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Do I Pay Universal Service Fund On Fraud Calls?

American system of telecommunications subsidies and fees

The Universal Service Fund (USF) is a system of telecommunication subsidies and fees managed by the United states of america Federal Communications Commission (FCC) intended to promote universal admission to telecommunications services in the United states. The FCC established the fund in 1997 in compliance with the Telecommunications Human action of 1996. The FCC is a government agency that implements and enforces telecommunication regulations across the U.Southward. and its territories.[ane] The Universal Service Fund's budget ranges from $5–8 billion per twelvemonth depending on the needs of the telecommunication providers. These needs include the cost to maintain the hardware needed for their services and the services themselves. The total 2019 proposed budget for the USF was $viii.four billion.[2] The budget is revised quarterly allowing the service providers to accurately approximate their costs. Equally of 2019, roughly 60% of the USF budget was put towards "high-cost" areas, nineteen% went to libraries and schools, xiii% was for low income areas, and 8% was for rural health care.[ii] In 2019 the rate for the USF budget was 24.four%[iii] of a telecom company'southward interstate and international stop-user revenues.[4]

While divide itemization is not required by the FCC, information technology is common for USF fees to be listed separately from other charges on a consumer'southward bill.[5] [half-dozen] Universal Service charges should non be confused with what are sometimes referred to in telephone company bills as "Federal Subscriber Line" charges, which are access fees charged past telecommunication companies, not the local or federal government.[5] [6]

Some have raised concerns nigh the future funding of the USF; despite falling taxable revenues, the size of the fund has increased from $1.2 billion in collections at 5.vii% in 4Q 2000,[7] to $ii.two billion in 4Q 2014 at 16.one%.[8] Some believe that reclassifying broadband Net access services under Title Two of the 1996 Telecommunications Act would exist followed by requiring ISPs to pay into the USF as a new source of revenue for the fund.[nine] The FCC has made articulate that the change does give information technology the power to do then, but will not require contributions on broadband Internet access revenues at this time,[10] as the FCC volition forbear from the contribution requirements in Department 254(d) of the Communications Deed.[eleven]

History [edit]

Calls for universal service [edit]

By 1913, AT&T had favored status from U.Southward. authorities, assuasive it to operate in a noncompetitive economic environment in exchange for subjection to price and quality service regulation. The authorities asserted that a monopolistic telephone industry would best serve the goal of creating a "universal" network with uniform applied science country-wide for phone consumers. Regulators emphasized limits on profits, enforcing "reasonable" prices for service, setting levels of depreciation and investment for new applied science and equipment, dependability and "universality" of service. "Universal" was originally used by AT&T to hateful, "interconnection to other networks, non service to all customers". After years of regulation, the term came to include infrastructural development of telephony and service to everyone at a reasonable cost.[12]

Willis Graham Deed of 1921 [edit]

The Willis Graham Human activity of 1921 was chosen into activity in order to resolve pressing issues in the contend about the claim of interconnectivity of telecommunications.[13] The human activity marks the first piece of legislation in the history of telecommunications to tackle the increasingly difficult challenges of the telecommunication industry in the 20th century.[fourteen] Before the Graham act was passed the commonly expressed opinion was, such every bit by the Senate Commerce Committee, that telephone service fit the definition of a natural monopoly.

The central practical problem, co-ordinate to the commission, with the Willis Graham Human activity was competing telecommunications services serving one individual market.[14] The act was in favor of a monopoly, which aimed to exempt competing telephone companies from the antitrust laws and allow them to unify the service past merging competing telecommunication service providers.[13] The main principle backside the human action was that in that location should be simply one organisation in each customs through which all users communicate. The focus was exclusively on local service rather than long-distance service, as no independent long-altitude lines were able to compete with AT&T.[14]

Communications Act of 1934 [edit]

The Communications Act of 1934 includes in its preamble a reference to universal service. It calls for "rapid, efficient, Nation-wide, and world-broad wire and radio communication service with adequate facilities at reasonable charges" to "all the people of the United states." Communications Human action of 1934 – Title I, Sec. 1 [47 U.s.a.C. 151] The Communications Act of 1934 get-go established the concept of making affordable basic telephone service bachelor to everyone everywhere within a nation, state, or other governmental jurisdiction.

To comply with the human action, AT&T began increasing the toll of long-distance service to pay for universal service. The deed besides established the FCC to oversee all non-governmental dissemination, interstate communications, also as international communication which originate or cease in the The states.

