NTCA-The Rural Broadband Association’s chief executive officer has urged the FCC to increase funding for the Universal Service Fund subsidy for small carriers bringing voice and broadband to rural customers. The fund has been underfunded since it launched in 2011, when the Commission first set a $2 billion annual target for telco USF support, according to CEO Shirley Bloomfield.
That’s when it wedged “replacement” cost recovery for inter-carrier compensation cuts into that budget—even though AT&T and Verizon had voluntarily agreed at the time to forgo several hundred million dollars of their own USF gains per year to help supplement that budget,” states the executive in a blog. That meant small carriers have always faced shortfalls in the support they need to deploy rural broadband.
Earlier this year the FCC adopted “promising” reforms to the existing high-cost USF programs. These changes included an explicit “non-model” support mechanism for standalone broadband services provided to rural consumers, along with an option for carriers who thought “model” support would work better for them to receive such support, according to Bloomfield.
The FCC also indicated it would include up to $150 million per year in additional resources on “the model side” to facilitate that option. The sum of those numbers — just under $260 million — proves the USF fund for rural carriers is “woefully” underfunded, to the tune of by more than $250 million per year; that’s in contrast to other USF programs that have seen annual increases of $1.5 billion (E-Rate) and $750 million (Lifeline) in the past few years, states the telco association executive in a blog.
“Just to be absolutely clear, we aren’t saying that the increases in other programs like E-Rate and Lifeline funding were unnecessary or unwarranted; Non-model carriers could be denied $100 million in 2017 cost recovery, which will make it harder to repay existing loans, access capital for new investments and charge consumers reasonable rates for broadband,” says Bloomfield. “Meanwhile, model carriers cannot hope to deliver on the full promise of the model if the model is underfunded to such a large degree.”
“No telco – model or non-model – should be left behind, because in the end they all serve consumers in the rural areas that other carriers long ago left behind, and their networks are essential to make education, low-income, and even mobility goals a success too,” says Bloomfield. NTCA is urging the FCC to provide sufficient funding to cover both the severe budget shortfall on the non-model side (especially the early years of implementing these reforms) and to satisfy the demand for model-based support needed over 10 years to enable the expansion of broadband.
November 11, 2016
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