Modernizing USF Fund is Important First Step in Job Growth
By Steve Pociask, American Consumer Institute
(Posted in The Hill, 9/12/2011)

With the president’s speech this week highlighting the ongoing desperation
among American families looking for job creation and economic recovery,
Congress should start with the low-hanging fruit: policies and reforms that
can get us on the path to recovery immediately and without partisan

One widely supported reform that President Obama failed to mention is the
proposed transition of the little-known Universal Service Fund (USF), a
federal fund that was designed to support the expansion of old-fashioned,
wire-line telephone service across America. Today, we have now achieved
virtually universal access to traditional phone service and USF is long
overdue for change.

Fortunately, many with the technology community have offered a very
practical solution: transitioning the fund into supporting the expansion of
broadband Internet services to millions of Americans in underserved

The proposal is a laudable one, representing the next wave of 21st century
infrastructure investment that the President discussed during his prime-time
speech. And according to data that our organization released this week, USF
reform would result in 90,000 new jobs thanks to new broadband construction
and the ability for businesses to expand with new high-speed internet

First, the plan proposes modernizing the USF program by ending the current
support paid to companies for deploying traditional telephone services in
high-cost (generally rural) areas and redirecting these dollars to broadband

In addition, the plan recommends dramatically reducing hidden telephone
company subsidies, called switched access charges. Consumer detest hidden
fees and these fees need to end. By removing these fees, the result will
not only bring more transparency and clarity but ultimately cheaper phone
service for consumers.

Finally, one of the major benefits of USF reform is that broadband expansion
has a sizable economic multiplier effect. Unlike most traditional
infrastructure investments, broadband expansion will mean that businesses in
rural and underserved communities will have the technology they need to
expand their consumer base and reach new markets. Consumers will have
access to a wide breadth of new products and services that were otherwise
impossible to reach.

And there are other tangible benefits to investment in new broadband
services, including new access to remote healthcare services and significant
distance learning and education advancement opportunities. All this will
mean a much more effective use of taxpayer funds that will help close the
lingering gap in broadband access.

Reforming USF represents a smart government policy that the FCC can
implement in short order without being delayed by partisan bickering. Both
Democrats and Republicans agree that the fund is outdated and in need of
updating, and so far the telecom industry seems to widely support the
effort. Six major tech companies even went so far as to file a plan with
the FCC – – “American’s Broadband Connectivity Plan.”

President Obama certainly made his case this week that policymakers at all
levels need a laser-like focus on job creation and private sector
empowerment. It starts with policies like USF reform that represent
bipartisan agreement, smart government efficiency, and most importantly, a
much-needed boost in job creation that doesn’t cost taxpayers another dime.

Steve Pociask is president of the American Consumer Institute Center for
Citizen Research, a 501c3 nonprofit educational and research institute