Earlier the Telecommunications Act of 1996, the Universal Service Fund (USF) operated as a mechanism by which interstate long-distance carriers were assessed to subsidize telephone service to low-income households and high-cost areas in guild to ensure that all the people in the United States have admission to rapid, efficient, nationwide communications service with sufficient facilities at realistic charges.[15]

Ozark Plan [edit]

In the 1960s the telecommunication monopolies were shocked by new evolving technologies and competitions: new long-distance carriers and microwave networks were authorized. The predominant method used for financing subsidies for the underprivileged was to reallocate profit margins fabricated past long-distance telecommunication to funds for local phone connection. This process began in the mid 1960 and was institutionalized through the Ozark plan of 1970 into activeness. At the time of the institutionalization phone penetration ranged between 85–95%.[13]

Era of deregulation [edit]

There was a push button for deregulating the telecommunications industry in the 1980s. Nether President Ronald Reagan, the FCC shifted its focus from "social equity to an economic efficiency objective," which it claimed was a primary purpose of the Communications Act of 1934.[12] Afterward AT&T was split up in 1984, universal service was still "supported by a organisation of above-price access charges paid to local exchange companies." This system was administered by the National Exchange Carrier Association. Increased competition and universal service were subsequently legislatively addressed and codified with the Telecommunications Act of 1996.[16]

Telecommunications Act of 1996 [edit]

The Universal Service Fund was first codified in the Telecommunication Act of 1996, the beginning major rewrite of the Communications Act of 1934. The act addresses new challenges and opportunities of the digital information age, with the goal of promoting an economic environment conducive for the growth of new information technology. Information technology as well further adult the meaning and implementation of universal service. The act calls for the cosmos of a articulation federal-state lath to brand recommendations to the FCC on defining federal universal services and gear up time tables. The deed besides fix out immediate priorities of universal service. These include quality and reasonably priced services, access to avant-garde telecommunication services, admission for rural, depression-income and loftier-cost regions, equitable and nondiscriminatory service, specific and predictable toll construction, access of avant-garde telecommunications services for schools and wellness intendance and libraries (Sec. 254(b)(1)-(vii)). The act provided ability in the constantly irresolute telecommunication surroundings to periodically revisit and conform universal service, while setting core principles (Sec. 254(c)). The 1996 act also "mandated the creation of the universal service fund (USF) into which all telecommunications providers are required to contribute a percentage of their interstate and international end-user telecommunication revenues".[16]

The major goals of Universal Service as mandated by the 1996 Act are as follows:

  • Promote the availability of quality services at simply, reasonable and affordable rates for all consumers
  • Increment nationwide access to advanced telecommunications services
  • Advance the availability of such services to all consumers, including those in low income, rural, insular, and high cost areas, at rates that are reasonably comparable to those charged in urban areas
  • Increase access to telecommunications and advanced services in schools, libraries and rural health care facilities
  • Provide equitable and non-discriminatory contributions from all providers of telecommunication services to the fund supporting universal service programs

The 1996 Deed states that all providers of telecommunications services should contribute to federal universal service in an equitable and nondiscriminatory manner; there should be specific, predictable, and sufficient Federal and Land mechanisms to preserve and accelerate universal service; all schools, classrooms, health care providers, and libraries should, generally, have access to advanced telecommunication services; and finally, that the Federal-Land Joint Lath and the FCC should make up one's mind those other principles that, consistent with the 1996 Act, are necessary to protect the public interest.[17]

Expansion of the fund into broadband [edit]

The concept of universal service may include other telecommunication-information services, mainly Cyberspace access. Members of Congress have spoken out in favor of increased contribution to the USF from alternate sources.

Many of the services covered past the USF are related to traditional telephone technology. At that place is a rising business concern that more recent developments in telecommunications are but as important to the consumer as these older technologies. For example, consumers' subscriptions to traditional telephone services have fallen while their subscription rate to wireless services have been rising consistently. Yet many cellular companies are likely to receive less funding nether the new rules, which may reduce consumers' access to wireless services in areas of the land that have depression populations. Similarly, a question currently debated is whether access to broadband cyberspace should be supported by the USF and if then, how best to fulfill such a large mandate without dissentious the stability of the fund. The Telecommunication Human activity of 1996 states that "advanced services" should be accessible to all Americans [Section 254(b)(3)]. One question is whether the providers of internet admission should contribute to the fund like other companies that provide access to telecommunications, if such providers besides want to draw from the fund. Supporters of including cyberspace access in the Universal Service Fund include former Congressman Rick Boucher (D-VA)[18]

Adding additional services to the fund has corporate back up from major telecommunication companies, including Verizon and AT&T. In March 2009, senior executives from Verizon Communications met with the House Subcommittee on Communications, Technology, and the Internet, providing recommendations for how all-time to keep bringing broadband and mobile communication access to rural and unserved areas. Citing reform to the Universal Service Fund as a ways "to better serve rural America," Verizon recommended that a limit be assault the size of USF'south high-toll fund, competitive behest wars be employed to determine which company expand service to unserved areas, construction a "wire-centre approach" model to replace statewide cost averaging, restructure how contributions to the USF are determined, and impose a deadline on the FCC for completion of their reform of inter-carrier bounty.[19]

In October 2011 the FCC formally proposed a "Connect America Fund" to address these and other concerns.[20] Reform finally arrived on October 27, 2011, when the FCC canonical a 6-yr transfer process that would transition money from the Universal Service Fund to a new $iv.v billion a year Connect America Fund that will support the expansion of broadband services to areas that don't take broadband access withal.[21] [22]

In June, 2015, the FCC announced steps to modernize and reform Lifeline for broadband.[23] Public comments were sought, with a deadline of August 31, 2015. The collection of public comments are available here.[4] The NDIA played a critical role in providing comments and encouraging others to participate in the procedure.

