NTCA Seeks Rural USF Budget Flexibility, Citing Lifeline/E-rate Treatment
NTCA officials suggested rural telcos should receive additional high-cost USF support in order to achieve sustainable broadband service and equitable treatment under FCC subsidy programs. Speaking at the group's policy conference Monday, the officials said Lifeline and E-rate USF programs received substantial funding hikes and were indexed for inflation, unlike rate-of-return high-cost USF support, which only has increased a little and isn't indexed. NTCA members -- about 500 of whom were in attendance -- will lobby congressional offices this week on the issue, they said.
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NTCA CEO Shirley Bloomfield questioned whether the FCC current rate-of-return USF budget, which effectively is now a little over $2 billion, is sufficient to meet statutory mandates. In a discussion with Wireline Bureau Chief Matt DelNero, Bloomfield said that the day after the FCC issued its recent rate-of-return USF overhaul (see 1603300065), it adopted an order to modernize its Lifeline USF low-income support, giving the program a funding boost for new broadband coverage. The Lifeline order set a budget of $2.25 billion -- creating about $750 million in headroom for growth beyond its current $1.5 billion spending level-- that was indexed for inflation (see 1603310056).
The FCC rural high-cost focus was on ensuring reasonably comparable service at reasonably comparable rates, DelNero said. The recent rate-of-return order provided about $150 million in additional annual support, if needed, for carriers electing model-based support over the next 10 years, he said. That extra amount makes the FCC's $2 billion rate-of-return annual budget, in effect, now $2.15 billion, a commission spokesman confirmed Monday. DelNero noted Lifeline never had a budget before.
Bloomfield questioned whether the rate-of-return USF budget was adequate to ensure sustainable broadband deployment and affordable service. An audience member also asked about the funding level. DelNero said he was "hearing a theme" at the conference regarding the budget. The level eventually could be changed, he said, but the commission wants first to see what can be done within that budget.
NTCA wants "equal treatment" of the rate-of-return USF support to match the budgetary flexibility the FCC has granted the Lifeline and E-rate programs, said David Hoover, vice president-legislative affairs. He said most rural telcos would be forced to offer stand-alone broadband at a loss under the current funding level, which is largely "flat." NTCA members would address the rate-of-return USF budget in their visits to congressional offices, said Tom Wacker, vice president-advocacy initiatives.
House Commerce Committee Republican leaders are "thrilled" the FCC could reach a bipartisan deal on the rate-of-return USF overhaul, said David Redl, chief communications counsel for the majority, noting USF complexities and declining to dive into the details. Redl also said the looming net neutrality ruling by the U.S. Court of Appeals for the D.C. Circuit will give lawmakers a better idea of what communications legislation is realistic in the remaining months of this Congress. He said FirstNet is in a "good place" after a "rough start" in its effort to build a national wireless network for first responders.
NTIA is about to launch a $115 million next-generation 911 grant program to complement FirstNet, Angela Simpson, deputy assistant commerce secretary-communications and information, said in prepared remarks to NTCA. The funding comes from FCC auction proceeds, she said.
ToledoTel, an NTCA member in southwestern Washington State, has received $1.9 million per year in high-cost USF support, Chief Operating Officer Dale Merten told us at the conference. It has no choice but to stick with the revised legacy support because under the FCC's optional model-based support mechanism, it would receive only $84,000 per year, he said. Even under the revised legacy program, ToledoTel's preliminary sense is it will probably lose about $90,000 in the first year, with that loss expected to double in the second year and continue to increase in following years. ToledoTel received an $18 million Rural Utilities Service loan to provide 1 Gbps fiber-based service to 2,300 business and residential locations in its 400-square-mile territory, so its budget is mainly operating expenditures, not capex, he said. But if the funding keeps declining, he said it wouldn't be economically viable at some point, he said.
The Department of Agriculture is reviewing the FCC order and will offer guidance to RUS loan recipients before long, said Lisa Mensah, USDA undersecretary for rural development.