FEDERAL COMMUNICATIONS COMMISSION
March 14,2012
..JULIUS GENACHOWSKI
CHAIRMAN
The Honorable Kenny Marchant
U.S. House of Representatives
I 110 Longworth House Office Building
Washington, D.C. 20515
Dear Congressman Marchant:
Thank you for your letter regarding the Commission's proceedings to reform the Universal
Service Fund (USF), and your concern about the legal authority for USF to support broadband
services. I value your input and will ensure that your letter is included in the records of the relevant
proceedings.
More than 15 years after Congress passed the Telecommunications Act of 1996, technology
and the economy have evolved greatly. The entire USF program was in need of modernization and
reform. The reforms in the USFIICC Transformation Order and FNPRM are designed to ensure
that both voice and advanced broadband services are available in all areas ofthe country, and
universal voice service remains a central purpose of the USF program.
The Commission agreed unanimously, and [ am confident that it has the legal authority to
modernize USF for the twenty-first century. I have extracted the paragraphs discussing FCC legal
authority from the Transformation Order and an1 enclosing them for your information. In
particular, the Transformation Order notes that Section 254 ofthe Communications Act grants the
Commission the authority to support not only voice telephony service but also the facilities over
which it is offered. With consumers increasingly receiving voice telephony services from
interconnected Voice of Internet Protocol (VoIP) providers over broadband networks, the
Commission concluded that its authority to promote universal service in this context does not
depend on whether interconnected VoIP services are telecommunications services or information
services under the Act.
The job to reform USF is by no means completed. The Commission also has been taking
significant steps to reform and strengthen Lifeline and LinkUp against waste, fraud, and abuse. It
released a Report and Order and Further Notice ofProposed Rulemaking on February 6, 2012,
comprehensively reforming the Lifeline program.
I appreciate your interest in this very important matter. Please let me know if I can be of
any further assistance.
elY,~
Julius Genachowski
Enclosure
445 12TH STREET S,W. WASHINGTON, DC 20554 •202~418~IOOO
Extract from Connect America Fund; A National Broadband Plan for Our Future; Establishing
Just and reasonable Ratesfor Local Exchange Carriers; High-Cost Universal Service Support;
Developing a Unified lntercarrier Compensation Regime; Federal-State Joint Board on
Universal Service; Lifeline and Link-Up; WC Docket Nos. 10-90,07-135,05-337,03-109, CC
Docket Nos. 01-92, 96-45, ON Docket No. 09-51, Report and Order and Further Notice of
Proposed Rulemaking, FCC 11-161, reI. Nov. 18,2011
V. LEGAL AUTHORITY
60. In this section, we address our statutory authority to implement Congress's goal of
promoting ubiquitous deployment of, and consumer access to, both traditional voice calling capabilities
and modern broadband services over fixed and mobile networks. As explained below, Congress has
authorized the Commission to support universal service in the broadband age. Section 254 grants the
Commission clear authority to support telecommunications services and to condition the receipt of
universal service support on the deployment of broadband networks, both fixed and mobile, to consumers.
Section 706 provides the Commission with independent authority to support broadband networks in order
to "accelerate the deployment of broadband capabilities" to all Americans. Recently, moreover, Congress
has reaffirmed its strong interest in ubiquitous deployment of high speed broadband communications
networks: the 2008 Farm Bill directing the Chairman to submit to Congress "a comprehensive rural
broadband strategy," including recommendations for the rapid buildout of broadband in rural areas and
for how federal resources can "best ... overcome obstacles that impede broadband deployment,,;S6 the
Broadband Data Improvement Act, to improve data collection and "promote the deployment of affordable
broadband services to all parts of the Nation";S? and the Recovery Act, which required the Commission to
develop the National Broadband Plan to ensure that every American has "access to broadband capability
and ... establish benchmarks for meeting that goal."S8 By exercising our statutory authority consistent
with the thrust of these provisions, we ensure that the national policy of promoting broadband deployment
and ubiquitous access to voice telephony services is fully realized.
