December 7, 2010 - USF Reduction Threatens Broadband Deployment, NTCA Says

Group urges FCC to avoid adversely affecting small telcos, rural communities


Arlington, Va., December 7, 2010 - Freezing, capping, or otherwise eliminating high-cost universal service support will have dramatic and immediate consequences on broadband availability in rural America the National Telecommunications Cooperative Association (NTCA) said in comments to the FCC on the role of universal service and intercarrier compensation in the commission's national broadband plan.

NTCA urged implementation of its own national broadband proposal-specifically provisions regarding changes to the USF structure.  Adopting NTCA's plan would ensure reliable and predictable universal service support is available to deliver high-quality broadband throughout rural America. 

In the comments, NTCA opposed elimination or reduction of high-cost USF support and cited potential consequences of such a change, noting that "at best, retail rates would increase and put service out of reach of many and service quality would drop because carriers would no longer be able to fund necessary network upgrades and maintenance.   At worst, small rural ILECs would no longer be able to serve their customer base, stranding high-cost rural customers without adequate broadband coverage." 

NTCA also said USF reform should include designating "Market Failure Areas" (MFAs), those areas that lack the population base or economic foundation for any provider to justify broadband facilities build-out without external monetary support.  These MFAs should then be used to identify where new broadband USF support is most needed for deployment expenses. 

"NTCA urges the Commission to gather input, as soon as possible, from all interested and affected parties on how to establish exactly which areas are too costly and thus would qualify as broadband MFAs," NTCA said. "The process needs to be transparent and focused on areas-not providers-so that it is not dominated by corporations with the largest reservoir of financial, technical, and political resources."

The association said high-cost USF support should be available for middle-mile and second-mile transport services and cited a recent data request of its membership that indicated middle mile costs will rise dramatically as bandwidth demand increases. 

NTCA also urged the FCC to implement a revenue-based contribution methodology that includes all broadband providers and said the commission should explore requiring large bandwidth users to contribute to the new broadband USF funding mechanism. 

The association further recommended that the FCC maintain Rate of Return regulation for rural ILECs throughout the transition period and allow rural ILECs to base their high-cost support on each carrier's study area average costs, to ensure affordable and uninterrupted broadband access to rural, high-cost consumers.

View the comments. 


The National Telecommunications Cooperative Association is the premier association representing more than 560 locally owned and controlled telecommunications cooperatives and commercial companies throughout rural and small-town America. NTCA provides its members with legislative, regulatory and industry representation; meetings; publications and educational programs; and an array of employee benefit programs. Visit us at Caitlin Colligan at 703-351-2086