Universal Service Reforms Cost Jobs, Hurt Rural Carriers, NTCA CEO Says
The FCC’s USF reforms are costing jobs, National Telecommunications Cooperative Association CEO Shirley Bloomfield said Tuesday while taping an episode of C-SPAN’s The Communicators to be telecast in the coming weeks. Things such as the commission’s quantile regression analysis (QRA), meant to compare similarly situated companies, aren’t nuanced enough to take into account all the unique challenges faced by NTCA’s 900 members, she said. That uncertainty reduces investment and hurts NTCA’s members, Bloomfield said.
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With the Wireline Bureau not eager to grant waivers to rules that limit high-cost loop support and cap per-line support to $250 per month, NTCA’s members are facing hard choices, she said. A member company in Indiana that serves Indiana University just last week laid off 45 of its 200 workers, she said. A cap on USF support “means a lot to what you can do going forward,” she said.
The 10th U.S. Circuit Court of Appeals will hear a challenge to the QRA and the other new USF rules next month (CD Oct 15 p9). How best to apply the QRA may be causing angst within the commission, but “you can’t begin to imagine the angst it’s created outside of the FCC,” Bloomfield said. That formula attempts to compare similar companies, she said, but “you can’t even begin to come up with a model that works all the way across the country for all these different geographies."
Inside-the-Beltway types can “become so academic” when trying to solve nationwide challenges, Bloomfield said. “We think about it from such an academic perspective: ‘There must be a formula. There must be a model. There must be an answer from an ivory tower.’ I think what would have really helped the FCC would have been getting on the ground, seeing how these carriers actually make decisions. How do they make investments, and what does it mean?"
"You've got to make sure that you're comparing apples to apples” when comparing the spending of different telcos to see who’s most efficient, but that’s so hard to do, Bloomfield said: Soil content in one place may change costs of putting fiber in the ground; Alaska and other northern states have only a few months when they can really dig. “It’s a tough statistical model to come up with,” especially in an industry that’s not homogenous, she said. “It’s been tried. It’s been difficult to do.”
NTCA has offered alternatives. One possibility is letting carriers opt into one of different models that might take into account the specific circumstances they face, she said. Instead of strict spending caps determined by a QRA, the commission could implement “triggers” used to examine high costs and figure out why they are so high, she said. Commissioners Ajit Pai and Jessica Rosenworcel weren’t at the agency when the original order was passed. They are “a clean slate,” Bloomfield said. And “both of their reactions has been, ‘This is so complex. It’s so complex that how are carriers supposed to figure this out?'” Pai and Rosenworcel “actually really understand the connection” between regulatory uncertainty and reduced broadband buildout, she said. “Let’s uncomplicate this."
Until then, NTCA’s members are trying to find new revenue streams, she said, and “that’s not an unhealthy part of the process.” Some carriers try to monetize the network, or provide different video services. “Maybe you need to open a data center, maybe you need to think a little bit more aggressively about some of your IT services. That entrepreneurial spirit is what I'm hoping will pull our folks through.”