61. Seclion 254. The principle that all Americans should have access to communications
services has been at the core of the Commission's mandate since its founding. Congress created this
Commission in 1934 forthe purpose of making "available ... to all the people ofthe United States ... a
rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate
facilities at reasonable charges."s9 In the 1996 Act, Congress built upon that longstanding principle by
enacting section 254. Section 254 sets forth six principles upon which we must "base policies for the
preservation and advancement of universal service.'o6O Among these principles are that "[q]uality services
should be available at just, reasonable, and affordable rates," that "[a]ccess to advanced
telecommunications and information services should be provided in all regions of the Nation," and that
S6 Food, Conservation, and Energy Act of2008, Pub. L. No. 110-246, § 6112, 122 Stat. 923. 1966 (2008)(2008
Farm Bill). Acting Chairman Copps transmitted the report to Congress on May 22, 2009. See Rural Broadband
Report Published in the FCC Record, GN Docket No. 09-29, Public Notice, 24 FCC Rcd 12791 (2009).
57 Broadband Data improvement Act, Pub. L. No. 110-385, i22 Stat. 4096 (2008) (codified at 47 U.S.C. § 1301 el
seq.).
S8 See American Recovery and Reinvestment Act of2009, Pub. L. No. 111-5, 123 Stat. I 15 (2009); 47 U.S.C.
§ 1305(k)(2).
S9
47 U.S.C.§ 151.
60
47 U.s.C. § 254(b).
"[c]onsumers in all regions ofthe Nation ... should have access to telecommunications and
infonllation services, including ... advanced telecommunications and information services, that are
reasonably comparable to those services provided in urban areas" and at reasonably comparable rates.
61
62. Under section 254, we have express statutory authority to support telecommunications
services that we have designated as eligible for universal service support.
62
Section 254(c)( I) ofthe Act
defines "[u]niveral service" as "an evolving level oftelecommunications services that the Commission
shall establish periodically under this section, taking into account advances in telecommunications and
information technologies and services." As discussed more fully below, in this Order, we adopt our
proposal to simplify how we describe the various supported services that the Commission historically has
defined in functional terms (e.g., voice grade access to the PSTN, access to emergency services) into a
single supported service designated as "voice telephony service.''''' To the extent carriers offer traditional
voice telephony services as telecommunications services over traditional circuit-switched networks, our
authority to provide support for such services is well established.
63. Increasingly, however, consumers are obtaining voice services not through traditional
means but instead through interconnected VolP providers offering service over broadband networks. As
AT&T notes, "[c]ircuit-switched networks deployed primarily for voice service are rapidly yielding to
packet-switched networks," which offer voice as well as other types ofservices.'''' The data bear this out.
As we observed in the Notice, "[f]rom 2008 to 2009, interconnected VolP subscriptions increased by 22
percent, while switched access lines decreased by 10 percent.''''' Interconnected VolP services, among
other things, allow customers to make real-time voice calls to, and receive calls from, the PSTN, and
increasingly appear to be viewed by consumers as substitutes for traditional voice lelephone services.
66
Our authority to promote universal service in this context does not depend on whether interconnected
VolP services are telecommunications services or information services under the Communications Act
67
61 47 U.S.C. § 254(b)(I)-(3).
62
47 U.S.C. § 254(c).
63 USFIICC Transformation NPRM, 26 FCC Red at 4590, para. 95; see infra Section VIA
64 AT&T Apr. 11,2011 Comments at 10.
6' USFIICC Transformation NPRM, 26 FCC Rcd al 4560, para. 8 (citing Industry Analysis and Technology
Division, Wireline Competition Bureau, Local Telephone Competition Report: Statlls as ofDecember 2009, at 6
(Jan. 2011) (Jan. 2011 Local Competition Report». From 2009 to 2010, interconnected VolP subscriptions
increased by 22 percent (fTom 26 million to 32 million) and retail switched access lines decreased by 8 percent (from
127 million to 117 million). Industry Analysis and Technology Division, Wireline Compel ilion Bureau, Local
Telephone Competilion Report: SWillS as ofDecember 31,2010, at2 (Oct. 2011) (Oct. 2011 Local Competition
Report).
66 USFIICC Transformation NPRM, 26 FCC Red a14747, para. 612; see also IP-Enabled Services, 20 FCC Rcd
10245,10256, para. 23 (2005) ("consumers expect that VolP services that are interconnected with the PSTN will
funclion in some ways like a 'regular lelephone' service."), pet. for review denied, Nllvio Corp. v. FCC, 473 F.3d
302 (D.C. Cir. 2006).
