Oral arguments in the court case challenging the FCC’s Report and Order (FCC Docket 10-90) reforming the intercarrier compensation system are scheduled for November 19, 2013, at the Denver Circuit Court. There are two major points of contention. First, does the FCC have the right to usurp the individual states rate-making authority? And second, does the Commission have the legal authority to create the Connect America Fund with dollars from the proposed Fund going to broadband providers despite the fact that broadband is not one of the USF mandated services under Section 254 of the 1996 Telecom Act? And while predicting the outcome, is at this point, a fool’s errand, some industry insiders believe hearing the case in Denver – rather than at the D.C. Circuit, which traditionally rules on communication policy – may tilt the deck slightly in favor of the FCC’s position.

The November date pretty much guarantees that they’ll be no decision until well into 2014. And with an appeal to the Supreme Court almost inevitable, it is unlikely they’ll be final legal resolution until 2016 or 2017!

Every once in a while, it pays to dismiss – or at least discount – policy arguments and look at the cold, hard facts. So, while the FCC’s interminable deliberations on Universal Service Fund (USF) reform continue consider this: in just under 10 years, the USF contribution rate has doubled. That’s right, doubled.

In the fourth quarter of 2003, the USF contribution rate was 8.7% – a number that at the time seemed extraordinarily high.  In the fourth quarter of 2012, the USF contribution rate hit 17.4% – a 100% increase from 2003!

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The FCC’s Order in FCC Docket 10-90 starts a phased – and fundamental – reform of the intercarrier compensation system which has been in place since 1982 and which defined how, and how much, telecom carriers paid for the use of each other’s networks.

Here are the key pieces you need to know about the Order: