"Be Careful Of What You Wish For ... Your Wishes May Come True." FCC Chairman Martin's Statement On CETC Cap Points To Auctions As Next Step

From Chairman Martin's statement on the interim USF cap:
"Today, we act to stem the explosive growth of the Universal Service Fund (Fund) by capping total annual high-cost universal service support for competitive eligible telecommunications carriers (ETCs) at the level of support that they were eligible to receive in each state during March 2008. This action is essential to preserve and advance the benefits of the universal service program while we consider comprehensive reform...

A large and rapidly growing portion of the high-cost support program is now devoted to supporting multiple competitors to serve areas in which costs are prohibitively expensive for even one carrier. These competitive ETCs don’t receive support based on their own costs, but rather on the costs of the incumbent provider, even if their costs of providing service are lower.

Indeed, growth in required contributions to the Fund is largely attributable to these competitive ETCs. High-cost support to competitive ETCs has grown from approximately $1.5 million in 2000 to well over $1 billion in 2007. Left unchecked, this staggering growth threatens the sustainability of the Fund.

Today’s decision is not an end in itself, but a step on the path towards comprehensive reform. I continue to believe the long-term answer for comprehensive reform of high-cost universal service support is to move to a reverse auction methodology and to require that high-cost support be based on a carrier’s own costs. I’m supportive of these measures to contain the growth of universal service in order to preserve and advance the benefits of the Fund and protect the ability of people in rural areas to continue to be connected. I look forward to working with my colleagues as we consider comprehensive reform."