FCC Probes Industry on USF Modernization

WASHINGTON April 28, 2011 – The Federal Communications Commission gathered key industry experts on Wednesday to explore the different ways that the Universal Service Fund can be modernized to effectively deploy high speed broadband to rural America.

“The Universal Service Fund is at the heart of the Commission’s core mission,” said FCC Chairman Julius Genachowski at the start of the event. “The current system was largely successful in meeting the challenges of the 20th century challenges but cannot handle the needs of the 21st century; it does not work for broadband deployment.”

Genachowski said that the current system disperses broadband funds inefficiently and wastefully. He went on to say that, the current system cannot provide long-term sustainable broadband deployment and reform is necessary.

“This is an issue with bipartisan support,” said Commissioner Robert McDowell. “It’s my hope that one day we won’t need the USF because technology can bring affordable broadband to all Americans, but until then we need to work together to provide the necessary access.”

In early February, the FCC unanimously adopted a notice of proposed rulemaking aimed at transforming the Universal Service Fund (USF) to include broadband. The Commission proposed the creation of the Connect America Fund (CAF), which would provide support for both voice and broadband services. As a compliment to the CAF, the Commission also proposed the creation of a Mobility Fund, which would provide support to expand mobile broadband.

Andrew Newell, General Counsel at Viaero Wireless, called wireless networks the best solution for bringing high-speed broadband to rural areas with minimal cost.

“The endgame to bring fiber to every home won’t work. Fiber is getting increasingly expensive and it is considerably cheaper to deploy mobile broadband,” said Newell. “The download speed of mobile broadband is getting faster which makes it increasingly more attractive for home use.”

David Russell, Solutions Marketing Director at Calix, agreed that wireless is a solution, but to support the wireless network, a fiber backbone needs to be deployed and consumers should be able to access this fiber when it comes close to their homes. Also, he said, broadband is no longer a luxury, but increasingly a necessity.

“I was in Western Massachusetts recently, where a number of homeowners told me that they were unable to sell their homes because the properties did not have access to high speed broadband,” Russell said.

Consumer Federation of America Research Director Mark Cooper and Park Region Mutual Telephone CEO Dave Bickett both echoed Russell’s statements on providing users with access to fiber where possible.

“There is no doubt that mobile computing is more valuable than fixed computing,” said Cooper, “but there needs to be a shared infrastructure between wired and wireless to provide better access to consumers.”

One of the major reforms that the FCC proposes is the use of reverse auctions for the distribution of support. Currently the USF provides support to multiple companies that serve the same area as long as they provide access.

Under the reverse auction system, companies would bid to be the sole recipient of support, where the firm that can provide access with the least amount of funding wins.

The telecommunications industry is divided on the use of reverse auctions, but companies agree that the new fund should have separate wireless and wireline programs.

Maggie McCready, Vice President of Federal Regulatory at Verizon supported the use of reverse auctions saying, “this system will provide increased efficiency and provide the most access for the lowest cost.”

Grant Spellmeyer, Senior Director of Legislative & Regulatory Affairs at US Cellular and Jason Hendricks, Director of Government Relations and Regulatory Affairs, RT Communications, Inc. both voiced their opposition of the use of auctions saying that the auctions would not provide adequate support.

They both said that the auctions would leave current providers unable to recoup the cost of their current deployments if they lost the auction and stopped receiving funding.

Vice President of Government Affairs at the American Cable Association Ross Lieberman called upon the FCC to increase their speed goals for universal service.

“Right now the FCC has a broadband goal of 4 megabits per second (Mbps) download speed and 1 Mbps upload,”  Lieberman said. “This is not adequate for future use. If the government is going to fund deployment it should make sure that the connections are going to be useful for long term use. Our members are currently offering base speeds of 16 Mbps down and 4 up and speeds will only improve over time.”