FCC Shouldn't Favor One Broadband Tech In USF, ICC Reform Effort, Ex-Chairman Says

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By Paul Barbagallo  

The Federal Communications Commission should avoid favoring one type of broadband internet service provider over another in reforming the complex and interwoven Universal Service Fund and intercarrier compensation systems, former FCC Chairman Michael Powell said.

Powell, who is now president and chief executive officer of the National Cable and Telecommunications Association, spoke to reporters Oct. 7 at NCTA's offices in Washington, a day after the current chairman, Julius Genachowski, formally announced that the agency will vote on a comprehensive USF-ICC reform order.

While crediting Genachowski for working toward final resolution of the thornier issues, Powell said that companies providing telecommunications and broadband internet services should be treated equitably.

“If broadband is the infrastructure we're trying to incent more construction of, which is the principal claim of the reform, then you have to try to root out making distinctions in how the subsidies flow based on what kind of technology is being used,” Powell said.

Cable Firms Handle Same Function.

“If a cable company is offering telephone service in its area and competing effectively, for any access charges that are available, we don't see any reason why they shouldn't compensated the same way as a TDM [time-division multiplexing] architecture does,” he added. “We're [cable providers] doing the exact same function.”

Genachowski's proposal, while short of details, seeks to overhaul the Universal Service Fund and intercarrier compensation regimes at the same time. Both systems are linked in the overall revenue stream that telecommunications carriers receive for their services. Both systems are considered broken by nearly all observers and in need of reform. Both systems remain, for the time being, intractable.

Historically, the Universal Service Fund has drawn from a surcharge that consumers pay on interstate telephone calls, but the decline in revenue from traditional long-distance calling is shrinking the base for contributions to the fund.

Meanwhile, the intercarrier compensation system has developed into a messy patchwork of payments among carriers for originating and terminating traffic

“Broadband makes no distinctions in the kinds of services they provide over the network. A bit is a bit, and you have to live up to the truth of that. … Why should anybody care?”

Michael Powell, National Cable and Telecommunications Association  

“We've now gotten to the point where public officials will declare that the telephone system isn't the central communications infrastructure anymore; broadband is,” said Powell, commenting broadly on the FCC's reform effort. “Broadband makes no distinctions in the kinds of services they provide over the network. A bit is a bit, and you have to live up to the truth of that.”

Powell pointed out that consumers fail to make those distinctions, too.

“When I pick up the phone to call my sister, it makes no difference to me whether the architecture that underlies the fact that I'm engaged in that human activity is voice-over-internet protocol [VoIP], where the bits are being translated into digital data and sent over that kind of architecture, or whether it's a circuit-switched architecture. Why do I care as a consumer? Why should anybody care?”

Powell is slated testify to the Senate Commerce Committee on Universal Service Fund and intercarrier compensation reform Oct. 12.