As rural telcos face a shortfall of as much as $2.1 billion in the Universal Service program, the solution may involve tapping a funding source that is common for other government initiatives but not for telecom: Congress is considering an infrastructure bill that could include broadband funding. And as comments made by FCC Chairman Ajit Pai yesterday illustrate, support is growing for the idea that if Congress makes additional broadband funding available, it should go toward USF.

“Recently the President proposed that Congress pass a major bill to upgrade our nation’s infrastructure,” said Pai in an address about “Bringing the Benefits of the Digital Age to All Americans” at Carnegie Mellon University’s Software Engineering Institute yesterday. Pai stopped short of saying he supported such a bill, instead saying he supported “the President’s bold vision on this issue.” But he went on to say that “If Congress moves forward with a major infrastructure package, broadband should be included.”

In the digital age, he said, “our wired and wireless broadband networks are core components of our nation’s infrastructure.”

Importantly, Pai added that “any direct funding for broadband infrastructure appropriated by Congress as part of a larger infrastructure package should be administered through the FCC’s Universal Service Fund and targeted to areas that lack high-speed Internet access.”

Broadband Funding
Pai’s comments echoed those made in a blog post by FCC Commissioner Michael O’Rielly several weeks ago. O’Rielly also stopped short of advocating additional funding for USF but said that if Congress decides to make additional broadband funding available, it should be administered through the USF program.

The two commissioners had similar rationales for advocating this approach. Both Pai and O’Rielly noted that the USF program is designed with safeguards to minimize waste and that funding could be made available quickly by administering it through an existing program.

“Our newly revised rural deployment programs are designed to get the most bang for the buck,” said Pai yesterday. He also noted that USF has bipartisan support and “[t]hese days, if you can get bipartisan buy-in on a policy approach, you should take it.”

Traditionally, USF has been funded as a percentage of long-distance voice revenues – an approach that is becoming increasingly unfeasible as those revenues shrink at the same time that USF buildout requirements have been increased to encompass higher-speed broadband. Earlier this year the FCC had to scale back broadband buildout goals for the program when funding came up short by $210 million annually for the next 10 years.

That includes a shortfall of approximately $110 million annually for carriers that chose support based on the FCC’s A-CAM cost model and as much as $100 million annually for carriers that chose to remain on the traditional high-cost USF program. Initially, the shortfall for carriers choosing the A-CAM option was $160 million annually but that amount dropped to $110 million when the FCC freed up an additional $50 million annually for that program.

In his address, Pai also recommended that any infrastructure bill should include the Gigabit Opportunity Zones proposal that he made last year. That proposal would provide tax incentives for internet service providers to deploy high-speed broadband to low-income neighborhoods and would require local governments to make it easier for ISPs to deploy these networks, Pai explained.