The Universal Service Fund, a $4.5 billion annual pool of money that is intended to ensure nationwide phone service in high-cost areas and also funds the e-Rate, is outdated and promotes inefficiency, U.S. phone companies told federal lawmakers on March 12 — but the companies largely disagreed over how to fix it, Reuters reports. In a hearing before the House Commerce Committee’s subcommittee on telecommunications, AT&T and Verizon called for competitive bidding to set fund awards. Some also want its annual total capped. Rural carriers, though, said funding should stay based on actual costs, and they said a cap would discourage investment and jeopardize coverage in hard-to-serve areas. Most agree the fund’s payment system is broken and that it subsidizes too many private carriers that do not need it. Many also agree it should be used to spur expansion of high-speed internet access. "The problem is not that we are spending too little money on universal service. The problem is that we are not spending it on the right things," Verizon Vice President Thomas Tauke said. Rep. Rick Boucher, the Virginia Democrat who chairs the subcommittee, suggested mandating that fund recipients offer broadband at a minimum speed. But some Republicans called for abolition of the program entirely, arguing that the private sector is expanding fast enough to cover everyone eventually…

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