Clyburn Cites 'Win-Win' on Rural USF Reform; Rosenworcel Warns of Complexity
Commissioner Mignon Clyburn called FCC rate-of-return USF changes a "win-win" for rural consumers wanting broadband and phone consumers paying into the USF. Clyburn said she was proud the FCC went beyond fixing a stand-alone broadband problem that prevented rural telcos from receiving USF support when customers with high-speed Internet access dropped traditional phone service. "We are also establishing a blueprint to connect unserved households and modernize the Connect America Fund to ensure that rate-of-return carriers use finite resources as efficiently as possible," she said in a statement that accompanied the 249-page Order and Further NPRM released Wednesday (see 1603300065).
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The FCC must ensure every dollar spent on USF is "necessary but not excessive," Clyburn said. "The fund dedicates approximately $2 billion to rate of return carriers that serve 3.8 million lines, or, on average, over $500 per line per year with some areas receiving more than $3,000 per line every year," she said. But the program sometimes subsidizes carriers in areas also served by unsubsidized competitors, creating an "unequal, unlevel playing field" that distorts the market. The order goes "a long way in addressing this distortion by creating a process to disaggregate support in census blocks where a competing provider serves 85 percent or more of the census block," she said.
Clyburn also welcomed new operating expense limits and the Further NPRM's solicitation of comments on revising the rules so that the program "no longer pays for things like art work" and other items unrelated to service, "such as vehicles for personal use, corporate aircrafts and boats, housing allowances and childcare." Companies can pay for those, not phone consumers, she said: "It is distressing our rules have permitted using support for such personal uses for so long."
Commissioner Jessica Rosenworcel called the stand-alone broadband fix overdue and also said other FCC actions "come not a moment too soon." But she also said the agency needs to recognize its USF policies had become increasingly complex. "Our work here is no exception. I worry that this complexity can deny carriers dependent on the universal service system the certainty they need to confidently invest in their network infrastructure. Nonetheless, [Wednesday's] Order represents a step forward -- especially with respect to standalone broadband. But looking ahead I am hopeful that when new opportunities arise to simplify our universal service rules in a manner that is good for rural consumers and bound to inspire investment -- we will seize them." Commissioner Ajit Pai also complained about the item's complexity in partially dissenting. The other commissioners voted to approve it.
WTA -- Advocates for Rural Broadband is hopeful FCC rate-of-return USF reforms will increase regulatory certainty and encourage its members to continue deploying broadband to their customers, the association said in a statement Thursday. The group is still reviewing the details of the order, and will be assessing and discussing the potential impact with its members, but it said it appreciates the FCC efforts to work with industry to modernize the fund. It welcomed the change to allow rural telcos to receive USF subsidies for stand-alone broadband service. “Going forward we need to make sure that the reform meets the needs of residents and businesses in rural America. Sometimes the practical effects don’t match up with the theory," said Derrick Owens, WTA vice president of government affairs. "We look forward to working with the FCC to ensure broadband networks in rural America are as affordable and robust as they are in urban and suburban America as mandated by the ’96 Telecom Act.”
NTCA similarly had expressed hope about the FCC changes and caution about the order's details and how they would work. “In the end, the success or failure of this reform should not and cannot be measured merely by whether networks are built in rural areas," CEO Shirley Bloomfield said in a statement late Wednesday. "Rather, under the law, success can and must be defined only by whether consumers and businesses in the most rural parts of America have sustainable access to services that are reasonably comparable in price and quality to those available in urban areas. That is the only yardstick that ultimately matters."
"We will be monitoring closely to see if this yardstick is met," Bloomfield added, "and if it turns out that some aspects of the reforms do not succeed -- if recovery of past investment is undermined, if the prospects of future investment become more challenging, or if consumers still cannot obtain reasonably comparable voice or broadband services at reasonably comparable prices -- we will be right back at it working to have the FCC correct and address those aspects of reform for small rural carriers and the consumers they serve.” ITTA and USTelecom had issued statements (here and here) lauding the commission action as providing greater regulatory certainty and opportunities for broadband deployment.