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Text of the Universal Service Reform Act of 2007

This bill was introduced on April 26, 2007, in a previous session of Congress, but was not enacted. The text of the bill below is as of Apr 26, 2007 (Introduced).

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I

110th CONGRESS

1st Session

H. R. 2054

IN THE HOUSE OF REPRESENTATIVES

April 26, 2007

(for himself, Mr. Terry, Mr. Filner, Mrs. Capito, Mr. Graves, Mrs. Cubin, Mr. Fortenberry, Mr. Manzullo, Mr. King of Iowa, and Mr. Radanovich) 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.

1.

Short title

This Act may be cited as the Universal Service Reform Act of 2007.

2.

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 following new paragraph:

(11)

Communications service provider

The term communications service provider means any entity that—

(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 2007;

(B)

uses telephone numbers or Internet protocol addresses, or their functional equivalents or successors, to offer a service or a capability—

(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, directly to the public, or to such classes of users as to be effectively available directly to the public, a physical transmission facility, whether circuit-switched, packet-switched, a leased line, or using radio frequency transmissions, regardless of the form, protocol, or statutory classification of the service, that allows an end user to obtain access, from a particular end user location, to a network that permits the end user to engage in electronic communications (including telecommunications) with the public.

; and

(4)

by inserting after paragraph (20) (as redesignated by paragraph (2) of this section) the following 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 provided over an Internet protocol platform or for which an Internet protocol capability is an integral component, and services, facilities, equipment, and applications that enable an end-user to receive communications in Internet protocol format, regardless of whether the communications are voice, data, video, or any other form, at a download receiving rate of 1 megabit per second or greater.

(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 2007 and shall make the necessary adjustments to move to higher speeds as deployment and advancement of new technology allows communications service providers to provide 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 predecessor or successor protocols to such protocol.

.

3.

Universal service reform

(a)

In General

Section 254 of the Communications Act of 1934 (47 U.S.C. 254) is amended by amending subsections (a) through (e) to read as follows:

(a)

Procedures To reform universal service

(1)

Federal-state joint board on universal service

Within one month after the date of enactment of the Universal Service Reform Act of 2007, 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 2007), including the definition of the services that are supported by Federal universal service support mechanisms and a specific timetable for completion of such recommendations. 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 recommendations to the Commission within 9 months after the date of enactment of the Universal Service Reform Act of 2007.

(2)

Commission action

The Commission shall initiate a single proceeding to consider the recommendations 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 2007. The rules established by such proceeding shall include a definition 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 preservation and advancement of universal service on the following principles:

(1)

Quality and rates

Quality services should be available at just, reasonable, and affordable rates.

(2)

Access to advanced services

Access to advanced telecommunications and information services should be provided in all regions of the Nation.

(3)

Access in rural and high cost areas

Consumers in all regions of the Nation, including low-income consumers and those in rural, insular, and high cost areas, should have access to the services the Commission determines to be universal services in accordance with subsection (c), including interexchange services and advanced telecommunications and information services, that are reasonably comparable to those services 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 providers should make equitable and nondiscriminatory contributions to the preservation and advancement of universal service.

(5)

Explicit, specific, and predictable support mechanisms

There should be explicit, specific, predictable, and sufficient Federal and State mechanisms to preserve and advance universal service.

(6)

Competitive neutrality

Federal and State mechanisms to preserve and advance universal service should be competitively neutral, so that those mechanisms neither unfairly advantage nor disadvantage one communications service provider over another, and neither unfairly favor nor disfavor one technology over another.

(7)

Access to advanced telecommunications 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).

(8)

Additional principles

Such other principles as the Joint Board and the Commission determine are necessary and appropriate for the protection of the public interest, convenience, and necessity 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 2007 as universal services, as modified by the Commission as necessary to implement the provisions of this Act, high-speed broadband services, and an evolving level of telecommunications and information services that the Commission shall establish periodically under this section, taking into account advances in telecommunications and information technologies and services. The Joint Board in recommending, and the Commission in establishing, the definition of the services that are supported by Federal universal service support mechanisms shall consider the extent to which such services—

(A)

are essential to education, public health, or public safety;

(B)

are being deployed in public telecommunications networks by communications service providers; and

(C)

are consistent with the public interest, 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 service under paragraph (1), the Commission may designate additional services for such support mechanisms for schools, libraries, and health care providers for the purposes of subsection (h).

