{"id":202,"date":"2004-08-18T16:21:59","date_gmt":"2004-08-18T16:21:59","guid":{"rendered":"https:\/\/viodi.com\/classic\/2004\/08\/18\/article2-24\/"},"modified":"2023-08-13T18:27:19","modified_gmt":"2023-08-13T18:27:19","slug":"article2-24","status":"publish","type":"post","link":"https:\/\/viodi.com\/classic\/2004\/08\/18\/article2-24\/","title":{"rendered":"Radical Idea to Restructure USF Funding:"},"content":{"rendered":"\n

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Indie Telco Local Content Workshop Information<\/a><\/p>\n

Quick Jump Menu to this Issue’s Articles August 18th, 2004 Overview USF Overview: My Dream as to how to Restructure USF’s Funding: The Independent Telco Space According to Viodi: <\/p>\n

Radical Idea to Restructure USF Funding<\/b><\/b><\/p>\n

by Ken Pyle (ken.pyle@viodi.com), <\/strong>Viodi, LLC<\/a><\/p>\n

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August 18th, 2004 Issue<\/strong><\/p>\n

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[Editor’s Note: Many thanks to Mr. David Irwin,<\/strong> Managing Partner, Irwin, Campbell & Tannenwald, PC and Director of the Institute for Communications Law Studies at the Catholic University Law School, for his insight and assistance with this article. His comments regarding the telco industry are always very valuable. Come to the IP @ Telecom 04<\/strong><\/a> conference to hear him provide an overview of what is required from a regulatory standpoint for telcos to add video services.]<\/p>\n

One potential solution<\/strong> to the USF conundrum would be to drop the distinction<\/strong> between Information and Telecommunications<\/strong> services and levy a fee on all services that provide voice communications. This sounds great, but is it possible? At the various conferences I have recently attended, experts have questioned whether the U.S. can regulate telephone services originating from outside its borders<\/strong> and whether it is even possible to identify voice traffic, given that these services may use encryption and other means to obfuscate the content. <\/p>\n

I have heard from many, including FCC Chairman Michael Powell<\/strong> when he spoke at Supercomm, that the new IP networks are allowing services to be decoupled<\/strong> from the infrastructure. With IP, it is no longer necessary to have a network tuned to a specific application or service, as multiple services can ride on the same network. Many of these same experts have suggested that the Universal Service should be supporting infrastructure<\/strong> and not services. <\/p>\n

So, my dream took me across the pond, to merry old England<\/strong>, and to their television experience for a possible answer. In England, there is a \u201cTelevision Fee\u201d. People pay a license fee<\/strong> of 121 pounds ($221, U.S.<\/strong>) and 40.5 pounds ($74, U.S.<\/strong>) per year (exchange rate) for color televisions and black and white televisions, respectively, for the privilege of watching television. This practice started in the 1920s with the advent of radio and has been a funding mechanism for the BBC ever since. <\/p>\n

A variation on this idea could provide an interesting alternative for funding USF. That is, what if every single device sold<\/strong>, that had the potential to provide a communications<\/strong> function, were assessed<\/strong> a USF fee<\/strong>? Included in this would be any PCs or any device with a microprocessor (e.g. it could look like a toy, but it might upgradeable to an IP phone). To make definitions easier and to prevent arbitrage, it would probably be easier to define any products containing an electronic component as candidates for this fee. <\/p>\n

This may sound ridiculous at first, but, as was pointed out to me by Kurt Scherf, Vice President of Research at Parks Associates<\/strong>, the European Union apparently has a blank media fee for CDs and DVDs to compensate artists hurt by illegal downloads. These fees have even extended to the recording equipment as well. <\/p>\n

According to Jeff Joseph<\/strong> of the Consumer Electronics Association<\/strong>, the 2004 revenue for sales from manufacturers to dealers<\/strong> is estimated to be $101 Billion dollars. Add to that figure, revenues from business to business applications and from other industries that incorporate electronics in their products (how about the automobile industry) and the $5.5 Billion USF requirement<\/strong> becomes a very small percentage<\/strong> of the overall sales. <\/p>\n

There are many questions about this approach, such as<\/p>\n