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 STATEMENT  OF  CHAIRMAN  KEVIN  J.  MARTIN 
 Re:  Universal  Service  Contribution  Methodology  (WC  Docket  No.  06-  122);  Federal-State  Joint  Board  on  Universal  Service  (CC  Docket  No.  96-  45);  1998  Biennial 
 Regulatory  Review  –Streamlined  Contributor  Reporting  Requirements  Associated  with  Administration  of  Telecommunications  Relay  Service,  North  American  Numbering  Plan, 
 Local  Number  Portability,  and  Universal  Service  Support  Mechanisms  (CC  Docket  No.  98-  171);  Telecommunications  Services  for  Individuals  with  Hearing  and  Speech 
 Disabilities,  and  the  Americans  with  Disabilities  Act  of  1990  (CC  Docket  No.  90-  571);  Administration  of  the  North  American  Numbering  Plan  and  North  American 
 Numbering  Plan  Cost  Recovery  Contribution  Factor  and  Fund  Size  (CC  Docket  No.  92-  237;  NSD  File  No.  L-  00-  72);  Number  Resource  Optimization  (CC  Docket  No.  99-  200); 
 Telephone  Number  Portability  (CC  Docket  No.  95-  116);  Truth-  in-  Billing  and  Billing  Format  (CC  Docket  No.  98-  170);  IP-  Enabled  Services  (WC  Docket  No.  04-  36) 


 Maintaining  the  stability  of  the  universal  service  contribution  system  is  one  of  the  Commission’s  most  important  responsibilities.  We  take  an  interim  step  today  to  ensure 
 the  stability  of  the  fund  by  raising  the  wireless  safe  harbor  and  broadening  the  contribution  base  to  include  interconnected  VoIP  providers.  We  take  these  actions 
 because  we  recognize  the  changing  telecommunications  marketplace. 
 First,  for  the  first  time  in  nearly  four  years,  we  raise  the  mobile  wireless  safe  harbor  from  28.5  to  37.1%.  We  find  that,  given  the  tremendous  growth  of  wireless 
 communications,  the  current  safe  harbor  no  longer  accurately  reflects  the  extent  to  which  wireless  consumers  utilize  their  wireless  phones  for  interstate  calls.  This  is  true 
 particularly  in  light  of  the  increased  substitution  of  wireless  for  traditional  wireline  service.  Of  course,  wireless  providers  will  continue  to  have  the  option  to  contribute  to 
 the  fund  based  on  traffic  studies  that  serve  as  a  proxy  for  their  actual  interstate  telecommunications  service  revenues  rather  than  contribute  based  on  the  safe  harbor. 


 Second,  we  require  interconnected  VoIP  providers  to  contribute  to  the  fund.  Like  wireless  services,  consumers  are  increasingly  using  interconnected  VoIP  services  as  a 
 substitute  for  traditional  wireline  service.  And,  many  of  these  VoIP  providers  claim  that  their  services  are  “inherently  interstate.”  Thus,  we  could  require  these  providers  to  pay 
 based  on  100%  percent  of  their  revenues.  Instead,  we  only  require  them  to  contribute  based  on  a  safe  harbor  of  64.9%  -  the  percentage  of  interstate  revenues  reported  by 
 wireline  toll  providers.  Similar  to  the  options  available  to  wireless  providers,  interconnected  VoIP  providers  may  choose  instead  to  contribute  based  on  their  actual 
 interstate  revenues  or  use  a  traffic  study  as  proxy  for  these  revenues. 
 As  the  item  recognizes,  by  requiring  interconnected  VoIP  providers  to  contribute  to  the  fund,  the  Commission  is  furthering  the  principle  of  competitive  neutrality.  This 
 principle  of  competitive  neutrality  has  guided  the  Commission’s  universal  service  policies  over  the  past  decade.  It  requires  us  to  ensure  that  our  universal  service  rules  do 
 not  unfairly  favor  nor  disfavor  one  technology  over  another,  or  unfairly  advantage  or 
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 disadvantage  one  provider  over  another.  Like  public  safety  goals,  universal  service  obligations  transcend  new  technologies  and  cannot  be  compromised. 
 The  preservation  and  advancement  of  universal  service  depend  on  the  Commission’s  ability  to  respond  effectively  to  the  ever-  evolving  telecommunications 
 marketplace.  Today’s  order  recognizes  the  increasing  use  of  wireless  and  VoIP  services  by  consumers  and  adjusts  the  Commission  universal  services  rules  accordingly.  Thus, 
 the  actions  we  take  today  ensure  that  the  contribution  base  reflects  the  current  market  realities.  And,  at  the  same  time,  our  actions  ensure  that  universal  service  contributions 
 remain  equitable  and  nondiscriminatory. 
 Although  today’s  item  should  ensure  the  stability  and  sufficiency  of  the  universal  service  support  system,  it  is  just  an  interim  step.  I  still  believe  that  this  system  needs 
 fundamental  reform,  and  I  remain  committed  to  adopting  and  implementing  a  numbers-based  contribution  system.  Accordingly,  our  work  in  this  area  is  far  from  complete.  I 
 look  forward  to  working  with  my  colleagues  to  preserve  the  values  of  universal  service. 
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