(4)

High-speed broadband service

The definition of universal service shall not be construed to exclude eligible communications service providers from using universal service funding for the provision, maintenance, and upgrading of high-speed broadband service.

(d)

Universal service support contributions

(1)

Calculating universal service support contributions

(A)

In general

To preserve and advance universal service in accordance with the principles in section (b), the Commission shall assess contributions to universal service support mechanisms from communications service providers in a manner that is equitable, competitively neutral, and nondiscriminatory, and ensures that communications service providers are subject to similar obligations. The Commission may employ any methodology to assess such contributions, including consideration of—

(i)

revenues derived from the provision of intrastate, interstate, and foreign communications services by communications service providers;

(ii)

working telephone numbers used by communications service providers; or

(iii)

any other current or successor identifier protocols or connections to the network used by communications service providers.

(B)

Use of more than one methodology

If no one methodology designated under subparagraph (A) effectuates the principles described in this Act, the Commission may employ a combination of any such methodologies.

(C)

Low volume exception

The Commission shall not materially increase the contributions of communications service providers whose customers typically make a low volume of calls on a monthly basis.

(D)

De minimis exception

The Commission may exempt a communications service provider from the requirements of this subsection 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 service would be de minimis.

(E)

Group plan exception

If the Commission uses a methodology under subparagraph (A) based in whole or in part on working telephone numbers, it may provide a discount for additional numbers provided under a group or family pricing plan for residential customers provided in one bill.

(2)

Reports

The Commission shall establish annual reporting requirements for all communications service providers contributing to universal service support mechanisms or receiving universal service support. The reporting requirements shall not impose unnecessary burdens, and shall be technology and provider neutral. The Commission shall periodically review the reporting requirements to ensure that universal service support is used for the provision, maintenance, and upgrading of the facilities for which support is intended.

(3)

Universal service support contribution limits

(A)

Limitation

The total amount of universal service support for all universal service 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 Universal Service Reform Act of 2007, as adjusted—

(i)

annually by a growth factor; and

(ii)

once, within one year of the date of enactment of the Universal Service Reform Act of 2007, by the amounts that the adjustments in subsections (e)(3) and (m) increase demand for universal service support.

(B)

Growth factor

The growth factor shall be the annual percentage change in the Gross Domestic Product–Chained Price Index (GDP–CPI), or any successor general inflationary factor that the Bureau of Economic Analysis of the Department of Commerce determines shall supersede such index, plus the annual percentage change in the total number of incumbent local exchange carrier working loops in rural, insular, and high cost areas, if that percentage change is greater than zero.

(C)

Intercarrier compensation recovery mechanism

If at any time after the date of enactment of the Universal Service Reform Act of 2007 the Commission mandates that intercarrier compensation revenues be recovered through an alternative revenue recovery mechanism, such alternative revenue recovery mechanism shall be included in the limitation set forth in subparagraph (A), and the Commission shall adjust such limitation by the amount that such alternated revenue recovery mechanism increases demand for universal service support.

(e)

Distribution and use of universal service support

(1)

In general

Only an eligible telecommunications 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 provision, maintenance, and upgrading of facilities and facilities-based 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, insular, and high cost areas—

(A)

should be expanded to include high-speed broadband services;

(B)

should be based on actual costs reasonably incurred in providing such facilities-based services in a service area, exclusive of the cost of acquiring spectrum, except that an eligible telecommunications carrier that is an incumbent local exchange carrier may 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 2007); and

(C)

should be available to communications service providers that are determined to be eligible telecommunications carriers under section 214(e).

(3)

Support for non-rural carriers providing service in rural, insular, and high cost areas

(A)

Calculating support

Except with respect to non-rural carriers serving insular areas, in calculating the need for and distribution of Federal universal service support for eligible telecommunications carriers that serve rural, insular, and high cost areas and that are either non-rural carriers, or (after a one-time election) rural carriers subject to Federal incentive regulation, the Commission shall revise the Commission’s support mechanism for rural, insular, and high cost areas to provide support to each wire center to the extent the incumbent local exchange carrier’s average forward-looking cost per line for such wire center exceeds 2.75 times the national average 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 2007.