On April i, 2016, the Federal Communications Commission voted to expand the Lifeline phone subsidy for low-income Americans to include Internet access.

On April 27, 2016, the total text of the ruling was released.

The key points of the decision include:

  • Establishes a National Eligibility Verifier to verify eligible Lifeline subscribers. Eligibility will be based on participation in SNAP, Medicaid, SSI, Federal Public Housing Assist, the Veterans *Pension do good program, current Tribal qualifying programs, or those who can demonstrate income of less than 135 percent of the federal poverty guidelines.
  • Defines minimum service standards for broadband and mobile voice services.
  • Defines a five and half year transition plan to migrate from voice-focus to broadband-service-focus.
  • Creates a Lifeline Broadband Subscriber designation process to encourage new service providers.
  • Requires that Lifeline providers make bachelor hotspot-enabled devices and Wi-Fi enabled devices when providing such devices for use with the Lifeline-supported service.
  • Directs the Consumer and Governmental Affairs Bureau (CGB) to develop recommendations to address the non-price barriers to digital inclusion. In addition, CGB's plan should address best practices for increasing the digital skills of those already online and how those best practices tin be spread throughout the digital inclusion community.

Components [edit]

USF's money is funded and so spent amongst the fund'south four programs. The Connect America Fund provides funding for telephone companies that provide services to high-cost areas. The Low-Income Support "assists low-income customers by helping to pay for monthly telephone charges so that telephone service is more than affordable."[24] The Due east-Charge per unit program "provides telecommunications services (e.g., local and long-distance calling, both fixed and mobile, high-speed data transmission lines), Internet access, and internal connections to eligible schools and libraries."[24] Lastly, the Rural Health Care Support plan "provides funding to eligible health care providers (HCPs) for telecommunications and broadband services necessary for the provision of health care."[24] Every bit far every bit State funds go, they have experienced inhibited growth. "The growth of State USF funds was tempered by reductions in Lifeline back up and IAS funding, both driven by changes in federal regulation."[25] There currently are forty-five states that provide some sort of State universal service support in addition to the existing federal funds. There are vi states, however, that do non have whatsoever state funds. These include Alabama, Florida, Massachusetts, New Jersey, Tennessee, and Virginia.

The Universal Service Fund every bit fabricated upwardly of the following four constituent programs:

Connect America Fund [edit]

The largest and most complex of the four programs, the high toll program subsidizes telecommunications services in rural and remote areas. The program paid out $iv.ii billion in subsidies to telecommunications companies in 2013,[26] with a goal of making telecommunications affordable to rural and remote areas. The plan has been criticized equally wasteful, granting large sums of money to telecommunications companies while having little effect on access.[27]

As part of the National Broadband Programme proposed in March 2010, the FCC proposed reorganizing the High Price program into a new "Connect America Fund", which volition include both voice and 4 Mbit/due south cyberspace connectivity.[28] On October 27, 2011, the FCC approved a six-year transfer process that would transition the money from the Universal Service Fund High-Toll Programme into the new $4.v billion a yr Connect America Fund, effectively putting an end to the USF High-Toll Fund by 2018.[21] [22] [29]

In 2012, during "Phase I" of the Connect America Fund, $115 million in subsidies were given out to build out broadband in 37 states, with $71.nine meg going to Borderland Communications and $35 million to Century Link, with AT&T and Verizon declining to participate.[30] In 2013, also during "Stage I", CenturyLink accustomed another $54 million,[31] and AT&T accepted $100 meg.[32]

In March 2014, the FCC approved "Stage II" of the transition to the Connect America Fund, adding $1.8 billion a year in funding,[33] and clarifying the specifics of the funding process. Under the framework the FCC approved, incumbent carriers have priority admission to subsidies, but if the funds are declined, the funds are allocated by a competitive bidding process. The FCC also proposed upping the minimum speed requirement from 4Mbit/s to 10Mbit/south.[34] In May 2014, the 10th circuit court of appeals upheld the shift in funds in the face up of a legal claiming past telephone companies.[35] [36]

The Connect America Fund besides includes the Mobility Fund, which is given to wireless carriers who expand service to underserved areas. "Phase I" of the Mobility Fund offered $300 million for a September 2012 round of auctions, and "Phase II" of the Mobility Fund plans to give out $500 million in annual back up.[37]

