FCC Should Consider Having Flexibility with USF/ICC Waivers, Vilsack Says
The U.S. Department of Agriculture has asked the FCC to be flexible in its system for waivers of the USF/intercarrier compensation order, so the Rural Utilities Service has the flexibility it needs to adjust RUS loans held by rural carriers, Secretary Tom Vilsack told the Agriculture Subcommittee of the Senate Appropriations Committee on Thursday. “If we have it then I think we can make adjustments,” he said. His comments came in response to questioning by Sen. Jerry Moran, R-Kan., who in a February letter to Vilsack expressed his concern over how the order would affect the viability of the rural telecom companies, many of whom take out loans from the RUS.
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When the FCC proposed its order, the USDA made sure the FCC knew how much rural utilities providers count on USF support, intercarrier compensation and the infrastructure assistance the USDA provides, Vilsack said, because “these are the three pillars upon which the whole system operates.” USDA expressed the need for the FCC to realize that the order may have an adverse impact on some carriers, Vilsack said.
Moran’s letter expressed concern that USF reforms would leave “no clear path for continued funding for small rural companies.” Many of those companies had indicated that the USF reforms would affect their ability to repay RUS loans, and additional funding changes proposed in a further notice of proposed rulemaking “created incredible uncertainty” and has “chilled investment in rural telecommunications services,” Moran wrote.
RUS is working with rural carriers to get more specific financial information on how the order will affect carriers’ revenue going forward, and to know how the carriers see the potential impact. “We have weighed in and asked for the impact on the individual operations” so that RUS can make an “appropriate analysis,” Vilsack said, adding that RUS is also monitoring the discussion regarding the quantile regression factor the FCC plans to use to set an upper limit of high-cost loop support paid to incumbent rate-of-return LECs (CD Mar 13 p9). “We are aware of it, we have engaged in, and we continue to engage in it,” Vilsack said. “We are sensitive to the concerns.” Vilsack said he is hopeful the FCC will give RUS the “flexibility” it needs to work with rural carriers.
Vilsack also fielded questions regarding broadband investment in underserved areas, and said that proceeds from the American Recovery and Reinvestment Act were focused on remote and rural areas. In cases where small remote companies might not be in a position to support “full-blown broadband,” the USDA has looked into upgrades of technology and the use of satellite technologies to deliver connectivity, he said, and millions of dollars will be made available for loan guarantees and expansion into rural areas. “So there is a significant effort here, either through grants, loans or the Recovery Act,” Vilsack said.
Sen. Roy Blunt, R-Mo., questioned how the RUS Broadband Initiative Program decides whether to focus its resources on unserved versus underserved areas. Vilsack said that the RUS is concerned about totally unserved areas, but it’s important to direct its resources in an “appropriate” way. “There are times when, because of the remoteness of it, or the population of a particular area, it may be difficult to have the highest level of broadband capacity because you may not be able to sustain it with a customer base,” he said. Therefore it’s important to continue to look for ways to improve access to telecommunications “without necessarily creating a circumstance where we're setting someone up for failure.”