67 Ifinterconnecled VolP services are lelecommunications services, our authority under section 25410 define
universal service after "taking into account advances in telecommunications and information technologies and
services" enables us 10 include interconnecled VolP services as a type ofvoice telephony service entitled to federal
universal service support. And, as explained below, ifinterconnected VolP services are information services, we
have authority to support the deploymenl ofbroadband networks used to provide such services.
2
64. Section 254 grants the Commission the authority to support not only voice telephony
service but also the facilities over which it is offered. Section 254(e) makes clear that "[a] carrier that
receives such [universal service] support shall use that support only for the provision, maintenance, and
upgrading of/aci/ities andservices for which the support is intended.'''' By referring to "facilities" and
"services" as distinct items for which federal universal service funds may be used, we believe Congress
granted the Commission the flexibility not only to designate the types of telecommunications services for
which support would be provided, but also to encourage the deployment ofthe types of facilities that will
best achieve the principles set forth in section 254(b) and any other universal service principle that the
Commission may adopt under section 254(b)(7).69 For instance, under our longstanding "no barriers"
policy, we allow carriers receiving high-cost support "to invest in infrastructure capable of providing
access to advanced services" as well as supported voice services.'· That policy, we explained, furthers
the policy Congress set forth in section 254(b) of"ensuring access to advanced telecommunications and
information services throughout the nation."" While this policy was enunciated in an Order adopting rule
changes for rural incumbent carriers, by its terms it is not limited to such carriers. The "no-barriers"
policy has applied, and will continue to apply, to all ETCs, and we codify it in our rules today. Section
254(e) thu contemplates that carriers may receive federal support to enable the deployment of broadband
facilities used to provide supported telecommunications services as well as other services."
65. We further conclude that our authority under section 254 allows us to go beyond the "no
barriers" policy and require carriers receiving federal universal service support to invest in modern
68 47 U.S.C. § 254(e) (emphasis added).
69 In establishing the rules governing the designation and responsibilities of ETCs pursuant to section 214(e), we
have long defined the term "facilities" to mean H any physical components ofthe telecommunications network that
are used in the transmission or routing of the services that are designated for support." 47 C.F.R. § 54.201(e); see
also Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 12 FCC Rcd 8776,
8813, para. 67 (1997) (Universal Service First Report and Order) (subsequent history omitted).
,. See Federal-State Joint Board on Universal Service, Mul/i-Association Group (MAG) Plan for Regula/ion of
Interstate Services ofNon-Price Cap Incumbent Local Exchange Carriers and Interexchange Carriers, CC Docket
No. 96-45, CC Docket No. 00-256, Fourteenth Report and Order, Twenty-Second Order on Reconsideration, and
Further Notice of Proposed Rulemaking in CC Docket No. 96-45, and Report and Order in CC Docket No. 00-256,
16 FCC Rcd 11244, 11322, para. 200 (200 I) (Rural Task Force Order) ("[U]se ofsupport to invest in infrastructure
capable ofproviding access to advanced services does not violate section 254(e), which mandates that support be
used uonly for the provision, maintenance, and upgrading of facilities and services for which the support is
intended." The public switched telephone network is not a single-use network. Modem network infrastructure can
provide access not only to voice services, but also to data, graphics, video, and other services.") (footnote reference
omined)
" 2003 Definition ofUniversal Service Order, 18 FCC Rcd at 15095-96, para. 13.
" We also note that the Commission has historically concluded that "the proper measure ofcost for determining the
level of universal service support is the forward-looking economic cost ofconstructing and operating the network
facilities and functions used to provide the supported services," First Report and Order, 12 FCC Rcd at 8899, para.
224, and that the record contains evidence that the forward-looking cost ofdeploying voice- and broadband-capable
networks today is generally not significantly higher than deploying voice-only networks, see, e.g., Letter from
Donna Epps, Verizon, to Marlene H. Dortch, Secretary, FCC, GN Docket No. 09-51 at 2-3 (filed Feb. 12,20 I0)
("Fiber networks are ... more efficient, and more reliable than the legacy copper network.... [T]hey are cheaper to
maintain and have fewer potential points offailure than copper lines."). Indeed, although we are updating the high 
cost fund to support modem voice and broadband networks, we are not increasing the overall size ofthe fund to do
so.
3
broadband-capable networks
H
We see nothing in section 254 that requires us simply to provide federal
funds to carrier and hope that they will use such support to deploy broadband facilities. To the contrary,
we have a "mandatory duty" to adopt univer al service policies that advance the principles outlined in
section 254(b), and we have the authority to "create some inducement" to ensure that those principles are
achieved." Congress made clear in section 254 that the deployment of, and access to, information
services - including "advanced" information services - are important components ofa robust and
successful federal universal service program." Furthermore, we are adopting today the recommendation
ofthe Federal-State Joint Board on Universal Service to establish a new universal service principle
pursuant to section 254(bX7) that universal service support should be directed where possible to networks
that provide advanced services, as well as voice services.,,7. Intoday's communications environment,
achievement of these principles requires, at a minimum, that carriers receiving univer al service support
invest in and deploy networks capable of providing consumers with access to modem broadband
capabilities, as well as voice telephony services. Accordingly, as explained in greater detail below, we
will exercise our authority under section 254 to require that carriers receiving support - both CAF
support, including Mobility Fund support," and support under our existing high-cost support mechanisms
- offer broadband capabilities to consumers." We conclude that this approach is sufficient to ensure
access to voice and broadband services and, therefore, we do not, at this time, add broadband to the list of
supported services, as some have urged'·
66. Sec/ion 706.
30
We also have independent authority under section 706 ofthe
Telecommunications Act of 1996 to fund the deployment of broadband networks. In section 706,
Congress recognized the importance of ubiquitous broadband deployment to Americans' civic, cultural,
and economic lives and, thus, instructed the Commission to "encourage the deployment on a reasonable
and timely basis of advanced telecommunications capability to all Americans.,,81 Of particular
7J USFI/CC Transformation NPRM, 26 FCC Rcd at 4581, para. 71.
"Qwest Corp. v. FCC, 258 F.3d 1191, 1200, 1204 (IOlh Cir. 2001) (Qwest I).
"47 U.S.c. §§ 254(b)(2), (b)(3).
7. See infra Section III.
" Recipients of Mobility Fund Phase One support, however, are not required to provide broadband as discussed
below. See infra Section VII.E.. I.b.vi.
78 Section 254(e) states that "support should be explicit and sufficienl to achieve the purposes" ofsection 254. As
discussed below, our CAF rules satisfy this requirement. See generally infra, Section VII.
7. See. e.g., Communications Workers ofAmerica USFI/CC Transformation NPRM CommenlS at 5-6; National
Association ofTelecommunications Officers and Advisors USFI/CC Transformation NPRM Comments al 3; State
Members USFI/CC Transformation NPRM Comments at2; Vonage USFI/CC Transformation NPRM Comments at
6-8.
30 Commissioner McDowell does not support Ihe view that section 706 provides the Commission with authority 10
support broadband through universal service funds. Instead, Commissioner McDowell's view is that section 706 is
very narrow in scope and is therefore unnecessary in reaching this conclusion.
81 47 U.S.c. § 1302(a). This direct mandate is consistent with numerous other statutory provisions governing the
Commission. See, e.g., 47 U.S.C. §§ 151 (instituting FCC for, among other objectives, "the purpose ofregulating
interstate and foreign communicalion by wire and radio so as to make available, so far as possible, to all the people
ofthe United States . .. a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with
adequate facilities al reasonable charges"), 157 ("It shall be the policy ofthe United Slates to encourage the
provision of new technologies and services to the public."), 230(b)(I) ("It is the policy oflhe United States ... to
promote the continued development ofthe Internet and other interactive computer services and other interactive
4
importance, Congress adopted a definition of"advanced telecommunications capability" that is not
confined to a particular technology or regulatory classification. Rather," 'advanced telecommunication
capability' is defined, without regard to any transmission media or technology, as high-speed, switched,
broadband telecommunications capability that enables users to originate and receive high-quality voice,
data, graphics, and video communications using any technology.'" Section 706 further requires the
Commission to "determine whether advanced telecommunications capability is being deployed to all
Americans in a reasonable and timely fashion" and, ifthe Commission concludes that it is not, to "take
immediate action to accelerate deployment ofsuch capability by removing barriers to infrastructure
investment and by promoting competition in the telecommunications market.,,s3 The Commission has
found that broadband deployment to all Americans has not been reasonable and timely84 and observed in
its most recent broadband deployment report that "too ma'J, Americans remain unable to fully participate
in our economy and society because they lack broadband.' , This finding triggers our duty under section
706(b) to "remov[e] barriers to infrastructure investment" and "promot[e] competition in the
telecommunications market" in order to accelerate broadband deployment throughout the Nation.
