Rural Telcos Fear USF Reform Would Limit Services
Prospects of a slimmer Universal Service Fund (USF) with potentially higher charges for rural carriers is discouraging investment in the industry, panelists said Fri. at a Rural Telephone Finance Coop (RTFC)panel. “Any change in the regulatory environment gives us concern,” said Robin Reed, RTFC vp-portfolio management.
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Congress should continue USF, financing it with access charges all network providers contribute, RTFC said. Funding should go only to providers meeting stringent “provider of last resort requirements,” it said. Absent a commitment to continued funding, there won’t be money to build facilities needed to connect rural Americans with up-to-date services.
Wall Street rating agencies are eyeballing the industry, said Hank Buchanan, RTFC vp-regulatory, because there’s “so much uncertainty surrounding the traditional revenue stream.” Up until recently, investing in rural telecom “has pretty much been a sure bet,” he said. About 30% of rural telcos’ revenue streams from USF, he said, so prospects of a USF overhaul via telecom law rewrite makes investors nervous.
Another fear factor: rising USF assessments, needed to keep the fund as is, Buchanan said. The current structure puts the brunt on telcos. With unassessed providers competing for customers, the system is out of whack, he said: “At the end of the day, it looks like some of the costs will be shifted to rural local carriers and ratepayers.”
Some reform proposals have linked USF fund disbursements to buildout of Wi-Fi in rural areas -- an idea RTFC dislikes as limiting. It could work in flat areas, but amid mountains regions chances of interference and spotty service heighten the business risk, he said. “You'd not want people in most rural areas to have to rely on wireless services,” Buchanan said, admitting many developing nations have taken that route with success. The U.S. started out with wires, and that’s what most Americans rely on, he said.