USF tug of war
As envisioned, the Joint Board proposal would give considerable autonomy to individual states, including decisions about where to target funds and how to disburse them. The plan also would encourage states to foot part of the bill for broadband and mobility deployments by providing matching funds to states that raise money on their own.
Several incumbent carrier groups applauded the matching fund plan, noting that it can make states more accountable. “States that don't have a [USF] have no incentive to look closely at CETC applications,” said Mitchell. “They figure there's federal money coming in; let's rubber stamp it.”
To the extent that some states opt to generate matching funds and others don't, the matching plan could contribute to a have/have not situation. But Stamp believes states will be receptive to the idea. Noting strong popular support for broadband, Stamp said, “From a political standpoint, the states will step up.”
But others may prefer to minimize states' role in the USF. “If you start having states make decisions, you have to deal with multiple government units,” said Ken Johnson, a principal for law firm Bennet & Bennet, which counsels Independent telco clients.
Another Joint Board recommendation that may generate controversy is a plan to eliminate the distinction between smaller rural carriers and larger non-rural carriers such as AT&T and Verizon that receive USF money for their high-cost areas according to a different and less generous formula. Proponents of this change say citizens who happen to be served by the larger carriers should not be penalized. But Independent telcos worry that such a plan could reduce the funds available to them.
“If you have a fixed amount of money and you say you'll merge the two funds, funding will flow from the rural to non-rural carriers,” said Rose.
Mitchell was more confrontational, noting that AT&T agreed to deploy broadband ubiquitously as a condition of its merger with BellSouth. “Rather than just give these carriers USF funding, which was not a condition of that agreement, they should be held accountable,” he said. “AT&T has more than enough money to live up to its commitment.”
Initial comments from FCC commissioners about the Joint Board proposal revealed the same level of disagreement as in the telecom industry itself. On one hand, Commissioner Deborah Taylor Tate argued that three funds might be more expensive than a single fund. On the other hand, Commissioner Michael J. Copps expressed concern that the proposed funding levels might not be sufficient. “By recommending a cap of the fund at current levels, the board cripples the ability of USF to support broadband in a credible manner,” he wrote in a statement.
With key decision-makers aligned on opposite sides and a plan that leaves many concerns unresolved, supporters of any aspect of the Joint Board proposal appear destined for a prolonged struggle.
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