(4)

Administration: accountability standards

(A)

Network traffic identification accountability standards

(i)

Network traffic identification standards

A communications service provider shall ensure, to the degree technically possible, that all traffic that originates on its network contains, or, in the case of non-originated traffic, preserves, sufficient information in call signaling to allow for traffic identification by other communications service providers that transport or terminate such traffic, including telephone number information of the calling and called parties and such other information as the Commission deems appropriate. Except as otherwise permitted by the Commission, to the degree technically possible, a communications service provider that transports traffic between communications service providers shall signal-forward without altering call signaling information it receives from another communications service provider.

(ii)

Network traffic identification rulemaking

The Commission, in consultation with the State commissions, shall initiate a single rulemaking no later than 180 days after the date of enactment of the Universal Service Reform Act of 2007 to establish rules and enforcement provisions for traffic identification.

(iii)

Network traffic identification enforcement

The Commission shall adopt and enforce clear penalties, fines, and sanctions under this section.

(B)

Universal service distribution accountability standards

To ensure fairness 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 distributed to all eligible recipients.

.

(b)

Rural Health Care Support Mechanisms

(1)

Amendment

Subparagraph (A) of section 254(h)(1) of the Communications Act of 1934 (47 U.S.C. 254(h)(1)) is amended to read as follows:

(A)

Health care services for rural areas

Within 180 days after the date of enactment of the Universal Service Reform Act of 2007, the Commission shall prescribe regulations that provide that a communications service provider shall, upon, receiving a bona fide request, provide covered services which are necessary for the provision of health care services in a State, including instruction relating to such services, to any public or nonprofit health care provider that serves persons who reside in rural areas in that State at rates that are reasonably comparable to rates charged for similar services in urban areas in that State. A communications service provider providing service under this subparagraph shall be entitled to have an amount equal to the difference, if any, between the rates for services provided to health care providers for rural areas in a State and the rates for similar services in urban areas in that State treated as a service obligation as a part of its obligation to participate in the mechanisms to preserve and advance universal service.

.

(2)

Definition of health care provider

Subparagraph (B) of section 254(h)(7) of such Act (47 U.S.C. 254(h)(7)(B)) is amended to read as follows:

(B)

Health care provider

The term health care provider means—

(i)

post-secondary educational institutions offering health care instruction, teaching hospitals, and medical schools;

(ii)

community health centers or health centers providing health care to migrants;

(iii)

local health departments or agencies;

(iv)

community mental health centers;

(v)

not-for-profit hospitals;

(vi)

critical access hospitals;

(vii)

rural hospitals with emergency rooms;

(viii)

rural health clinics;

(ix)

not-for-profit nursing homes or skilled nursing homes;

(x)

hospice providers;

(xi)

emergency medical services facilities;

(xii)

rural dialysis facilities;

(xiii)

elementary, secondary, and post-secondary school health clinics; and

(xiv)

consortia of health care providers consisting of one or more entities described in clauses (i) through (xiii).

.

(3)

Definition of rural for health care support

Section 254(h)(7) of such Act is further amended by adding at the end the following new subparagraph:

(J)

Rural area

Within 180 days after the date of enactment of the Universal Service Reform Act of 2007, the Commission shall prescribe regulations that provide that, for purposes of the rural health care universal service support mechanisms established pursuant to this subsection, a rural area is—

(i)

any incorporated or unincorporated place in the United States, its territories and insular possessions (including any area within the Federated States of Micronesia, the Republic of the Marshall Islands and the Republic of Palau) that has no more than 20,000 inhabitants based on the most recent available population statistics from the Census Bureau;

(ii)

any area located outside of the boundaries of any incorporated or unincorporated city, village, or borough having a population exceeding 20,000;

(iii)

any area with a population density of fewer than 250 persons per square mile; or

(iv)

any place that qualified as a rural area and received support from the rural health care support mechanism pursuant to the Commission’s rules in effect prior to December 1, 2004, and that continues to qualify as a rural area pursuant to such rules.

.

