Wireline, Wireless Providers Clash on USF Reform, Special Access, Adoption in Broadband Strategy Comments

WASHINGTON, June 10, 2009 – In comments filed Monday before the Federal Communications Commission on its plan to unveil a national broadband strategy, old foes got a fresh chance to spar in long-standing battles over Special Access rates, Universal Service reform, and deployment versus adoption rates as a metric for success.

For Sprint Nextel Corp., competition is “the key to ensuring and expanding widespread, affordable broadband access.” But true facilities-based competition is being undermined by incumbent local exchange carriers — the owners of the fiber pipes that hook wireless phones back into the telephone network at the tower, Sprint said.  ILEC’s “dominate the special access markets” to the detriment of the industry, the company warned — leading to “lost productivity, lost income, and lost jobs.”

Verizon Communications, often a main target of Sprint Nextel’s ire, called for the FCC to encourage “consumer empowerment” by allowing free choice of services, applications and devices on a “robust…secure broadband network.” The FCC’s plan should be “pro-innovation. pro-growth,” Verizon said.

Investment in wireless is the key to a superior strategy, says T-Mobile, the nation’s fourth-largest mobile phone carrier.  Wireless deployment costs are “frequently less significant than comparable wired broadband deployments,” the company wrote, citing the FCC’s recently released Rural Broadband Report. “Wireless broadband can be an efficient means of delivering both backhaul and ‘last-mile’ access services in rural areas.”

A national strategy should focus on adoption rather than deployment,  cable giant Comcast said.  In comments closely echoing those filed by the National Cable and Telecommunications Association, the company suggested the problem of adoption is “four times as large as the access challenge.”

The FCC’s plan should  encourage adoption with a “number of policy strategies, ranging from incentives for investment, to removal of barriers to deployment, to direct government investment,” Comcast said. Ubiquitous deployment could be possible as soon as 2011 with the right policies in place, the company said.

Verizon suggested a national strategy should address the more than two-thirds of Americans that do not use broadband because of lack of computer literacy, or a failure to appreciate the potential relevance of broadband-enabled services to their lives.

Lack of relavence is primarily accountable for consumers’ decision not to get broadband – not lack of availability or price, the company claims. Americans are far from unserved, Verizon said:“Over 90 percent of Americans have such access, and most consumers can choose from at least two wireline broadband providers, three or more wireless broadband providers, and two satellite broadband providers for broadband Internet access service.”

Many stakeholders have suggested  the Universal Service Fund be an important part of any national strategy. In addition to a proposed pilot program to expand USF to cover broadband service, the FCC has also suggested an increase in required contributions to the fund that that would be roughly 12.9 percent of a consumer’s monthly bill, compared with the current rate  of 11.4 percent.

Sprint Nextel also used its comments to reiterate the company’s repeated calls for USF reform: “The existing universal service mechanism is broken…and in drastic need of major overhaul,” Sprint said.

But Verizon, which as a landline telephone company recieves a large share of USF dollars,  sees a less drastic need for reform. The commission should implement reforms to USF funding, but avoid  “double-taxing” broadband services, Verizon warns. Specifically, Verizon suggests replacing the revenue-based model with one that charges users a flat rate for each of their phone numbers.