Wheeler Responds Regarding USF High-Cost Subsidies

The Universal Service Fund subsidies now require consumers to pay a 17.4% surcharge on all of their interstate telephone calls. So adhering to some semblance of cost-control regarding USF fund expenditures ought to be a pro-consumer objective.

While I have found plenty to criticize recently regarding FCC Chairman Tom Wheeler's actions, especially with respect to the agency's Title II reclassification order, I am always happy to find some area of agreement. I was pleased to see Chairman Wheeler's response to Kansas Senator Jerry Moran regarding the FCC's implementation of reforms to the USF "high-cost loop support" provided to rural telephone companies. Here is the letter to Senator Moran.

Without here going into all the intricacies of the high-cost part of the USF program, the gist of Mr. Wheeler's response, at least as far as I can discern, appears to resist changing the high-cost support formula in a way that will prevent realization of the FCC's claimed objective "to provide better incentives for carriers to curb waste." Mr. Wheeler says that he believes "it is important to move forward with implementation of this  [reform] mechanism to ensure that universal service funds are being used as cost-effectively and efficiently as possible."

Please don't get me wrong. In my view, the USF program should be reformed in more substantial ways than anything the FCC has yet envisioned, so that subsidies can be targeted more narrowly and efficiently to those truly in need. But in the meantime, given the traditional pressures to expand support in the high-cost fund regardless of efficiency or effectiveness considerations, I was heartened to see Mr. Wheeler seemingly committed to resisting back-sliding regarding the modest reforms already adopted.

Meaningful reform of the USF program in a way that substantially reduces the 17.4% USF tax would be a tangible pro-consumer move.