NTCA Members Debate Reforms with Broadband Plan Author

February 14, 2011, Dallas, Texas - Policies that helped rural telecom providers successfully build networks in high-cost areas should be replicated not replaced, according to Delbert Wilson, general manager of Hill Country Telephone Cooperative (Ingram, Texas). Wilson and Randy Houdek, general manager of Venture Communications Cooperative (Highmore, S.D.) participated in a point counterpoint discussion with Blair Levin, the leading author of the national broadband plan (NBP), at the National Telecommunications Cooperative Association (NTCA) annual meeting in Dallas, Texas.

Wilson and Houdek outlined the potential harmful impact of certain of Levin's proposals on jobs, service quality and future broadband deployment in rural America. Houdek pointed out that South Dakota policy-makers viewed the potential consumer harms so problematic that the public utilities commission chose to engage in the debate at the national level.

Levin predicted that the discussions surrounding universal service (USF) reform, put forward by the NBP and now as part of the FCC's recently issued notice of proposed rulemaking (NPRM), would either result in broad industry consensus or a stalemate. He said the NPRM changed some portions of the NBP for the better, although he also noted that some changes from the NBP made the commission's intent unclear to him.

In response to Levin's assertion that the system must be transitioned for the broadband environment to prevent circumstances when companies receive tens of thousands of dollars in per line USF support, Houdek noted that such examples are highly unusual, and a "more realistic example" of how the program works would be found in a company like his own: Venture Communications' service area is 8,000 square miles-the approximate size of Connecticut and Delaware combined-and he receives $220 dollars per line of support per year.

Wilson emphasized that when determining what speeds should be funded by the reformed support mechanism, policy-makers should follow the law, which mandates "comparable speed" as codified in the 1996 Telecommunications Act. To offer evidence of their efficiency and the effectiveness of existing mechanisms, he noted that rural telcos' receipt of support from the federal universal service fund has increased by an average of only three percent per year in the past five years, while rural companies have increased their broadband footprint from 70% to 92% over that same time.

Regarding expanding the base of contributors to the USF fund as it transitions to a Connect America Fund, Wilson stated that anyone who uses the network and benefits from it should be paying for that use, with Houdek noting that the nation's voice network is the best in the world because those who use it, paid for it. Levin acknowledged that expanding the contribution base does pose an interesting question, but said that it should be the next step in the debate, once policy-makers have established a "more rational" distribution system.

In closing, both Wilson and Houdek voiced concern that the NBP plan was too experimental and full of "ifs," with Houdek noting that if Levin's assumptions are wrong, there is a risk an entire infrastructure will be destroyed. He urged the FCC to be cautious in how it approaches reform going forward. Levin, on the other hand, challenged rural companies and their advocates to come forward with specific proposals that would achieve the objectives they sought in reform while also addressing in a practical way the broader need to achieve universal broadband nationwide.

Former FCC commissioner Harold Furchtgott-Roth joined the stage following the debate to engage in a one-on-one discussion with Levin that explored underlying economic and legal questions of the FCC proposals. Furchtgott-Roth noted reform solutions don't necessarily come from Washington, but that ultimately it is how well rural telcos meet the demands of their customers. He noted the importance of grounding USF reform policies in the law, noting the NBP "doesn't begin with 'what does the law say and where do we want to go from here,' but rather asserts,' this is where we want to be, now how can we shoehorn the law to fit that plan?" Levin responded that rural providers needed, however, to look to other business opportunities and models, including some laid out in the NBP, to build cases for sustainable operations in their serving areas.

Also during today's general session, Rep. Pete Sessions (R-Texas) addressed the audience, asserting the rural telco industry "is not a self serving business, it is a very important business," and that their companies provide the necessary interconnection that makes sure the system works, to the benefit of the entire country. He urged the audience to share with policy-makers their stories of job creation, economic development and innovation, stating the success or failure of the country rides with rural telecom providers.

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The National Telecommunications Cooperative Association is the premier association representing over 570 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 www.ntca.org.Contact NTCA at 703-351-2037