The telecom industry has spent enormous sums and made great progress in bringing broadband to rural America, but more can and should be done USTelecom Vice President David Cohen told the House Agriculture Subcommittee on Rural Development. The subcommittee held a hearing to discuss two broadband programs serving rural America: the Federal Communications Commission’s (FCC) Universal Service Fund (USF) and the telecom loan programs of the Rural Utilities Service (RUS).
“As the FCC modernizes USF, coordination with RUS is necessary to continue the progress that has been made,” Cohen’s testimony said. RUS has a sizeable portfolio of loans to borrowers that derive a significant portion of their revenues from USF, which means there must be a predictable level of future support so carriers can confidently plan, borrow and invest in facilities, he said.
Cohen told the subcommittee what the FCC is doing to reform USF, starting with a landmark decision in 2011 to shift the program from supporting voice to broadband. The commission established a new “Connect America Fund” that has two phases and has been instrumental in achieving rural broadband deployment goals.
CAF Phase II is still in the planning stages with implementation expected in early 2015. The program will offer price cap companies a fixed amount of money to meet vigorous broadband service obligations. A company would receive five years of CAF support (for a 25-year investment) and be obligated to provide broadband at 4 Mbps downstream and 1 Mbps upstream.
The FCC is considering raising the downstream speed to 10 Mbps. USTelecom supports the higher speed, which increases build-out costs if accompanied by more flexible terms of support, including funding for 10 years. If companies decline funding, the FCC will conduct an auction open to all those willing and able undertake the broadband obligations.
Cohen’s testimony praises the FCC for rejecting calls by some to “jump in front of the line and overturn the FCC’s considered decision to accelerate the availability of broadband to rural Americans by providing price cap carriers with an initial opportunity to expand and upgrade service by accepting CAF Phase I and CAF Phase II funds.”