August 2010

One more element has been added to the full-court governmental press aimed at extending broadband to as many people as possible: a bill recently introduced in the House would reform the 13-year-old, multi-billion dollar Universal Service Fund (USF).

The proposal would (among other things) explicitly declare high-speed broadband to be a "universal service" and, therefore, eligible for subsidization from the USF -- thus freeing up boatloads of big bucks for broadband build-out in the boondocks. Dubbed the "Universal Service Reform Act of 2010", the bill is a bipartisan effort sponsored by Reps. Rick Boucher (D-VA) and Lee Terry (R-NE). The Boucher-Terry bill focuses primarily on the USF program for delivering telecom services to "high cost" areas. The existing patchwork of USF "high cost" programs is in many ways irrational, overly complex, and inefficient. For example, eligibility for certain types of support is based on company size or regulatory classification rather than on the costs of serving the area. Furthermore, the USF now supports carriers generally on the basis of their actual costs of providing service, whether or not they or someone else could have done it for less. Although many aspects of USF are ripe for reform, its most egregious shortcoming, in the eyes of many, is clearly its failure keep up with technology - i.e., to fund broadband. (The current "high cost" program supports only voice service.)

Significantly, in this post-Comcast regulatory environment, the Boucher-Terry bill would address that conundrum by giving the FCC express authority to direct USF funds to broadband services. Would consumers have to pay more for the proposed changes? The bill mandates that any reforms will not "unreasonably" increase the contribution burden on consumers (i.e., the line item charge for USF that appears on your phone bill). To make this mandate mathematically possible, the bill would reduce support to certain carriers, expand the contribution base, and perform other feats of legislative legerdemain designed to balance the fund with the greatest of ease. Nonetheless, consumers may not feel entirely reassured by the guarantee that rate hikes will not be "unreasonable."

The US government has made progress on enabling high-speed Internet for just a fraction of the homes and businesses that need it. But the billions for broadband in last year's stimulus law was a down payment on universal broadband. After that money is spent, large swaths of Texas will remain unserved by broadband providers. Telecom regulators say the answer rests on reforming a complex and politically entrenched system of local phone subsidies that support telephone service providers, including Dallas-based AT&T. In the meantime, residents and business leaders in rural and thinly populated parts of Texas say they've lost potential employers, including call centers, and educational opportunities without broadband access.

Sens Mark Pryor (D-AR) and Jay Rockefeller IV (D-WV) introduced legislation to require businesses and nonprofit organizations that store consumers' personal information to put in place strong security features to safeguard sensitive data, alert consumers when this data has been breached, and provide affected individuals with the tools they need to protect their credit and finances.

Currently, there is no single federal standard for guarding many types of consumer information. The Data Security and Breach Notification Act of 2010 would require entities that own or possess data containing personal information to establish reasonable security policies and procedures to protect that data. If a security breach occurs, entities would have to notify each individual whose information was acquired or accessed as a result of the breach within 60 days. Affected consumers would be entitled to receive consumer credit reports or credit monitoring services for two years, as well as instructions on how to request these services.

Two consumer-related technology topics dominated among Twitter users last week-privacy on the social networking site Facebook and user rights with Apple's popular iPhone device. The attention speaks to the social media's role as a kind of consumer watchdog for the online community, though in this instance some felt the significance of the Facebook event had been overplayed. For the week of July 26-30, fully 22% of the news links on Twitter were about the publication of millions of Facebook users' personal information, according to the New Media Index produced by the Pew Research Center's Project for Excellence in Journalism.