Kerry Urges Fairness for Massachusetts in Universal Service Fund Reform

Statement

Senator John Kerry (D-Mass.), Chairman of the Commerce Subcommittee on Communications, Technology, and the Internet, today issued the following statement at a hearing entitled, "Universal Service Reform -- Bringing Broadband to All Americans."

"Between 2000 and 2009, Massachusetts telephone customers paid $1.47 billion in surcharges into the Universal Service Fund but drew out only $415 million in benefits," Sen. Kerry said. "At a time when their household budgets are squeezed, middle class and working families in Boston and throughout the state are subsidizing phone customers in other states in large amounts."

The full text of Senator Kerry's statement, as prepared, is below:

Mr. Chairman, an article that appeared recently in my state papers on the Universal Service Fund was titled, "Massachusetts Phone Charges Fuel Communications Investments Around the Country." The article's point was to highlight a dramatic inequity -- between Massachusetts telephone customers paid $1.47 billion in surcharges into the Universal Service Fund but drew out only $415 million in benefits. Put another way, at a time when their household budgets are squeezed, middle class and working families in Boston and throughout the state are subsidizing phone customers in other states in large amounts.

The inequity between my state and others might be ok if the USF was efficient and targeting only those communities and people who need it most, but it is not. And it might be ok if Massachusetts did not have large pockets of geography without access to broadband and with spotty wireless service, but we do. We need to start getting a fair share of the fund and the fund needs to target areas of need in a financially responsible way.

In a speech last week, Chairman Genachowski said this, "The Universal Service Fund is outdated. It still focuses on the telephone, while high-speed Internet is rapidly becoming our essential communications platform… USF is wasteful and inefficient. The fund pays some companies almost $2,000 a month, that's more than $20,000 a year, for a single home phone line… USF is unfair... Some parts of rural America are connected to state-of-the-art broadband, while other parts of rural America are entirely left behind, because the program doesn't direct money where it's most needed…USF is broken, and the related intercarrier compensation system, a complex system of payments phone companies make to each other when they connect calls, doesn't work anymore either."

I agree with that assessment and I do not want my constituents' money spent this way any longer. The specific details of the Chairman's proposal for reform are on circulation at the FCC and are not yet public. As a result, I cannot judge them yet, but I certainly support the Chairman's intent.

I have written two letters over the last year to the FCC on this matter. One was with Senator Warner asking the FCC to focus on efficiency and broadband deployment where it is most needed and another with Senators Lautenberg and Nelson focused on providing for greater equity in distribution.

Today's hearing is focused on potential reforms before the FCC to the most costly of the universal service fund programs, the High Cost program. I support universal service as a concept and I am committed to the values that make it possible. Almost 95% of American households subscribe to telephone service today. That is because it is available to them, it delivers the voice service it promises, and it is affordable. That is the measurable success of our existing universal service system.

But as we declare that significant victory over the telephone divide that would have existed without universal service, there are lessons learned that we should apply to broadband going forward and we have to recognize that the modern communications system poses some new challenges in a time of increased fiscal constraints. And we have to make sure that we fund services with the end user in mind.

Mr. Chairman, I look forward to working with you and the FCC on this challenge. It should be a top priority for the agency and for this committee. Thank you.

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