In its open meeting earlier today (Feb. 8, 2011), the FCC adopted a Notice of Proposed Rulemaking (NPRM) to reform the Universal Service Fund (USF) and the Intercarrier Compensation (ICC) system, both of which Chairman Julius Genachowski said are “plagued with waste and inefficiency.” Although the text has not yet been issued, we outline our expectations for the proposal in this advisory. After the NPRM has been issued, we will update our advisory as necessary.

Anticipated USF proposals

On the USF side, the NPRM will call for consolidating several of the separate funds into one fund to support deployment of broadband, moving away from supporting just “plain old telephone service.” The new fund (dubbed the “ConnectAmerica Fund” (CAF) in the National Broadband Plan issued last March) will be targeted first toward geographic areas where there is no broadband service currently, and where there is little prospect for private sector deployment of broadband. (How these geographic areas are defined will be an important issue to watch.) The CAF will be supplemented by a “Mobility Fund” for wireless broadband services, which the Commission called for in an NPRM issued last fall.