It would be an understatement to say that when the FCC’s draft order on the USF budget begins circulating tomorrow, there will be a number of rural broadband providers anxiously reading through the details. The same goes for NTCA staff along with the members of our Industry and Competitive Services committees who have been so engaged and active for years as the quest and battle for USF sufficiency has been waged. We have been most appreciative of the leadership from the FCC to continue to move this critical issue forward and seek enough resolution to create some much-needed certainty in this industry ecosystem if we really are to achieve more robust broadband deployment in the rural parts of our nation.
From NTCA members who have roamed the halls of Congress these past several years sharing their stories before members of Congress and testifying before congressional committees on the challenges and cost of rural broadband deployment to those who have literally spent hundreds of hours on committee calls and in FCC meetings sharing the details required in complex mechanics—this order coming to the table could not come soon enough.
More details and insights to be shared after the order is published on the FCC’s website tomorrow but for today, we have words from Chairman Pai in his released blog this afternoon titled “The FCC’s Thanksgiving Menu: 5G, Rural Broadband, and Stopping Unwanted Robocalls.” I have included some of the relevant text below:
“From wireless to wired: One thing you can’t count on if your grandma lives in one of America’s most remote rural communities is access to high-speed broadband. So in December, we’ll continue to pursue our goal of closing the digital divide with a measure to help connect some of America’s hardest-to-reach communities.
Here’s how. The FCC administers what is known as the Universal Service Fund, or USF. You pay into the USF through your phone bill, typically with a line-item called a “universal service fee.” The USF has several programs aimed at helping close the digital divide. This includes what we call our high-cost program, which subsidizes rural-focused carriers called rate-of-return carriers as they build broadband networks in some of the most difficult-to-serve parts of our country.
There are a few basic principles that animate — or should — the high-cost program. First, subsidies should provide maximum incentive to be efficient; we want to stretch taxpayer dollars as far as possible. Second, subsidies should be sufficient to build out networks; after all, these are areas where the business case for private investment is lacking. Third, the program should support high-quality services; rural Americans deserve services that are comparable to those in urban areas. And fourth, subsidies should be predictable; after all, building networks is a serious long-term proposition, not a one-time whim. Unfortunately, for many, many years, the program hasn’t satisfied each of these important principles.
We’re hoping to change that in December. First, we’re working to promote efficiency by moving away from simply telling rate-of-return carriers what their allowable costs and return on investment will be and toward setting broad goals for deployment and rewarding companies for being efficient in meeting those goals (what’s called an “incentive-based” model). Specifically, we’re offering rate-of-return carriers another opportunity to opt in to model-based support, which would give them a guaranteed revenue stream for a decade in exchange for meeting specified buildout requirements. Second, we’re ensuring support is sufficient by offering additional funding to carriers that currently receive model-based support and who agree to meet increased buildout requirements. We’re also increasing funding for carriers who do not receive model-based support. Third, we’re recognizing that rural Americans need and deserved high-quality services by increasing the target speeds for subsidized deployments from 10/1 Mbps to 25/3 Mbps. And fourth, we’re making the program more predictable by setting a new long-term budget for rate-of-return carriers who choose not to opt in to model-based support and ending arbitrary funding cuts. Long story short, we’re making the Universal Service Fund a more efficient, effective way of distributing funding to close the digital divide.”
From NTCA, as we head into the Thanksgiving holiday, I am sincerely hoping for something that we can indeed be grateful for….