Federal Communications Commission

National Broadband Plan-Is the Sky Really Falling

July 15th, 2010 by Admin User

[Wireline Competition Bureau Deputy Chief Carol Mattey prepared this speech July 26, 2010 for delivery at the 47th OPASTCO Summer Convention and Tradeshow in Seattle, WA]

Thank you for inviting me to join this panel – I appreciate the opportunity to talk to all of you about what steps the FCC is taking in the wake of the National Broadband Plan to undertake USF reform.  We want to have an honest and respectful dialogue about what we should do to make sure that everyone has access to broadband and voice service in this country.

In March, the full Commission unanimously adopted a “Joint Statement on Broadband” which stated:  “The nearly $9 billion Universal Service Fund (USF) and the intercarrier compensation (ICC) system should be comprehensively reformed to increase accountability and efficiency, encourage targeted investment in broadband infrastructure, and emphasize the importance of broadband to the future of these programs.”

The National Broadband Plan presented a vision for how to achieve these goals, but what’s important to remember is that was not a rulemaking document, and there will be plenty of opportunity to discuss and refine that vision as we move forward during the rulemaking process. 

Reform Goals
At the outset, I’d like to highlight the goals that we are trying to advance.

Goal #1 – Bring broadband to those that do not have access to it today,  in a manner that can evolve as next generation technology evolves.  Private investment, supplemented with public investment in certain areas, has brought broadband to most Americans – but 14-24 million Americans still do not have access to broadband, many of whom live in areas that simply are not profitable to serve today.

We can’t leave these Americans behind.  For some, public investment is needed to unleash private investment.

Goal #2 – Sustain broadband where it is provided today.  We want to provide a certain foundation for continued investment in broadband and a pathway for broadband to grow and evolve in the future. We understand that there is a need to provide ongoing public investment to sustain broadband that already exists in certain areas. Funding broadband where it doesn’t exist and sustaining broadband where it does shouldn’t be seen as mutually exclusive goals.

Goal # 3 – Make sure that we use USF wisely.  It is imperative that we undertake reform in a way that is fiscally responsible and sensible.

Where we are today
Big picture, the National Broadband Plan made several USF recommendations:

  • Create a new Connect America Fund to support broadband networks in areas that are uneconomic to serve.
  • Create a targeted Mobility Fund to address areas that are significantly lagging in 3G coverage.
  • Refocus existing USF to expressly support broadband.
  • Transition gradually.

The FCC began the process of seeking comment on certain discrete issues in the April NOI/NPRM – but that’s just the first step.  Staff is working full steam ahead on more comprehensive USF, ICC and USF Contributions Reform NPRMs proposed for 4th Quarter seeking comment on the many issues that you and others have highlighted must be resolved to move forward on these ambitious goals.   

The comments on the April NOI/NPRM were just filed.  We are encouraged by the broad participation in the first step in our USF reform proceeding. 

We are pleased that commenters have offered constructive feedback and particularly want to thank those commenters that provided data.  For instance, the Oregon Telephone Association and Washington Independent Telecommunications Association submitted information for each of their member companies, such as the last five years of line loss, their current local rates, average loops per square mile, the population per square mile for the relevant county, and the percentage of regulated revenues derived from  USF and ICC.  That sort of information is helpful.

We see some common themes of consensus emerging from the initial record. 

  • USF reform is long overdue but we shouldn’t make any flash cuts.
  • In reforming USF, we must focus on the needs of consumers in rural areas.
  • Consumers should have access to high quality broadband and voice service
  • Broadband services should be reasonably comparable and affordable
  • But USF support cannot be excessive.
  • Deployment and adoption programs must work hand in hand.
  • Coordination with states will be critical.

At the same time, we see some areas of misconception in the initial record.  I’d like to spend a few minutes addressing the theme of this panel, “Is the Sky Falling?”  My answer to that question is no – but you need to give us more information so we can get this right. 

There’s some misunderstanding that the National Broadband Plan recommended cutting or eliminating USF, with nothing in its place.  That’s not the case. 

As I said in the beginning, one of the key goals is to sustain broadband where is provided today.  In fact, the Plan specifically recommended that the Connect America Fund provide ongoing support to areas that continue to need it for broadband, those areas where it’s not profitable to provide broadband. 

Everyone needs to understand – the recommendation to cut existing USF was intended to occur in conjunction with the implementation of a new program to support investment in rural America – the Connect America Fund. 

We are well aware that we need to flesh out the details of the replacement USF program, the new Connect America Fund.  But we need data so we get the scope and need for ongoing support right.  We are looking for more robust information about cash flows, and we can talk to you about the process for filing information confidentially at the FCC.  We need good data to make good decisions.

We also we need to be thinking about what it means to be a carrier of last resort in a broadband world.   As we move forward, the FCC and states need to partner in looking at how to move away from voice-centric regulations to focus on broadband and voice networks. 

The National Broadband Plan suggested that recipients of funding should be required to meet certain public interest obligations, such as being required to report on service availability and pricing, and also meet specific service quality and build-out requirements.  We need to define the parameters for affordable broadband service.  In fact, these are some of the core issues that we will need to explore in the rulemaking proposed for consideration in the 4th Quarter of this year.

We understand that different policy choices could have significant impacts on existing carriers of last resort, and we need to think about how this all fits together.  We do realize that many rural networks provide both voice and broadband, and that many of you have taken out loans to upgrade your networks to provide broadband.   We are well aware of the problem of the donut and the hole, and that it costs far more to serve the customers outside of the small towns. 

To conclude, the National Broadband Plan started the dialogue for change. The time is now for you to come forward with specific actionable ideas that we can consider as we are working on those NPRMs for the 4th Quarter.  Change often is not easy, but change is necessary for the country to realize its goal of achieving universal access to broadband and leaving no consumer behind. 

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