Depression income (Lifeline) [edit]

Since 1985, the Lifeline program has helped low-income people pay for phone service; first landlines, then cellphones, and as of 2016 it also offers the option of Internet connectivity.[38] Information technology provides a subsidy of upwardly to $ten.00 a month for Americans below 135% of the poverty line for this service.[ citation needed ]

As of 2012, 17 meg households received a $9.25 subsidized discount through the program. This was downwards to 12 1000000 households by 2015.[39] [38] In 2013, the Lifeline programme paid out $1.eight billion in subsidies to telephone companies; reduced to $1.5 billion by 2015.[26] [38] As the original program was set up up to encompass country lines, in that location was criticism of significant waste product in the program.[40] Residents of Native American Indian and Alaska Native tribal communities may qualify for enhanced Lifeline assistance (upwardly to an additional $25.00) and expanded Link-Upwardly support (up to an additional $70.00). States with their own programs may have their own eligibility guidelines.

On January 31, 2012, the Federal Communications Committee approved an order changing the Lifeline Program to reduce fraud and abuse.[41] [42] In April 2013 a hearing was held before the Subcommittee on Communications and Technology of the Committee on Energy and Commerce, U.S. Business firm of Representatives, to explore bug relating to whether the plan should be eliminated or placed nether a budget cap, and if not, whether a freeze should be put in place until the reform measures currently underway are completed.[43]

The Lifeline programme is limited to 1 disbelieve per household. A "household" includes anyone living at the same address "who share income(s) and household expenses".[44]

Link-Upwards America assisted consumers with the installation costs of phone service. Link-Up program paid upward to 50% or $30 of the telephone service installation fees,[45] and provides up to $200 of one year, interest-free loans for whatever additional installation costs. On Jan 31, 2012, among other changes to the Lifeline Programme, the FCC announced that they would be catastrophe the Link-Upwards America Program, except on Indian reservations.[45]

In 2016, Lifeline services were expanded to offer a broadband option.[38]

This is the proposed cost and information program for the Lifeline program reform.

On March 31, 2016 the Federal Communications Commission set a plan to reform the Lifeline plan. The reform attempted to make the Lifeline programme more modern and comprehensive to present day society. The 2016 Lifeline Modernization Order included that broadband service would be provided to low income households as an addition to the preexisting Lifeline program benefits. The Commission also set service standards in guild to ensure the highest value for the Universal Service Fund. The FCC projected that the annual amount of mobile vocalisation minutes bachelor for each individual household per month will increase, while the price of vocalization support will simultaneously subtract and will somewhen become a completely unsubsidized service.[46] The FCC besides appointed a National Eligibility Verifier whose purpose would be to determine the eligibility of the independent subscribers to the program.[46]

In February 2017, FCC Commissioner Ajit Pai suspended the expansion of Lifeline. While electric current broadband providers are technically authorized to provide subsidized broadband, the FCC itself could not point to a single company that actively provides broadband.[47]

Companies [edit]

  • Assurance Wireless
  • Safelink Wireless
  • Life Wireless

Rural wellness care [edit]

The rural health intendance program provides subsidies to health intendance providers for telehealth and telemedicine services, typically by a combination of video-conferencing infrastructure and high speed Internet access, to enable doctors and patients in rural hospitals to access specialists in distant cities at affordable rates. The Rural Wellness Intendance Support Machinery allows rural health care providers to pay rates for telecommunications services similar to those of their urban counterparts, making telehealth services affordable. Over $417 million has been allocated for the construction of 62 statewide or regional broadband telehealth networks in 42 states and three U.S. territories under the Rural Wellness Care Airplane pilot Program.[48] In 2013, the rural health care plan paid out $159 1000000.[26]

At that place are three components of the Rural Health Care Program: Telecommunication Programme, HCF Program, Pilot Program.[49]

"The Telecommunications Program (formerly known equally the Main Program) provides discounts for telecommunication services for eligible health care providers (HCPs)."[49]

"The Healthcare Connect Fund (HCF) Program is the newest component of the Rural Health Care Program. The HCF Plan will provide a 65 percent discount on eligible expenses related to broadband connectivity to both private rural health care providers (HCPs) and consortia, which can include not-rural HCPs (if the consortium has a majority of rural sites)."[49]

"The Pilot Program provides funding for upwardly to 85 percent of eligible costs of the structure or implementation of statewide and/or regional broadband networks. At that place are l active projects involving hundreds of health care providers (HCPs)."[49]

Schools and Libraries Program (E-Rate) [edit]

The E-Rate programme provides subsidies for Cyberspace admission and general telecommunications services to schools and libraries. The subsidies typically pay 20% to 90% of costs based on need,[50] with rural and depression-income schools receiving the greatest subsidy. In 2013, the E-Rate program paid out $2.2 billion.[26] USAC has more than $37.3 billion in E-Rate funding commitments and $26.8 billion in Due east-Rate funding disbursements issued to schools and libraries nationwide through the Eastward-Charge per unit from 1998 to 2013.[26] Every yr since 2010, the Wireline Competition Bureau announces the funding cap for the E-Rate program to adhere to the current needs of schools and libraries telecommunications.[51]

"The Eligible Services List (ESL) for each funding twelvemonth provides guidance on the eligibility of products and services under the Schools and Libraries Plan." In 2015, USAC outlined two specific categories for grouping the ESL, and one category for miscellaneous services.

