Rural Telecom Leaders to President: Cuts to Universal Service Threatening Stimulus Efforts, Loan Repayment and Access to Capital, Undermining Administration’s Broadband Goals


NTCA board members, CEO request White House meeting to discuss cuts to universal service and related programs, danger to public and private loans, including economic stimulus awards

Contact: Laura Withers, 703-351-2086, lwithers@ntca.org 
               Wendy Mann, 703-351-2087, wmann@ntca.org

ARLINGTON, Va. (August 23, 2012) – Looming reductions in federal Universal Service Fund (USF) and other rural telecommunications cost recovery programs pose a threat to the repayment of public and private loans and will jeopardize the administration’s efforts to provide ubiquitous broadband access and stimulate rural economies, telecom leaders from more than a dozen states said today in a letter to President Barack Obama.

Members of the Board of Directors for the National Telecommunications Cooperative Association (NTCA) and association Chief Executive Officer Shirley Bloomfield signed the letter, which urges the president to help “put the promise of rural broadband back on track.” Among other things, the group has been seeking an immediate suspension of new untested and unpredictable caps on USF support that are already preventing rural providers from planning and initiating the long-term network investments necessary for rural broadband. NTCA has also been urging the Federal Communications Commission (FCC), which adopted these reforms, to study their effects on broadband adoption, broadband deployment, consumer rates and provider access to capital markets prior to making yet further changes that might only exacerbate the current problems.

The USF cuts and related reductions in intercarrier compensation (ICC) rates are already yielding increases in consumer rates in rural areas, causing most network providers to reconsider rural broadband investments in the pipeline, and prompting lenders and investors to limit access to capital for further investments. Such developments put at risk the Obama administration’s vision of universal broadband access and are frustrating efforts to stimulate rural economies and promote job creation and retention through the $7.2 billion broadband infrastructure development program in the American Recovery and Reinvestment Act of 2009.

“In 2009, your administration pressed for an economic stimulus package that had the twin aims of promoting job creation and, as you said at the time, ‘building a 21st-century infrastructure,’” the group stated in the letter requesting a meeting with the president. “Now, however, other federal ‘reform’ efforts are throttling the predictable revenue streams needed to justify the business case for such operations and to help facilitate repayment of these stimulus loans, other Rural Utilities Service (RUS) loans and private loans.

“It is essential that our national broadband policy does not merely ‘trade off’ unserved rural areas or create situations in which the significant efforts of small providers to deliver broadband become ‘frozen in time’ or, worse yet, deteriorate over time,” the group added. “Moreover, at this critical juncture in our nation’s road to recovery, it would be unfortunate indeed to pursue a USF and ICC reform plan that injects regulatory uncertainty into the marketplace and calls upon small businesses to cut jobs and hike prices.”

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The National Telecommunications Cooperative Association (NTCA) is the premier association representing over 580 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; educational programs; and an array of employee benefit programs. Visit us at www.ntca.org.