(c)

Schools, libraries, rural health care, life-line, link-up, and toll limitation hold harmless

Except as provided in subsections (h)(1)(A), (h)(7)(B), and (h)(7)(J) of section 254 of the Communications Act of 1934 (47 U.S.C. 254), as amended by subsection (b)—

(1)

nothing in this Act (and the amendments made by this Act) shall be construed as limiting, changing, modifying, or altering the amount of support or means of distribution for the schools, libraries, rural health care, life-line, link-up, and toll limitation programs; and

(2)

the Federal Communications Commission shall ensure that such amendments do not result in a decrease of such support to a level below the level for the fiscal year preceding the fiscal year in which this Act is enacted.

4.

Eligible recipients of universal service support

(a)

Amendment

Section 214(e) of the Communications Act of 1934 (47 U.S.C. 214(e)) is amended—

(1)

by redesignating paragraphs (3), (4), (5), and (6) as paragraphs (6), (7), (9), and (8), respectively, and reordering such paragraphs in numerical order; and

(2)

by striking paragraphs (1) and (2) and inserting the following:

(1)

Eligibility to receive universal service support

A communications service provider shall be eligible to receive universal service support in accordance with the requirements of this subsection only if such communications service provider—

(A)

uses its own facilities in whole or in part to make available throughout a service area the services that have been determined by the Commission to be universal services pursuant to section 254(c), and adheres to the State carrier-of-last-resort requirements that are imposed on incumbent carriers serving the area;

(B)

advertises the supported services and their associated charges throughout the service area using media of general distribution, and advertises the availability of life-line and link-up services in a manner reasonably designed to reach those likely to qualify for those services;

(C)

demonstrates the ability to remain functional in emergency situations;

(D)

satisfies consumer protection and service quality standards; and

(E)

meets the basic requirements for the deployment of high-speed broadband service, and provides high-speed broadband service, except that the Commission shall establish a process—

(i)

whereby a determination can be made to waive the requirements of this subparagraph for 3 years upon application of a communications service provider demonstrating that the deployment and provision of high-speed broadband service is not technically feasible or would materially impair the communications service provider’s ability to continue to provide local exchange service throughout its service area, except that a waiver shall be deemed automatically granted under this clause for a communications service provider which can demonstrate that the cost per line of deploying and providing high-speed broadband service is at least three times the average cost of providing high-speed broadband service among all recipients of universal service support, subject to the renewal provisions set forth in clause (ii);

(ii)

whereby the communications service provider may seek renewal of such waiver every 3 years for as long as the deployment and provision of high-speed broadband service is not technically feasible or would materially impair the communications service provider’s ability to continue to provide local exchange service throughout its service area; and

(iii)

whereby any application of a communications service provider for a waiver pursuant to clause (i) on which the Commission has not taken final action within 60 days of the date of submission to the Commission shall be deemed granted.

(2)

Eligibility criteria

In addition to the criteria specified in paragraph (1), the Commission shall establish such additional eligibility criteria for the receipt of universal service support by communications service providers as it deems necessary and in the public interest. The criteria established in paragraph (1) and the criteria established by the Commission pursuant to this paragraph shall be used by State commissions in determining which providers shall be designated as eligible recipients of universal service support for the purpose of paragraph (3).

(3)

Designation of eligible recipients

A State commission shall, upon its own motion or upon request, designate as an eligible recipient of universal service support only those providers meeting the requirements of paragraphs (1) and (2).

(4)

Grandfather provision

Recipients of universal service support in any service area prior to the date of enactment of the Universal Service Reform Act of 2007 shall meet the eligibility requirements for eligible recipients of universal service support—

(A)

as described in paragraphs (1)(A) through (D), within one year of the date of enactment of the Universal Service Reform Act of 2007; and

(B)

as described in paragraph (1)(E), within 5 years after the date of enactment of the Universal Service Reform Act of 2007.

Failure of such an eligible recipient of universal service support to maintain and meet the eligibility requirements within the period required by subparagraph (A) or (B) after the date of enactment of the Universal Service Reform Act of 2007 shall require the automatic termination of Federal universal service support to that recipient. This paragraph shall not be construed to prohibit such a recipient from obtaining a waiver under paragraph (1)(E).

.

