
other than schools, libraries, rural health care, 
life-line, link-up, and toll limitation in the last 
year prior to the date of enactment of the Uni-
versal Service Reform Act of 2006, as adjusted 
annually by a growth factor and once, within 
one year of the date of enactment of the Uni-
versal Service Reform Act of 2006, by the 
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amounts that the adjustments in subsections 
(e)(3) and (m) increase demand for universal 
service support. 
‘‘(B) GROWTH FACTOR.—The growth fac-
tor shall be the annual percentage change in 
the Gross Domestic Product–Chained Price 
Index (GDP–CPI), or any successor general in-
flationary factor that the Bureau of Economic 
Analysis of the Department of Commerce deter-
mines shall supersede such index, plus the an-
nual percentage change in the total number of 
rural incumbent local exchange carrier working 
loops, if that percentage change is greater than 
zero. 
‘‘(C) INTERCARRIER
COMPENSATION
RE-
COVERY MECHANISM.—If at any time after the 
date of enactment of the Universal Service Re-
form Act of 2006 the Commission mandates 
that intercarrier compensation revenues be re-
covered through an alternative revenue recovery 
mechanism, such alternative revenue recovery 
mechanism shall be included in the limitation 
set forth in subparagraph (A), and the Commis-
sion shall adjust such limitation once, within 3 
months of mandating that intercarrier com-
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pensation revenues be recovered through an al-
ternative revenue recovery mechanism, by the 
amount that such revenue recovery mechanism 
increases demand for universal service support. 
‘‘(e) DISTRIBUTION AND USE OF UNIVERSAL SERV-
ICE SUPPORT.— 
‘‘(1) IN
GENERAL.—Only an eligible tele-
communications carrier designated under section 
214(e) shall be eligible to receive specific Federal 
universal service support. A carrier that receives 
such support shall use that support only for the pro-
vision, maintenance, and upgrading of facilities and 
services for which the support is intended. Any such 
support should be explicit and sufficient to achieve 
the purposes of this section. 
‘‘(2) USES OF UNIVERSAL SERVICE SUPPORT.— 
The use of universal service support for all rural, in-
sular, and high cost areas— 
‘‘(A) should be expanded to include high- 
speed broadband services; 
‘‘(B) should be based on actual costs rea-
sonably incurred in providing such services, ex-
clusive of the cost of acquiring spectrum, except 
that an eligible telecommunications carrier that 
is an incumbent local exchange carrier may 
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elect to have the Commission calculate the 
amount of universal service support payable to 
such carrier pursuant to section 54.309 of title 
47, Code of Federal Regulations (as in effect on 
the date of the enactment of the Universal 
Service Reform Act of 2006); and 
‘‘(C) should be available to communica-
tions service providers that are determined to 
be eligible telecommunications carriers under 
section 214(e). 
‘‘(3) SUPPORT FOR NON-RURAL CARRIERS PRO-
VIDING
SERVICE
IN
RURAL, INSULAR, AND
HIGH 
COST AREAS.— 
‘‘(A) 
CALCULATING
SUPPORT.—Except 
with respect to non-rural carriers serving insu-
lar areas, in calculating Federal universal serv-
ice support for eligible telecommunications car-
riers that serve rural, insular, and high cost 
areas and that are not rural telephone compa-
nies, the Commission shall, subject to the provi-
sions of subparagraph (B), revise the Commis-
sion’s support mechanism for rural, insular, 
and high cost areas to provide support to each 
wire center in which the incumbent local ex-
change carrier’s average cost per line for such 
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wire center exceeds 3.75 times the national av-
erage cost per line. 
‘‘(B) HOLD HARMLESS.—In implementing 
this paragraph, the Commission shall ensure 
that no non-rural carrier receives less Federal 
support calculated under paragraph (1) than 
the non-rural carrier would have received under 
the Commission’s support mechanism for rural, 
insular, and high cost areas as in effect on the 
day before the date of the enactment of the 
Universal Service Reform Act of 2006. 
‘‘(4) 
ADMINISTRATION: 
ACCOUNTABILITY 
STANDARDS.— 
‘‘(A) NETWORK TRAFFIC IDENTIFICATION 
ACCOUNTABILITY STANDARDS.— 
‘‘(i) NETWORK TRAFFIC IDENTIFICA-
TION STANDARDS.—Communications serv-
ice providers shall ensure that all traffic 
that originates on their networks contains 
sufficient information to allow for traffic 
identification by other communications 
service providers that transport, transit, or 
terminate such traffic, including informa-
tion on the identity of the originating pro-
vider, the calling and called parties, and 
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the jurisdiction in which the traffic origi-
nates. 
‘‘(ii) NETWORK TRAFFIC IDENTIFICA-
TION RULEMAKING.—The Commission, in 
consultation with the States, shall initiate 
a single rulemaking no later than 180 days 
after the date of enactment of the Uni-
versal Service Reform Act of 2006 to es-
tablish rules and enforcement provisions 
for traffic identification. Such rules shall 
include mandatory requirements for identi-
fication of all traffic by the originating 
provider and shall require that such traffic 
identification information is transferred to 
transporting, transiting, and terminating 
providers unchanged and unaltered. The 
rules shall also establish procedures for 
carriers to contest insufficiently labeled 
traffic in a prompt manner and shall es-
tablish appropriate enforcement and pen-
alty provisions for carriers that insuffi-
ciently label traffic. The processes to adju-
dicate insufficiently labeled traffic shall re-
quire the relevant providers to demonstrate 
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their compliance with the Commission’s 
traffic labeling standards. 
‘‘(iii) NETWORK TRAFFIC IDENTIFICA-
TION
ENFORCEMENT.—The Commission 
shall adopt clear penalties, fines, and sanc-
tions for insufficiently labeled traffic. The 
penalties, fines, and sanctions established 
by the Commission shall provide— 
‘‘(I) adequate retroactive mone-
tary reimbursement to the defrauded 
provider or providers equal to the rate 
differential between accurately and in-
accurately labeled traffic; 
‘‘(II) monetary fines determined 
by the Commission; 
‘‘(III) a deterrence penalty for 
those offenders who do not resolve 
their violations or remit the required 
reimbursements to defrauded provider 
or providers; 
‘‘(IV) an adequate deterrence 
penalty against frivolous accusations; 
‘‘(V) the ability of network traffic 
operators to block inaccurately labeled 
traffic; 
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‘‘(VI) the decertification of re-
peat offenders or those providers un-
willing to comply with the established 
rules and penalties; and 
‘‘(VII) specific and clear time 
frames for the investigation and sub-
sequent penalty, fines, and sanctions 
of offending providers, to ensure prop-
er accountability. 
‘‘(iv) ACCOUNTABILITY FOR NETWORK 
TRAFFIC EXCHANGE.—To ensure that all 
communications service providers are ac-
countable for the volume of traffic the pro-
viders terminate on other carriers’ net-
works, the Commission shall ensure that 
all providers are compensated for the use 
of their networks by other providers. 
‘‘(B) UNIVERSAL
SERVICE
DISTRIBUTION 
ACCOUNTABILITY STANDARDS.—To ensure fair-
ness and accountability in the distribution of 
universal service funding contributions, the 
Commission shall promulgate rules to calculate 
the level of universal service support to be dis-
tributed to all eligible recipients.’’. 
(b) RURAL HEALTH CARE SUPPORT MECHANISMS.— 
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