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 STATEMENT  OF  COMMISSIONER  KEVIN  J  .  MARTIN,  APPROVING  IN  PART  AND 
 DISSENTING  IN  PART 


 Re:  Schools  and  Libraries  Universal  Service  Support  Mechanism  -  -  CC  Docket  No.  02-  6 


 At  the  outset,  I  want  to  reaffirm  my  support  for  the  universal  service  program  and  the  critical  function  it  serves  to  ensure  access  for  consumers  in  rural  and  high  cost  areas, 
 and  promote  access  to  advanced  services  for  schools,  libraries,  and  health  care  service  providers  in  rural  areas. 


 I  am  pleased  that  the  Commission  has  clarified  that  effective  no  later  than  second  quarter  2003  any  unused  funds  from  the  schools  and  libraries  support  mechanism  in  any 
 given  year  will  be  carried  forward  for  disbursement  in  subsequent  funding  years.  The  schools  and  libraries  program  has  been  instrumental  in  facilitating  access  to  advanced 
 services.  Today’s  action  will  help  us  ensure  that  schools  and  libraries  will  be  able  to  use  the  funding  available  under  the  existing  $2.25  billion  annual  cap. 


 I  am  also  pleased  that  the  Commission  is  moving  forward  today  to  take  action  to  stabilize  the  universal  service  contribution  factor  for  consumers.  I  agree  with  the 
 majority’s  decision  to  blunt  the  impact  of  spikes  in  the  universal  service  contribution  factor.  I  have  concerns,  however,  regarding  the  methodology  used  to  achieve  this  result. 
 I  would  have  taken  a  different  path  to  achieve  relief  for  consumers  while  providing  greater  market  certainty  and  ensuring  that  we  achieve  our  mutual  goal  of  protecting  the 
 continuing  health  and  sustainability  of  the  universal  service  fund. 
 Some  of  the  systemic  problems  of  our  universal  service  contribution  methodology  are  not  new.  Back  in  April  2001,  the  Commission  outlined  these  issues  and  sought 
 comment  on  various  potential  solutions.  For  example,  the  Commission  acknowledged  the  inequities  in  the  universal  service  contribution  system  of  declining  revenues  for  certain 
 wireline  interexchange  carriers,  as  well  as  the  potential  impact  that  the  growth  in  the  wireless  telecommunications  sector  may  be  having  on  the  fund. 


 At  that  time,  the  Commission  adopted  a  Notice  of  Proposed  Rulemaking  that  acknowledged  the  inequities  of  the  current  system  and  sought  comment  on  specific 
 proposals  to  address  comprehensive  reform  of  the  universal  service  contribution  system.  Eight  months  later,  with  no  permanent  relief  in  sight,  AT&  T  presented  this  Commission 
 with  a  request  to  help  level  the  playing  field  on  contributions  to  the  universal  service  fund  made  by  its  over  50  million  long  distance  customers.  For  example,  AT&  T  customers 
 now  face  a  monthly  federal  universal  service  fund  surcharge  that  stands  at  over  11%,  while  customers  of  new  entrant  long-  distance  providers  pay  at  or  below  the  FCC 
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 contribution  rate  set  within  the  7%  range.  I  supported  taking  action  on  their  petition  at  that  time  and  today.  1 
 I  support  the  Commission’s  efforts  to  address  the  long-  term  issues  created  by  a  converging  and  competitive  marketplace.  I  look  forward  to  working  with  my  colleagues 
 to  establish  an  equitable  and  nondiscriminatory  contribution  system  that  provides  for  specific,  predictable  and  sufficient  funding  to  preserve  and  advance  universal  service. 


 At  its  heart,  today’s  decision  takes  unused  money  from  the  schools  and  libraries  program  to  stem  the  growth  of  the  contribution  factor  while  the  Commission  grapples 
 with  long  term  solutions. 
 I  would  have  preferred  to  put  in  place  medium  term  remedies  to  address  some  of  these  contribution  methodology  issues  (e.  g.,  declining  revenues  and  the  potential  impact 
 that  growth  of  the  wireless  telecommunications  sector  has  on  the  fund).  While  we  continue  to  address  the  long  term  issues,  I  believe  we  should  address  the  various 
 inequities  that  require  certain  service  providers  and  their  customers  to  bear  a  disproportionate  share  of  funding  the  universal  service  system.  Especially  since  demand 
 for  the  school  and  libraries  program  has  always  exceeded  the  cap,  I  believe  we  should  have  taken  these  steps  first  before  taking  any  unused  monies. 


 I  believe  it  is  incumbent  upon  us  to  have  taken  steps  immediately  available  that  could  both  minimize  the  impact  of  any  increase  on  consumers  and  address  potential 
 inequities  in  our  current  system  prior  to  taking  some  of  today’s  actions. 
 Accordingly,  I  approve  in  part  and  dissent  in  part  from  the  order. 


 1  See  Separate  Statement  of  Commissioner  Kevin  J.  Martin,  Federal-  State  Joint  Board  on  Universal 
 Service:  CC  Docket  No.  96-  45  (rel.  June  13,  2002). 
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