UC Irvine

Support through the United States Federal Universal Service Fund for high-cost areas has been principally defined in terms of telephone service. Fund growth due to increases in wireless lines and implicit support for broadband infrastructure has created an untenable situation, and fundamental reform is expected. The cause underlying this growth is convergence between the telephone network, wireless networks, the Internet, and cable networks. This convergence will pose additional serious long term challenges to the Fund. This paper proposes a restructuring of the high-cost funds based on a layered model. Both contributions and distributions are focused on network infrastructure, without distinction between voice and broadband. The proposal uses a new definition of communication services to guarantee technology neutrality, and includes service area reform and cost e±ciency measures. This layered approach repositions the Fund for future converged networks.