  • "Category One
    • Data Manual Services and Cyberspace Access, and Phonation Services
  • Category ii
    • Internal Connections, Managed Internal Broadband Services, and Basic Maintenance of Internal Connections
  • Miscellaneous"[52]

Starting in the 2011 funding year, the different types of schools eligible to receive benefits now include:

  • "School on Tribal lands
  • Schools that serve children with physical, cognitive, and behavioral disabilities
  • Schools that serve children with medical needs
  • Juvenile justice schools, where eligible
  • Schools with 35 percent or more students eligible for the National School Tiffin Programme (NSLP)."[53]

Administration [edit]

Universal Service Administrative Company [edit]

The logo of the Universal Service Administrative Company

Post-obit the Telecommunication Human action of 1996 and the subsequent creation of the Universal Service Fund, the FCC designated the independent American nonprofit corporation named the "Universal Service Administrative Company" (Universal Service Administrative Co) to manage the contribution of acquirement to and distribution of funding from the Universal Service Fund. The Schools and Libraries Corporation and the Rural Health Care Corporation were merged into the USAC on January 1, 1999.[54] The USAC is a subsidiary of the National Exchange Carrier Association, and is governed by a xix-person lath of directors representing various stakeholder interests and carries out rules adopted by the FCC.[55] The company has 356 employees.[26]

USAC reports quarterly acquirement projections detailing what contributions are expected and detailing what actions are taken in the expansion and bolstering of universal service. The USAC receives contributions from all companies providing interstate and international telephone and Vocalization over Net Protocol (VoIP) service. Contributors send payments based on projected quarterly earnings. The FCC does not require companies to charge their customers for these contributions – this funding determination is left up to the private companies.[56] This acquirement is deposited into a central fund, from which the USAC distributes money to the four central services at the core of the USF: High Cost, Low Income, Schools and Libraries, and Rural Wellness Care.

Providers of telecommunication services are legally required to contribute to the Universal Service Fund. "The USAC collects revenue data from USF contributors on the FCC Course 499-A (Almanac Telecommunications Reporting Worksheet) and FCC Form 499-Q (Quarterly Telecommunication Reporting Worksheet)."[57] The USAC is responsible for estimating how much coin is needed for the USF program. The USAC provides a "demand filing," to the Federal Communications Committee (FCC) each quarter in its FCC Filings.[57]

In the past, only long-distance companies made contributions to support the federal Universal Service Fund. The Telecommunications Act of 1996 expanded the types of companies contributing to the Universal Service Fund. Currently, all telecommunication companies that provide service between states, including long-distance companies, local telephone companies, wireless phone companies, paging companies, and payphone providers, are required to contribute to the federal Universal Service Fund. Carriers providing international services as well must contribute to the Universal Service Fund. In June 2006, the FCC voted to require providers of VoIP services to contribute to the Universal Service Fund the same style traditional telephone services had been contributing.[58]

While the USAC cannot act without Congressional approval, it can make recommendations. USAC recommendations take resulted in expanding telecommunications resources, particularly broadband Internet and mobile access to schools and libraries, and recognizing VoIP equally a class of interstate and international communication, which requires those companies providing VoIP services to contribute to the USF.[59]

Federal Communications Commission [edit]

The FCC oversees the USAC'south administration of the Universal Service Fund, and institutes reforms equally it sees fit. Although the fund is limited past the telescopic of Usa police, (mainly the 1996 Telecommunications Act) the FCC has played a part in making several changes to the fund, including shifting funds from the high toll programme towards broadband expansion. Nether the FCC, at that place is an Enforcement Bureau that investigates and pursues the violators of the Deed of 1996 and any Commissions rules.[sixty]

Funding [edit]

All providers of telecommunications service support the Universal Service Fund. These providers contribute to the fund "based on their interstate and international cease-user telecommunications revenues." This percentage of contribution is "adapted every quarter based on projected demand for Universal Service funding." Every bit of the end of 2019, telecommunication companies were required to contribute 25%[61] of their revenue to the fund. Currently, the FCC has proposed to lower this to 21.2%[62] for the start quarter of 2020. However, not all companies cover the charge themselves. Instead they neb their customers to make upwardly the corporeality. While companies are non required to charge the customer, they must come up with the funds and many service providers discover this to be their solution. The contributions are collected by the Universal Service Administrative Company and disbursed towards four programs that the federal USF supports, as directed past the FCC.[63]

