Universal Service Fund changes worrisome to rural communities


Universal Service Fund, Intercarrier Compensation, Connect American Fund – big topics, technical topics, wonky topics, topics that most people avoid like the plague – but avoid at your own peril. USF, ICC and CAF are federal funding mechanisms that help build and maintain broadband to rural areas. Without federal funds many areas will not get broadband coverage, in fact some areas may lose coverage because between difficult terrain and low population density it is very difficult to make a business case to serve those areas.

Last week, the Minnesota Intelligent Rural Communities (MIRC) participants and leaders met to talk about broadband adoption. USF/ICC/CAF came up several times – and I was lucky enough to have a video camera with me. (Serendipity for the following videos was great – actualy footage not as much – but I thought the content was worth the lower quality video.)

First Colleen Landkamer from USDA Rural Development mentioned USF during the keynote lunch…

Then Kevin Beyer from Federated / Farmers Telephone stepped up to give a chalk talk on USF for interested attendees. This is one of the most accessible explanations of USF/ICC that I have seen. In fact, the conversation went much longer and I’m hoping to process more later. Kevin explains USF/ICC/CAF, how wireline broadband supports wireless, fiber to the node versus fiber to the premise…

As Kevin points out someone will have to pay for the network to rural areas. For years we’ve talked about local independent telephone companies, cooperatives and in some cases communities rising to the occasion. While the bigger providers have focused on metro areas – and building backbone. When I got back to my office Blandin Foundation’s Jennifer Bevis sent me an interesting article on AT&T’s plans for rural broadband. (As a quick reminder/aside – a couple of weeks ago I noted that the USF-CAF changes are coming in phases. Phase One changes are happening now. Phase Two changes have not been announced. I think that’s important background for the AT&T article.

AT&T is considering its options with their rural lines…

AT&T Inc. (T) (T) Chief Executive Officer Randall Stephenson said he’s “cautiously optimistic” about using new broadband technology to wring more value from rural phone lines, backing away from a plan to sell them off.

The company aims to use an enhanced version of digital subscriber line technology to speed up Internet access in rural areas, Stephenson said today at an investment conference hosted by Sanford C. Bernstein. AT&T had targeted the lines as an asset it could offload, though he said today that a deal would face regulatory hurdles and require multiple state approvals.

The article indicates that red tape involved in selling their existing infrastructure may be the reason they are thinking about reviving a product they earlier called “underperforming asset”. But given the changes in USF/CAF you have to wonder if that change is also a factor. I suspect the details of Phase Two changes will help them make a decision.

The big question I think rural areas should be asking is – Will the changes in federal funding support world class broadband in rural areas? I’ve commented earlier at the sanctioned two-tiered service supported by the National Broadband Plan (100 million homes at 100 Mbps) and 4 Mbps for the rest. It seems as if this funding mechanism continues to support that two-tiered outcome.