67. Providing support for broadband networks helps achieve section 706(b)'s objectives.
First, the Commission has recognized that one ofthe most significant barriers to investment in broadband
infrastructure is the lack ofa "business case for operating a broadband network" in high-cost areas "[i]n
the absence of programs that provide additional support.'086 Extending federal support to carriers
deploying broadband networks in high-cost areas will thus eliminate a significant barrier to infrastructure
investment and accelerate broadband deployment to unserved and underserved areas ofthe Nation. The
deployment of broadband infrastructure to all Americans will in turn make services such as
interconnected VolP service accessible to more Americans.
68. Second, supporting broadband networks helps"promot~e]competition in the
telecommunications market," particularly with respect to voice services. 7 As we have long recognized,
media"), 257 (mandating ongoing review to identify and eliminate "market entry barriers for entrepreneurs and other
small businesses in the provision and ownership oftelecommunications services and information services, or in the
provision of parts or services to providers oftelecommunications services and information services," with the goal
ofpromoting "the policies and purposes ofthis [Communications] Act favoring a diversity of media voices,
vigorous economic competition, technological advancement, and promotion ofthe public interest, convenience, and
necessity"); see also Recovery Act § 6001(k)(I) (requiring the Commission to develop a National Broadband Plan
with the goal of promoting, among other things. "private sector investment, entrepreneurial activity, job creation and
economic growth").
82 47 U.S.C. § 1302(d)( I); see also National Broadband Plan/or our Future, Notice of Inquiry, 24 FCC Rcd 4342,
4309, App., para. 13 (2009) ("advanced telecommunications capability" includes broadband 111lernet access);
tnquiry Concerning the Deployment 0/Advanced Telecomms. Capability to All Americans in a Reasonable and
Timely Fashion, CC Docket No. 98-146, Report, 14 FCC Rcd 2398, 2400, para. I (1999) (section 706 addresses
"the deployme11l ofbroadband capability"), 2406, para. 20 (same). The Commission has observed that the phrase
"advanced telecommunications capability" in seclion 706 is similar to the term "advanced telecommunications and
information services" in section 254. See Rural Health Care Support Mechanism, WC Docket No. 02-60, Order, 21
FCC Rcd lilli, 11113 n.9 (2006).
83 47 U.S.C. § 1302(b) (emphasis added).
84 Sixth Broadband Deployment Report, 25 FCC Rcd at 9558, paras. 2-3; Seventh Broadband Deployment Report,
26 FCC Rcd at 8009, para. I.
8l Seventh Broadband Deployment Report, 26 FCC Rcd at 80 II, para. 4.
86
Id. at 8040, para. 66.
'7
47 U.S.c. § 1302(b).
5
"interconnected VolP service 'is increasingly used to replace analog voice service.' ,,88 Thus, we
previously explained that requiring interconnected VolP providers to conlribule to federal universal
service support mechanisms promoted competitive neutrality because it "reduces the possibility that
carriers with universal service obligations will compete directly with providers without such
obligations.''''9 Just as "we do not want contribution obligation to shape decisions regarding the
technology that interconnected VolP providers use to offer voice services to customers or to create
opportunities for regulatory arbitrage,,,90 we do not want to create regulatory distinctions that serve no
universal service purpose or that unduly influence the decisions providers will make with respect to how
best to offer voice services to consumers. The "telecommunications market" - which includes
interconnected VolP and by statutory definition is broader than just telecommunications services
91
- will
be more competitive, and thus will provide greater benefits to consumers, as a result ofour decision to
support broadband networks, regardless of regulatory classification.