Country universal service funds [edit]

Taxes, Fees, and Government Charges on Wireless Service, July 2016

Many US States take their own universal service funds, with upkeep and administration independent of the much larger federal fund. Examples include in California,[64] New York,[65] Wisconsin,[66] and Texas.[67]

Controversy [edit]

Wide disagreement over the nature and administration of the USF exists in telecommunication policy circles.[68] Such disagreements fragment traditional partisan alliances in the United States Congress. Fears continue to abound well-nigh what such subsidies hateful, and how it will affect telecommunications in the long run.[69] Critics of the USF programs argue that there are many macro-level problems which are acquired by the ¨systematic design issues that have significant adverse impact on consumers and the carriers providing service.¨[seventy] Service providers and consumers alike are unduly granted subsidies or billed because of the lack of organization amidst the four programs. Discussions continue over whether the USF should exist used to provide services such as broadband internet access.[71] Plans to subsidize cyberspace service providers has led to backlash from traditional telecommunications carriers. Traditional carriers argue that "the relevant provisions of the 1996 Human activity exercise not give the FCC carte blanche to play regulatory Robin Hood with their universal service contributions."[72] Because ISP'southward and traditional telecommunications carriers frequently provide like services, the USF may "violate[] the pro-competitive precepts of the 1996 Human action."[72]

Concerns about 2011 changes [edit]

In 2011, the FCC made material changes in the USF plan, largely benefiting the largest traditional telephone companies in the state, which at present have double the access to funding than they had before those changes. Smaller traditional and wireless carriers were given reduced access to support going frontward, which ways that unless the FCC makes future changes, the country will depend in large measure on two carriers to carry out broadband deployment and ongoing operations in rural areas in the future, and in very rural areas of the country, service may diminish.

Waste and fraud [edit]

The effect of waste and fraud, every bit with many authorities programs, has been addressed as well. Gilroy stated, "The ability to ensure that only eligible services are funded, that funding is disbursed at the proper level of discount, that declared services have been received, and the integrity of the competitive bidding procedure is upheld take been questioned". Improved auditing of particularly the Eastward-rate program has been addressed.[73]

There have been multiple cases of waste and fraud throughout disbursement of subsidies from the Universal Service Fund. At that place is some business concern on the lag time between application, approval, and bodily receipt of funds.[74] In terms of fraud, some school officials accept been bribed by contractors working with corporations so that they utilize subsidies to purchase computer equipment from said corporation.[74] In add-on, some beneficiaries inaccurately report costs to inflate their subsidies amount. In terms of waste material, some equipment subsidized past the USF has been left unused for several years.[74]

An investigation into potential fraud in 2004 revealed that contractors working with Hewlett-Packard bribed schoolhouse officials. Hewlett-Packard wanted the schools to utilize subsidies provided by the fund to purchase computer equipment from Hewlett-Packard. The 2d example of fraud was when "Sandwich Isles Communication purposely inflated and inaccurately reported money to receive inflated subsidies."[75]

Critics continue to raise concerns in regards to the wastefulness of the fund. For case, "$5 1000000 worth of equipment purchased by Chicago public schools with East-rate funds was left unused in a warehouse for years." Lastly, a problem that has plagued the program is the long lag time between the overall application of the programs and the approving.[74]

The FCC has responded to issues of waste matter and fraud in the USF. In an attempt to combat them, the FCC conducted an investigation into the Lifeline program which revealed "serious weaknesses in federal safeguards, allowing providers to indiscriminately override checks that are supposed to prevent wasteful and fraudulent activities."[76] Equally a outcome, Ajit Pai, current FCC commissioner withdrew some Lifeline subsidies "to come up with a meliorate way to vet them for potential waste, fraud and abuse."[76] Pai argued that information technology is necessary to halt some funds towards programs riddled with fraud considering "putting the designations on concur gives the FCC the chance to make sure the procedure is legally defensible and to avoid potentially stranding customers if the courts ultimately deem the process unlawful".[76]

In early on 2018, the FCC Chairman Ajit Pai proposed a plan to scale dorsum the USF'southward Lifeline program.[77] Pai claimed the proposed cutbacks would encourage business investment in low income communities, reducing the demand for the government spending on the program.[78] Pai also referenced the fraud that surrounds the usage of the program as a reason to scale back Lifeline. If passed and put into effect, this cutback would cease Lifeline admission for eight million people, which accounts for about lxx% of the programme's recipients. In the American territory of Puerto Rico, this would interpret to most 17% of its population that would lose access.[79]

Ix U.S. Senators issued a joint letter of the alphabet opposing the cutbacks, contending that, "The Lifeline Program is essential for millions of Americans who rely on subsidized internet access to notice jobs, schedule physician'southward appointments, complete their school assignments, interface with the government, and remain connected in a digital economy."[80] The FCC must at present decide betwixt the loftier toll and the USF'south goal for "universal access" with this programme.