(b)

Definitions

Paragraph (9) of section 214(e) (as redesignated by subsection (a)) is amended to read as follows:

(9)

Definitions

As used in this subsection, the term service area means a geographic area that aligns with the area in which a communications service provider is licensed or authorized to provide service for the purpose of determining universal service obligations and support mechanisms. In the case of an area served by a rural telephone company, service area means such company’s study area or the licensed or authorized service area of any other communications service provider serving an area that overlaps with the service area of a rural telephone company. In the case of an area served by a wireless service provider, service area means such company's basic trading area.

.

5.

Removal of impediments to sufficient support mechanisms

Section 254 of the Communications Act of 1934 is amended by adding at the end the following new subsection:

(m)

Removal of limitations on high cost support mechanisms

The limitations on universal service support contained in section 54.305 of the Commission’s regulations (47 CFR 54.305), and the individual caps imposed upon carriers contained in section 36.631 of the Commission's regulations (47 CFR 36.631), shall cease to be effective on the date of enactment of the Universal Service Reform Act of 2007. The Commission shall not, on or after such date of enactment, enforce or reimpose limitations on support mechanisms for rural telephone companies or exchanges they acquire.

.

6.

Scope of support

Section 254 of the Communications Act of 1934 (47 U.S.C. 254) is further amended by adding at the end the following new subsection:

(n)

Scope of support

The Commission in implementing the requirements of this section as amended by the Universal Service Reform Act of 2007 with respect to the distribution and use of Federal universal service support shall not limit such distribution and use to a single connection or primary line, and all residential and business lines served by an eligible telecommunications carrier shall be eligible for Federal universal service support.

.

7.

Application of Antideficiency Act; investment of contributions

Section 254 of the Communications Act of 1934 (47 U.S.C. 254) is further amended by adding at the end the following new subsections:

(o)

Proper accounting of universal service contributions

(1)

From all budgets

Notwithstanding any other provision of law, the receipts and disbursements of universal service contributions under section 254 of the Communications Act of 1934 (47 U.S.C. 254) shall not be counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of—

(A)

the budget of the United States Government as submitted by the President;

(B)

the Congressional budget;

(C)

the Balanced Budget and Emergency Deficit Control Act of 1985; or

(D)

any other law requiring budget sequesters.

(2)

Additional exemptions

Section 1341, subchapter II of chapter 15, and sections 3302, 3321, 3322, and 3325 of title 31, United States Code, shall not apply to—

(A)

the collection and receipt of universal service contributions, including the interest earned on such contributions; or

(B)

disbursements or other obligations authorized by the Federal Communications Commission under section 254 of the Communications Act of 1934 (47 U.S.C. 254).

(p)

Investment of Universal Service Fund Contributions

Notwithstanding any other provision of law, including sections 3302, 3321, 3322, and 3325 of title 31, United States Code, the cash balance of receipts of universal service contributions collected pursuant to this section shall be invested by the Commission or its designee in conservative, liquid, interest-bearing investment vehicles of government backed securities until such time as such receipts are disbursed pursuant to this section 254.

.

8.

State authority

Section 254(f) of the Communications Act of 1934 (47 U.S.C. 254(f)) is amended to read as follows:

(f)

State authority

(1)

In general

A State may adopt regulations not inconsistent with the Commission’s rules to preserve and advance universal service. In adopting those rules, a State may require communications service providers to contribute to universal service on the basis of—

(A)

revenues derived from the provision of intrastate, interstate, and foreign communications services by communications service providers;

(B)

working telephone numbers used by communications service providers; or

(C)

any other current or successor identifier protocols or connections to the network used by communications service providers.

(2)

Disregard of interstate component

A State may require communications service providers to contribute under paragraph (1) regardless of whether the service contains an interstate component.

(3)

Guidelines

Regulations adopted by a State under this subsection shall result in a specific, predictable, and sufficient mechanism to support universal service and shall be competitively and technologically neutral, equitable, and nondiscriminatory.

.

9.

Report to Congress

The Commission shall, not later than 3 years after the date of enactment of this Act and triennially thereafter, report to Congress regarding the availability of the services designated by the Commission as universal services to all Americans, including schools, libraries, rural health care providers, and low income consumers.