FCC Aims to Minimize Impact of USF Reform on Consumer Rates

At the meeting, the FCC broadband team highlighted several high-priority gaps it intends to tackle in the National Broadband Plan due this February. Universal service, infrastructure availability and spectrum (see separate report in this issue) ranked high on the team’s list. The team is also looking at ways to spur innovation in set-top boxes and improve data quality at the FCC.

Genachowski said USF is a “creaky program that needs attention,” but keeping consumer rates low is critical. It’s still too soon to discuss what specific recommendations the FCC will make, he said. Later, broadband plan coordinator Blair Levin alluded to “various reports” predicting the FCC’s direction on USF, saying the outcomes they suggested are “highly unlikely.” The broadband team sought comment on long-brewing overhauls for USF and intercarrier compensation earlier this week. “It may turn out that … most of the information follows other information we've had in the past,” admitted Levin. But he believes getting fresh input on the issues is important because the market is constantly changing “and we want to be responsive to those market changes,” he said.

Genachowski and Levin responded to criticisms of the broadband study the agency ordered from the Harvard Berkman Center for Internet & Society. Incumbent broadband providers cited what they called bias in the study (CD Nov 18 p7), which concluded that open-access policies spurred broadband growth in other countries. Genachowski said the study’s findings should be taken together with findings of other studies and data in the record. “The FCC and the broadband team will look at all the information that comes in -- the studies it commissions, the studies that were voluntarily submitted. Data is data. Facts are facts.”

The FCC broadband task force is reading “with great interest” criticisms and other feedback on the Berkman report, said Levin during his team’s presentation to commissioners. The paper’s purpose was to look at the past, he said. He urged attendees to additionally read a report released this week by Columbia University that forecasts future broadband deployment, he said. “To get a full understanding of the issues we face, it’s important to understand both how we got to where we are and also where we're headed. Focusing only on one or the other I think leaves one with a false impression.”

During the meeting, Wireline Bureau Chief Sharon Gillett cited a middle-mile gap that could be bridged by redirecting USF subsidies to broadband. Paying for transport in rural areas costs 25 times what it does in urban areas, she said. The existing USF is unlikely to fill broadband gaps because most of USF targets voice rather than broadband, the contribution factor is exploding, the four support programs lack coordination to support broadband, and the high-cost fund doesn’t encourage “least-cost solutions,” she said.

Commissioner Robert McDowell pointed out that USF is supporting broadband indirectly because many of its recipients are using the money for networks that support high-speed data services. But Gillett said the fund doesn’t support companies that purely provide broadband services, and continuing in an indirect manner means no accountability as to how providers use the subsidies.

Affordability is another major broadband gap, said Gillett. The team’s preliminary analysis shows that low-income areas tend to have fewer competitors, and areas with fewer competitors have high prices, she said. Another hole is consumer information about what speeds they're actually getting when they sign up for broadband, she said. “Consumers can’t currently compare their actual performance versus advertised,” and some studies suggest the two figures “aren’t anywhere near identical,” she said. The U.K. and other countries have done better at making information available to consumers, she said.

Stimulating a “livelier market” for set-top boxes could be another way to promote national broadband goals, since boxes offer converged video and Internet services, said Media Bureau Chief Bill Lake. Most consumers rent boxes from their service provider, and there were 63 times more mobile devices than set-top box models in 2008, he noted.

Genachowski suggested adding coordination among government bodies to the list of gaps. FCC National Purposes Director Kristen Kane agreed, saying the team received many comments saying “there’s a tremendous need for improved coordination among relevant agencies [and] in some cases even within agencies.”

Commissioner Michael Copps cautioned the broadband team not to get so caught up with data that it ignores “intangibles.” Significant weight should be given to the public interest, which can’t always be measured scientifically, he said. Copps urged more emphasis on the value of civic engagement, media and promoting interactivity among citizens. “Media’s not on another track,” he said. “Media’s going to broadband. Media’s going to the Internet.”

McDowell asked how many more public notices the broadband team planned to release. The FCC issued its 21st and 22nd notices, on data portability and research, on Wednesday. “We've got a very short period of time to cobble this thing together,” the commissioner said. “The public notices have been terrific, but how many more PNs do you think we'll be issuing?” Levin replied that the bulk have been issued, but he didn’t know when they'd stop. “I can’t tell you either the number of PNs we have left, or an exact cutoff date, but we recognize that at some point we have to kind of stop that part of the process.”

In one notice Wednesday, the FCC sought comment on “broadband and portability of data and their relation to cloud computing, transparency, identity, and privacy.” Comments are due Dec. 9. In the other, the FCC asked for research ideas it can recommend to Congress to advance broadband deployment over the next decade and “be a global leader in broadband networking in the years 2020 and beyond.” Comments are due Dec. 8.