This cut to the Lifeline program prevents other smaller companies known as resellers from "buying network capacity from big telecom providers and and then selling it back to low-income consumers at cheaper rates."[79] This is problematic for the majority of Lifeline customers who rely on those cheaper rates.

The current assistants looks to be opposed to this program equally they feels information technology is wasteful of taxpayer money. Since 2017, there has been a 21% decrease in the number of people existence assisted by this programme. In 2017 only nether 11 million people were existence assisted whereas now in 2019, slightly under 9 million people are receiving assistance. It is estimated ii.3 one thousand thousand people are no longer enrolled in this program.[81]

The USF has some issues in dealing with bereft controls over determining who qualifies for funding, and limited auditing practices that are supposed to ensure that telecommunication companies are not overpaying or underpaying their ante to the fund.[82]

The USF is able to advantage those living in rural or impoverished areas who are capable of paying the entire price of personal telecommunication services. Critics argue that inconsistent and asymmetrical audits allow for wealthy consumers to avert triggering some USF fiscal burdens.[83] Wealthy landowners in rural estates decide to employ USF subsidies and pay a fraction of what they can realistically beget.[84]

Critics note that reimbursing carriers on a "'cost-plus' basis" creates "incentives to increase rather than decreas[e] costs" By reimbursing "carriers for the full price of infrastructure development plus 11.25 per centum of those costs in profit," the fund may expose itself to exploitation.[85]

Concerns about 2018 changes [edit]

In May 2018, the FCC moved $eight billion from a private bank to the United states of america Treasury. This anticipated move caused an uproar from FCC Autonomous commissioners who were concerned about the money being allocated to large corporations instead of the citizens. FCC commissioner, Jessica Rosenworcel stated that this move "sacrificed $50 million in annual involvement that could have been used to back up rural broadband, telemedicine & internet in schools."[86] Although lawmakers and commissioners claimed that this move was unexpected, there was a letter previously written to the Full general Accountability Office (GAO) in January 2018 asking for a review on the plan to review the funds. The GAO claimed that the USF funds are not regulated as intensively equally other government funds, and then this move was an attempt to "amend direction and oversight of the funds."[87]

Afterward the 2018 USF changes, VoIP service providers are now required to provide funds for the USF. For example, Vonage must charge an additional 10.10% fee.[88] However, they are exempt from the cost of using the Cyberspace for information send whereas DSL internet providers and modern cable services must burden the cost. This expands toll baloney to long-distance telephone providers and information technology raises the cost of telecommunications service for more than consumers.[seventy]

On May 21, the FCC issued an order that prohibited USF programs from buying equipment from Chinese telecommunications companies Huawei and ZTE. These companies are considered a take a chance to national security by American intelligence agencies. National Economic Quango Director Larry Kudlow commented that the Trump Administration are ¨aware of security bug, sanctions problems, technology theft issues, et cetera.¨[89]

Failing revenues [edit]

The apace changing interstate and international telecommunications markets can chop-chop and unpredictably bring about changes in USF funding levels. Dorothy Attwood of the FCC Wireline Competition Bureau stated, "One striking evolution that nosotros've witnessed in the interstate marketplace is the steady refuse of interstate revenues. Although traditional long-distance revenues grew consistently between 1984 and 1997, they're now in a catamenia of steady decline". She pointed out that competition in the interstate long-distance market, wireless substitution, and bundling of service packages that blur traditional service categories are all reducing revenues that serve to finance the USF.[xc] Service providers simply transferred the toll to customers in the class of a long-distance surcharge to make upward for reduced revenue. While the expenditures of the USF have increased since its inception, in part due to expansion of support paid to competitive providers, the revenues on which contributions are fabricated – interstate and international telecommunication revenues – have become increasingly more difficult for contributors to identify as a result of evolution of services offered. Overall revenues reported by telecommunications companies have steadily increased, if information service revenues are included. However, the revenues for these services are no longer discipline to contribution.

Proposed reform [edit]

Expanding revenue sources [edit]

Debate over the Universal Service Fund has consistently involved the telescopic of the funding, which applied science types and companies should fund the programme, which groups should be eligible for benefits, and the need to clean upwards waste material and fraud in the program. Proposals take been fabricated to increment the number of sources from which universal service fund is nerveless. This could include expanding contributions to include intrastate telephone services (calls within unmarried states), voice over IP (calculator-to-estimator calls), and information services such equally broadband, and increasing contribution requirements from wireless communication providers.

