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Don't raid telecom fund to pay down deficit, groups urge negotiators

Some of the most influential voices in Congress on telecom matters said on Monday that they would oppose any move by budget negotiators to raid a major telecom fund as a way to pay down the deficit.

Reps. Joe Barton, R-Texas, and Lee Terry, R-Neb., two longtime proponents of reforming the $8 billion Universal Service Fund or USF, came out against a proposal from House Republicans to tap the fund in a debt deal.

"You can't rob Peter to pay Paul. The burden of paying for USF is generally passed from carriers to customers and while I think the fund needs to be reduced, I am against using the money collected for anything other than its intended purpose," Barton said by e-mail.

The telecom fund pays for phone service in low-income and rural households, and the idea for using it to pay down the deficit came to light last week when House Majority Leader Eric Cantor, R-Va., circulated a slide show that listed deficit-reduction measures discussed with Vice President Joe Biden.

The presentation said the Universal Service Fund was one place to find money, saying Congress could collect $20 to $25 billion from this fund and through the auction of airwaves. U.S. landline telephone customers pay for the USF on their monthly phone bills.

The possibility has the rural phone companies, which depend on the subsidy, calling lawmakers in a frenzy because they fear they will lose funding, according to congressional aides.

"There could be pretty dire consequences," Tom Wacker, vice president of government affairs at the National Telecommunications Cooperative Association, said in a telephone interview. Rural phone industry advocates argue that diverting the fund could prompt lawsuits, and could even cost rural phone customers their service if phone companies cannot pay their bills.

The major consequence in Washington, according to companies who oppose diverting the fund, is that major efforts to reform the USF through a lengthy process underway at the Federal Communications Commission could be thrown off course.

The FCC is in the process of converting the fund to subsidize broadband rather than traditional phone service, and was hoping to unveil a major proposal as soon as this fall.

Congressional aides said the FCC is quietly working the Hill to discourage any effort to tap USF in a debt agreement.

U.S. Telecom, a phone company group, told tax-conscious lawmakers in a letter last week that tapping the fund would amount to creating a new tax, since the money is paid by consumers through a contribution line on their phone bills.

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