CCA: Regional, Rural MNOs Need USF Help
Carolina West Wireless’s announcement of a proposed deal to be acquired by Verizon due to financial pressures has created quite a stir in the wireless business. Tim Donovan, President & CEO, Competitive Carriers Association (CCA), wants to remind regulators the announcement shows why policymakers must ensure that competitive carriers serving rural and small markets “have the tools and support necessary to compete, invest, and thrive in the years ahead.”
Donovan tells Inside Towers that Universal Service Fund (USF) contributions help rural carriers cover capital expenses. But more than just constructing a tower, rural carriers often must build access roads, run power lines, and install backhaul. Moreover, the carrier is often the only tower occupant with little opportunity for colocations in those regions. While colocation in other markets allows larger carriers to share occupancy costs, the underlying operating economics remain challenging for smaller MNOs without federal support.
More importantly, he explained that smaller MNOs have not received new USF funding since Mobility Fund Phase I, which was intended as a one-time capital infusion rather than ongoing operational support. Mobility Fund Phase II for ongoing support was never implemented.
“Over two years ago, Carolina West filed a petition with the Commission seeking a waiver from the currently available USF money,” according to Donovan. “Its need was dire.” USF waivers allow additional support rather than waiving carrier obligations.
Moreover, rural carriers need certainty on USF funding, spectrum access, and network technology to remain viable. He says CCA supports using the waiver mechanism to provide immediate relief for carriers, noting that the Carolina West petition is still pending despite positive momentum and lack of opposition.
Donovan says Carolina West, which operates in 11 counties in western North Carolina, told the agency too many of their towers were not covering their cost each month, and if there was not sufficient USF support, it would have to reduce its network coverage footprint. He pointed out Appalachian Wireless in Eastern Kentucky also has filed a waiver and “dozens of other companies that have started thinking about it.”
He notes there is a regulatory effort in Congress and at the FCC to update the USF mechanism that currently relies on consumer landline bills, but that path is shrinking as consumers drop landlines.
Donovan says an immediate step would be to grant the waiver to provide some relief. Longer-term solutions would include updating the contribution base using reliable data like mobile coverage maps to ensure sufficient and predictable support.
He says that a couple dozen carriers with a couple million direct subscribers could be affected directly, yet without realizing it, many more Americans benefit from these rural carriers’ exclusive coverage areas when they roam off the national MNO networks.
The CCA executive is strongly encouraging Congress and the FCC to take prompt action. FCC approval is required for Carolina West to transfer its spectrum licenses to Verizon. Donovan says that while CCA will monitor the filing, its focus is on ensuring policymakers learn lessons to support other rural carriers facing similar challenges.
By John Celentano, Inside Towers Business Editor and Leslie Stimson, Inside Towers Washington Bureau Chief