69. By exercising our authority under section 706 in this manner, we further Congress's
objective of"acceleratling] deployment" of advanced telecommunications capability "to all
Americans.',92 Under our approach, federal support will not turn on whether interconnected VolP
services or the underlying broadband service falls within traditional regulatory classifications under the
Communications Act. Rather, our approach focuses on accelerating broadband deployment to unserved
and underserved areas, and allows providers to make their own judgments as to how best to structure their
service offerings in order to make such deployment a reality.
70. We disagree with commenters who assert that we lack authority under section 706(b) to
support broadband networks.
93
While 706(a) imposes a general duty on the Commission to encourage
broadband deployment through the use of"price cap regulation, regulatory forbearance, measures that
promote competition in the local telecommunications market, or other regulating methods that remove
barriers to inrrastructure investment," section 706(b) is triggered by a specific finding that broadband
capability is not being "deployed to all Americans in a reasonable and timely fashion." Upon making that
finding (which the Commission has done
94
), section 706(b) requires the Commission to "take immediate
action to accelerate" broadband deployment. Given the statutory structure, we read section 706(b) as
conferring on the Commission the additional authority, beyond what the Commission possesses under
section 706(a) or elsewhere in the Act, to take steps necessary to fulfill Congress's broadband deployment
88 Universal Service COll/ribution Methodalogy, Federal-State Joill/ Board on Universal Service, 1998 Biennial
Regula/Dry Review - Slreamlined COn/ribular Reporting Requirements Associated with Administration of
Telecommunications Relay Service, Telecommunications Services/or Individuals with Hearing and Speech
Disabilities, Number Resource Optimi:ation, Telephone Number Portability, Truth-In-Billing and Billing Farmat,
IP-EnabledServices, WC Docket Nos. 06-122 and 04-36, CC Docket Nos. 96-45, 98-171, 92-237, 99-200, 90-571,
95-11698-170, Report and Order and Notice of Proposed Rulemaking, 21 FCC Red 7518, 7541 (2006) (VoIP USF
Order) (quoting CALEA First Report and Order, 20 FCC Red at 15009-10, para. 42), 21 FCC Red at 7541, para. 44
(quoting CALEA First Report and Order, 20 FCC Red at 15009-10, para. 42).
89
1d
.
90
1
d.
91 Compare 47 U.S.C. § 153(50) (defining "telecommunications") with 47 U.S.C. § 153(53) (defining
"telecommunications service").
92
47 U.S.C. § 1302(b).
93
See, e.g., Cellular South Comments at9; RTCC Comments at 12.
94 See supra para. 64.
6
objectives. Indeed, it is hard to see what additional work section 706(b) does if it is not an independent
source ofstatutory authority:s
71. We also reject the view that providing support for broadband networks under section
706(b) conflicts with section 254, which defines universal service in terms of telecommunications
services:· Information services are not excluded from section 254 because ofany policy judgment made
by Congress. To the contrary, Congress contemplated that the federal universal service program would
promote consumer access to both advanced telecommunications and advanced information services "in
all regions of the Nation.,,97 When Congress enacted the 1996 Act, most consumers accessed the Internet
through dial-up connections over the PSTN,98 and broadband capabilities were provided over tariffed
common carrier facilities." Interconnected VolP services had only a nominal presence in the marketplace
in 1996. It was not until 2002 that the Commission first determined that one form of broadband - cable
modem service - was a single offering of an information service rather than separate offerings of
telecommunications and information services,lOo and only in 2005 did the Commission conclude that
wireline broadband service should be governed by the same regulatory classification.'01 Thus,
marketplace and technological developments and the Commission's determinations that broadband
services may be offered as information services have had the effect of removing such services from the
scope of the explicit reference to "universal service" in section 254(c). Likewise, Congress did not
exclude interconnected VolP services from the federal universal service program; indeed, there is no
reason to believe it specifically anticipated the development and growth of such services in the years
following the enactment of the 1996 Act.
9S The legislative history supports our conclusion that sections 706(a) and (b) are independent sources ofauthority.
