The mission of universal service is not accomplished merely when the network has been built. When Congress directed the FCC to create the Universal Service Fund (USF), “it was to ensure access to telecom services that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas.” So said Golden West Telecommunications Cooperative CEO Denny Law to lawmakers on Thursday during a USF hearing.
“If we only get Americans connected and neglect the ongoing responsibility to keep them connected, this effort will ultimately be for naught in many rural places – and the mission of universal service will fail,” said the South Dakota-based company executive.
He told members of the Senate Communications, Media and Broadband Subcommittee that without a reasonable business plan, providers are “hard-pressed to justify borrowing funds or using their own capital to build, and then harder-pressed still to sustain networks in areas where densities are low, distances are great, and terrain and topography complicate operations. This is where the federal high-cost USF program makes its mark – ongoing support from the high-cost USF initiatives overseen by the FCC are critical for providers like Golden West to make the business case for investing in and then sustaining broadband for the benefit of rural communities,” Law testified.
And while the upcoming millions of dollars coming in Broadband Equity, Access, and Deployment (BEAD) grants are welcome, those funds won’t sustain networks nor make services on top of them affordable, he noted. “BEAD will not cover the costs of hours-long ‘truck rolls’ or cover the portion of investment that still must be covered by matching funds,” said Law.
He also said that the USDA’s ReConnect program, by itself, won’t ensure that rural customers pay affordable rates that are roughly equivalent to what urban communities pay. “While incredibly valuable to promote network deployment, these grant programs in the end typically presume and expect a self-sustaining business case after networks are built and provide no support for ongoing operations or affordability measures.”
That’s why the federal high-cost USF program is essential, according to the telecom executive. The FCC, he noted, has been considering how to update its USF high-cost programs in coordination with BEAD grants to come. Law believes the agency should update these mechanisms as soon as possible and not wait until the BEAD grants have been dispersed to companies for broadband deployment, which is expected next year.
He asked congressional leaders to “encourage” the FCC to finish this work by identifying where support is needed under these programs based upon “realistic, engineering backed assessments of where reliable voice and broadband services can in fact be delivered today by a competitor at reasonably comparable rates,” and identifying what levels of support are needed to deploy higher speed broadband than the programs currently require, to sustain broadband where it has been deployed, and to keep rates affordable for rural consumers in those areas where support is warranted. He suggests providing recipients of high-cost USF support under these programs an option to commit to serve every location in the areas for which they receive such support so BEAD grant funds can be directed to aid other areas instead.
By Leslie Stimson, Inside Towers Washington Bureau Chief
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