NTCA offers alternatives to proposed Universal Service reforms

The Federal Communications Commission should take a “surgical” approach toward Universal Service reforms, said Mike Romano, senior vice president of policy for the National Telecommunications Cooperative Association on a webcast last week.

As policymakers undertake the process of transitioning today’s voice-focused Universal Service and access charge system to focus on broadband deployment, for example, Romano said they should recognize that “rural telcos have already done a terrific job of using funds for this purpose today.”

Romano also noted that the rate of return system has worked well to support broadband deployment and Romano suggested that policymakers should tweak the ROR system rather than “throw it away altogether.”

Not surprisingly, Romano also argued that attempts to restrain the size of the Universal Service fund shouldn’t be based on arbitrary caps. Although the overall size of the high-cost fund has grown sharply in recent years, he argued that the growth in payments to small rural telcos has seen a compound annual growth rate of only 3%.

Backing down on 100 Mb/s goal
When the Federal Communications Commission proposed reforming the Universal Service program in the National Broadband Plan issued a year ago, the commission drew a lot of flak from small telco groups over the 4 Mb/s target proposed for the broadband Universal Service program, which the telco groups said was too low. And the FCC’s “stretch goal” of 100 Mb/s for 100 million (apparently metro-based) homes drove small telcos to argue that the FCC would be creating an urban/rural digital divide.

But comments from Romano made last week indicated that small telco groups have backed off on the idea of using 100 Mb/s as the target speed for the broadband Universal Service program, perhaps recognizing that the costs of delivering that speed nationwide would be just too high.

“The real debate at this point isn’t over the precise level of speed but about reasonable comparability,” said Romano. Average speeds in rural areas, he said, shouldn’t lag behind urban areas.

As for how broadband Universal Service funding would be awarded, Romano urged the FCC to consider alternatives to the reverse auction idea that the commission seems so keen on. Reverse auctions that have been used in other countries have had a “spotty record at best,” Romano said.

Many areas that cannot get broadband today are on the outskirts of local telco serving areas, and recognizing that, Romano said one idea would be to give the incumbents conditional broadband Universal Service support based on the condition that the telco must provide broadband to those unserved areas. The incumbents essentially would have the right of first refusal, he said.