Senators argue against reverse auctions for universal service

A bipartisan group of senators urged Federal Communications Commission Chairman Kevin Martin to abandon a plan to use reverse auctions to award universal service fund support to eligible telecom carriers in rural areas.
“Reverse auctions leave too many unanswered questions about stranded investment and the lack of incentive for a carrier to improve and expand their network, let alone maintain their current systems,” stated the lawmakers. “We must not create a race to the bottom. . This would in all likelihood leave Americans living in rural and high-cost areas without adequate, affordable communications services.”
In the letter to Martin, the senators added: “Reverse auctions would ultimately do little more than stymie the innovative communications infrastructure build out that is envisioned by our national universal service policy. Such an untested mechanism is far too risky to impose as we charge communications providers with the responsibility of providing advanced communications services to some of the most rural and expensive-to-serve areas of the country.”
At the same time, the lawmakers — led by Senate Commerce Committee member Byron Dorgan (D-N.D.) — said they backed a separate FCC proposal to eliminate a rule that gives wireless carriers high-cost USF support equal to that given to landline telecom carriers in rural locales.
The FCC’s push for reverse auctions and repeal of the identical support rule — as well as its recent decision to impose an interim cap on high-cost USF subsidies for some eligible carriers — are designed to reign in the escalating cost of the fund as part of a broader reform effort.
Small- and mid-size wireless carriers argue USF changes — proposed and enacted — discriminate against them and violate technological neutrality principles.
As for reverse auctions, telecom carriers are attempting to shape the debate through proposals submitted by cellular association CTIA, Alltel Corp. and the parent company of Verizon Wireless.