The Universal Service Fund, money collected by the federal government to subsidize rural telephone service, needs to be revised to reflect the increasing use of electronic communications. Capping payments to wireless carriers for a year while the Federal Communications Commission looks for solutions to a problem it has been unable to solve for more than a decade is not the answer. Instead, federal regulators – with a push from Congress if necessary – must bring USF collections and distributions in line with current communications uses and needs without slowing their growth in rural areas.

The Universal Service Charge, usually about 10 percent of local, interstate and international line charges, is used to raise money to subsidize high-cost rural phone companies, Internet and telecom connectivity for schools and libraries, phone service for low-income customers, and telecom costs of health care providers that use telemedicine.

In 2000, the fund paid $2.5 billion, all to local exchange or landline carriers. In 2006, the fund paid out more than $4 billion, with local exchange carriers getting about $3 billion and $1 billion going to eligible telecommunications carriers, which are wireless carriers. The FCC estimates that payments to wireless carriers will grow to $2.5 billion by 2009.

However, wireless companies have contributed about $2.5 billion annually to the fund and have received a total of about $2 billion in payouts since 1996, while more than $22 billion has gone to landline carriers.

Late last month, the Federal-State Joint Board on Universal Service recommended a one-year cap on USF payments to wireless, but not landline, carriers while the FCC looked for solutions. The FCC is expected to decide whether to adopt the recommendations in coming weeks.

Americans have substantially increased their spending on communications in recent years with many families paying for a landline phone, several cellular phones and Internet service. USF collections have not kept pace, so the fund does not have the resources it needs to ensure these forms of communication are universally available.

Maine has two eligible telecommunications carriers, U.S. Cellular and Unicel. Each year, the companies present the Maine Public Utilities Commission with their plans for increasing coverage. If the PUC finds the plans faulty, it can deny certification to participate in the USF program. If other states, 40 of which receive more USF dollars than Maine, need better oversight of how this money is spent, this could offer a good model.

Unicel and U.S. Cellular have used USF funds primarily to build new towers to provide coverage to new areas. They estimate their 2007 pay outs will be about $15 million. If the cap is implemented, they would get about $13 million. The reduction would mean five new towers would not be constructed.

Ensuring USF funds support needed work and looking for ways to include broadband in the fund makes sense. Doing this at the expense of better cell phone service in rural areas does not.