Failed legislation [edit]

A draft proposal of the Telecommunications Act of 2005 was the discipline of hearings in Congress. The proposal outlined a significant restructuring of the Telecommunications Act of 1996, ultimately the Firm of Representatives passed a nib, the Communications Opportunity, Promotion, and Enhancement Act of 2006 (COPE – H.R.5252.RS, S.2686).[91] The bill was sent from the House to the Senate, where subsequent readings left information technology awaiting a legislative action. Nether the proposed restructuring of the Telecommunications Act of 1996, greater accent on the wide availability of broadband and mobile admission would be considered. Additionally, consideration of acquirement contribution to the Universal Service Fund would be radically revised, given that the cosmos of obligatory broadband and mobile communication admission would require a wide range of broadband, mobile, and Vocalisation over Net Protocol (VoIP) service providers to contribute a portion of their revenue to the fund. Lastly, the Act urged an FCC consideration of the universal service structure. The bill was not passed.

In Jan 2007, Senator Ted Stevens (R-AK) sponsored a bill (the Universal Service for Americans Human activity) that would increase universal service revenue enhancement base to include broadband ISPs and VoIP providers, to fund broadband deployment in rural and low-income regions of the country. This nib was referred to committee, only as no further action was taken on information technology by the 110th Congress, the neb never became law.[92] Since so the simply congressional activeness has been H.R. 176, introduced by Congressman Bob Latta (R-OH) on February xiii, 2009, which states that, "in order to keep aggressive growth in our Nation's telecommunications and technology industries, the United States Government should 'Go Out of the Way and Stay Out of the Way'." The neb died in committee.[93]

On July 22, 2010, the Universal Service Reform Human action of 2010 was introduced by Representatives Boucher (D-Va) and Terry (R-NE). The measure is intended to ameliorate and modernize the USF by reining in the size of the fund and promoting broadband deployment.[94]

Supporting natural monopolies [edit]

The status quo merely benefits powerful telecommunications companies. In the interest of reducing waste, limited back up to a monopoly universal service provider for each territory has been considered. Wireless technology is increasingly favored by consumers, and can cover a single territory ofttimes for less than landline engineering science. Nonetheless, wireless has traditionally been a competitive industry, which has resulted in a variety of innovative services for consumers, just means that supporting wireless companies requires a complex understanding of how to classify funding on a shared basis, in order to avoid injury to the positive forces of competition.[ commendation needed ]

Expanding rural broadband [edit]

In March 2016, the FCC unanimously voted to provide $20 billion over the adjacent 10 years in "support for small carriers." The previous FCC chairman Tom Wheeler nether the Obama Administration implemented this reform. The FCC will be offering the fund $20 billion over the next 10 years to support service in "high cost areas." This reform is a modernization of the plan support of broadband in "loftier cost areas." It will target communities that about need support. Reformation of the Lifeline program included minimum service requirement standards implemented to ensure that consumers benefited the virtually from the program. Pai and the proponents of the upkeep cuts claim that the Lifeline program is being abused by resellers claiming that some recipients listed in the databases are deceased or do not exist.[95] Pai's hope is that this budget cutting volition stimulate the free market place and allow existing broadband networks to aggrandize their infrastructure into the rural areas. These small carriers are too known equally "rate-of-render" carriers; these carriers take made pregnant progress in recent years but many even so do not have access to "terrestrial fixed broadband." The reform is fabricated upwardly of three main elements: "Modernizes Existing Universal Service Program for Rate-of-Return Carriers", "Create Two Paths to a 'Connect America Fund' for Rate-of Return Carriers" and "Increment Fiscal Responsibility in the Universal Service Fund."[96]

In 2017, new FCC chairman nether the Trump Administration, Ajit Varadaraj Pai, plans to keep rural areas a priority. He wants to bridge "the digital divide between rural and urban areas" by working on "expanding broadband options". Pai believes that there is waste product occurring betwixt the private and public sectors as private capital is already being given to areas in order to build out networks. Notwithstanding, some of these areas are still being subsidized. Pai intends to brand sure that broadband accessibility is included in an infrastructure nib to come.[97] This decision from Pai is reducing the touch on of the Lifeline plan, some even speculating that he may eventually dismantle the unabridged plan.[98]

Out of the iv USF programs, the Lifeline plan is currently the only i without a strict budget cap. Lifeline can go over its current budget as long as the FCC provides a reason every bit to why they need to spend more than money. This allows the FCC to subsidize advice services to people with depression income. As stated above, this will virtually likely change as the FCC is reviewing Pai's proposal on Nov xvi, 2017 to set a upkeep cap on the Lifeline program.[99]

Meet also [edit]

  • E-Charge per unit
  • National broadband plans from effectually the globe
  • Rural electrification
  • National Exchange Carrier Clan

References [edit]

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External links [edit]

  • FCC website
  • Universal Access (Free Press)
  • Universal Service Administrative Company
    • Well-nigh the USAC
    • Schools & Libraries
    • High Cost
    • Depression Income
    • Rural Healthcare
  • Commission on Energy and Commerce

Do I Pay Universal Service Fund On Fraud Calls?,

Source: https://en.wikipedia.org/wiki/Universal_Service_Fund

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