Statements on Introduced Bills and Joint Resolutions - S 1380

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. SMITH (for himself, Mr. BAYH, Mr. ALLEN, Mr. CRAPO, Mr. HAGEL, Mr. COLEMAN, Mr. BENNETT, Mr. HATCH, Mr. ENZI, Mr. THOMAS, and Mr. FITZGERALD):

    S. 1380. A bill to distribute universal service support equitably throughout rural America, and for other purposes; to the Committee on Commerce, Science, and Transportation.

    Mr. SMITH. Mr. President, today I rise in support of fairness for rural America and introduce the Rural Universal Service Equity Act of 2003.

    Universal service is a decades old Federal program intended to keep telephone service available and affordable across America. The Federal Universal Service Program has been a tremendous success. America's telephone network is the envy of the world. However, the program faces challenges, and it is imperfect.

    The Rural Universal Service Equity Act addresses an inequity in the way Universal Service support is distributed to rural customers served by larger phone companies. Under the program, only eight States receive funding. Three of those States receive more than 80 percent of the funds and one State receives more than half of all dollars available under the program.

    Yet many of the most rural States in America the very States the program was intended to assist—receive no funding at all. North Dakota, South Dakota, Idaho, Iowa, Utah, Kansas, Oklahoma, New Mexico, Nebraska and other rural States receive no funding under this program.

    My State of Oregon is an example of the unfairness of the program. Oregon has an average of 36 residents per square mile, according to U.S. Census Bureau data. Oregon has many rural and remote areas but does not receive any funding under this program for larger carriers. However, States with between 60 and 101 residents per square mile or more than twice the density of Oregon—receive 90 percent of the funding.

    How could this happen? When the FCC created this program in 1999, it determined which States would be eligible for funding by comparing the average cost of providing telephone service per line in each State to a benchmark tied to the national average cost per line. If a State's average cost of service per line exceeded the benchmark, that State would be eligible for funding. If the average cost was below the national benchmark, it would not be eligible.

    This method is skewed, in part, because telephone service in a metropolitan area is less expensive to provide than service in a rural area. Customers in cities are closer to one another, and the same facilities can serve more people at a lower cost.

    As a consequence, if you are served by a larger carrier and you live in a State with a city—no matter how rural an area, or no matter how far from the city you live—your State probably receives no support.

    This problem is exacerbated because the FCC formula also doesn't fully account for the actual cost of providing service in rural areas with natural obstacles such as mountains, lakes and rivers.

    In short, the formula is flawed, and the result is unfair to millions in rural America: Three States that are not among the 15 least populated States—receive more than 80 percent of the fund.

    The Rural Universal Service Equity Act of 2003 would make this program fair. The Act directs the FCC to replace the current state-wide average formula with a new formula that distributes funds to telephone company wire centers with the highest cost.

    Wire centers are the telephone facilities where all of the telephone lines in a given area converge. And because funds would be directed to high-cost wire centers, as opposed to States with the highest average costs, rural residents would no longer be penalized if they lived in a State with a city hundreds of miles away.

    The Act also: directs the FCC to develop rules to implement a program that is equitable among States; delegates to the FCC the determination of what an appropriate benchmark for what a high cost wire center should be; directs the FCC to not increase the size of the current program for high cost carriers; ensures a minimum level of support for States that currently receive funding under the program; and requires GAO to study and report back to Congress on the need for comprehensive universal service reform.

    Finally, I am concerned that the Universal Service Program has challenges beyond the inequities of the program for larger carriers. I look forward to participating in the broader debate on how to reform the Universal Service Program and ensure its long term viability and effectiveness. This bill will help further that debate.

    However, broadly reforming the Universal Service Program is complex and divisive. It may take years. And I do not believe the inequities of the program for larger carriers should be allowed to continue while Congress grapples with the broader issues. Millions of rural Americans are being disserved, and we can solve this one problem today.

    I urge my colleagues to join me and support the Rural Universal Service Equity Act of 2003. I ask unanimous consent that the text of the legislation be printed in the RECORD.