AT&T Proposes FCC Test Financing Broadband in Rural Areas

AT&T’s comments were among dozens filed at the FCC in response to a Federal-State Joint Board on Universal Service request. The Board sought views on proposals for long-term change such as using reverse auctions to decide who gets support, targeting subsidies to more “granular areas” and whether to use USF money to support broadband. Comments are due June 6 on a Joint Board companion interim proposal to cap USF support to competitive carriers. Thurs.’s comments looked further into the future.

The USF program is so “deeply flawed” it no longer can advance universal service, much less “promote the deployment of broadband and wireless in rural America,” AT&T said. The carrier envisioned pilot programs like the rural healthcare effort the FCC approved in Sept. to link health care providers to broadband networks to promote telemedicine. The pilots would speed the introduction of rural service and give the FCC “much needed experience and information about the level of funding that may be required,” AT&T told the agency: “A pilot program thus would provide a test case for a new approach to meeting universal service objectives with respect to broadband and wireless services in today’s competitive marketplace.” The wireless program would pay directly for deployment in unserved or “inadequately served” areas “rather than [provide] support to subsidize increased wireless penetration… in areas with multiple mobile wireless service providers.”

Alltel wants the Commission to consider network cost modeling and geographic information systems to better calculate support and target it at more “granular levels,” it said. Alltel is working with a company called CostQwest on “an economic cost model” and plans to set up a prototype, to do testing, it said. “One of the most critical analytical tasks needed to design an effective and sustainable system is to determine the cost of providing service efficiently in each geographic area,” Alltel said: “Changes to the support model are necessary to avoid… abuses invited by the current system… One of the main problems with the present system is that it rewards ILECs for losing customers by maintaining current overall support levels. This results in higher per line support and unnecessarily inflates the fund.” In a separate white paper, CostQwest invited “other parties, from all sides of the debate, to join the effort and contribute to the model’s design and completion.”

Incumbent carriers from Verizon to Mid-Rivers Telephone disagreed, telling the FCC that cost modeling and GIS mapping aren’t effective tools for fixing universal service. “Even with the advances that have been made in cost modeling… these approaches are not the right solutions,” Verizon said. “Cost models cannot answer the question of how much universal service should cost,” the Bell said, pushing its reverse auction plan as the better route. Mid-Rivers told the FCC it is “strongly opposed to the use of GIS or any other network cost modeling” to determine and distribute USF support because it’s “clearly inferior to the use of actual costs incurred.”

NCTA said the FCC need not add broadband to the list of services supported by the USF because cable already makes broadband service available to more than 94% of homes in the U.S. “With appropriate changes in how funding is distributed, the presence of cable operators and other facilities-based competitors in high-cost areas ultimately should reduce the need for federal universal service support,” NCTA said. Underserved areas should be targeted with specialized programs, not the USF, the association said.