The relevant Senate Report explained that the provisions of section 304 (the Senate analogue to section 706) are
"intended to ensure that one ofthe primary objectives ofthe [1996 Act]-to accelerate deployment ofadvanced
telecommunications capability-is achieved," and stressed that these provisions are "a necessary fail-safe" to
guarantee that Congress's objective is reached. S. Rep. No. 104-23, at 5Q.-51 (1995). As we previously explained,
"[ilt would be odd indeed to characterize Section 706(a) as a 'fail-safe' that 'ensures' the Commission's ability to
promote advanced services if it conferred no actual authority." Preserving the Open Internet, 25 FCC Red 17905,
17970 (20 I0). Moreover, section 304(a) ofthe Senate bill would have required the Commission, upon a finding that
broadband deployment is not reasonable and timely, to "take immediate action under this sec/ion," S. 652, § 304(b)
(1995) (emphasis added), which necessarily related back to the Commission's authority conferred by section 304(a)
ofthe bill to promote broadband deployment through "price cap regulation, regulatory forbearance, measures that
promote competition in the local telecommunications market, or other regulating methods that remove barriers to
infrastructure investment." Ultimately, however, Congress did not define the authority conferred by section 706(b)
by reference to section 706(a). Instead, Congress instructed the Commission to go beyond section 706(a) if it found
that broadband was not being deployed in the United States on a reasonable and timely basis and to "take immediate
action" to correct that failure.
9. See Cellular South USFIICC Transformation NPRM Comments at 16-20; RTCC Apr. 18,20 II Comments at 5.
97
47 U.S.c. § 254(b)(2).
98 /997 Universal Service Order, 12 FCC Rcd at 8622-23, para. 83 .
.. See GTE Telephone Operating Cos., 13 FCC Red 22466 (1998).
100 Inquiry Concerning High-Speed Access /0 the Internet Over Cable & Other Facilities, ON Docket No. 00-185,
CS Docket No. 02-52, Declaratory Ruling and Notice of Proposed Rulemaking, 17 FCC Red 4798 (2002), ajJ'd sub
nom. Nat'l Cable & Telecomms. Ass 'n v. Brand X Internet Servs., 545 U.S. 967, 978 (2005).
101 Wireline Broadband Order, 20 FCC Rcd 14853.
7
72. The principles upon which the Commission "shall base policies for the preservation and
advancement of universal service" make clear that supporting networks used to offer services that are or
may be information services for purposes of regulatory classification is consistent with Congress's
overarching policy objectives.
,02
For example, section 254(b)(2)'s principle that "[a]ccess to advanced
telecommunications and information services should be provided in all regions ofthe Nation" dovetails
comfortably with section 706(b)'s policy that "advanced telecommunications capability [be] deployed to
all Americans in a reasonable and timely fashion."I03 Our decision to exercise authority under Section
706 does not undermine section 254's universal service principles, but rather ensures their fulfillment. By
contra t, limiting federal support based on the regulatory classification ofthe services offered over
broadband networks as telecommunications services would exclude from the universal service program
providers who would otherwise be able to deploy broadband infrastructure to consumers. We see no
basis in the statute, the legislative history of the 1996 Act, or the record ofthis proceeding for concluding
that such a constricted outcome would promote the Congressional policy objectives underlying sections
254 and 706.
73. Finally, we note the limited extent to which we are relying on section 706(b) in this
proceeding. Consistent with our longstanding policy of minimizing regulatory distinctions that serve no
universal service purpose, we are not adopting a separate universal service framework under section
706(b). Instead, we are relying on section 706(b) as an alternative basis to section 254 to the extent
necessary to ensure that the federal universal service program covers services and networks that could be
used to offer information services as well as telecommunications services. Carriers seeking federal
support must still comply with the same universal service rules and obligations set forth in sections 254
and 214, including the requirement that such providers be designated as eligible to receive support, either
from state commissions or, ifthe provider is beyond the juri diction of the state commission, from this
Commission.
'o
' In this way, we ensure that our exercise of section 706(b) authority will advance, rather
than detract from, the universal service principles established under section 254 of the Act.
102
47 U.S.C. § 254(b)(2), (3).
103 Section 214(e)(I) requires services supported by the universal service mechanisms to be offered throughout a
carrier's designated service area. This requiremem, coupled with the rules we adopt in this Order, will further
promote the Commission's goal ofbringing broadband capability to "all Americans."
104 See 47 U.S.C. § 214(eXl), (2), (6).
8