There are ongoing reductions in the total amount of funding provided by the Universal Service Fund (USF) to regulated telcos due to federal budget control mechanisms that are chilling rural broadband investment, according to a survey by NTCA-The Rural Broadband Association. The average reduction in federal (USF) support has grown from a 4.5 percent reduction to 9.1 percent to 12.3 percent over just the past nine months, according to the association.

That amounts to approximately a $173 million reduction over a 12 month period, starting July 1, 2017. The original forecasted budget for this portion of the USF was $1.4 billion.

“In letters sent to the FCC, Congress has called for updates to universal service policies that will enable better, more affordable broadband for rural Americans,” said NTCA Chief Executive Officer Shirley Bloomfield in a press release.  “But recent reforms have laid bare that an insufficient USF budget and an unpredictable budget control are chilling broadband investment and preventing rural consumers from obtaining access to reasonably priced services.”

In a survey of its 800 service provider members, who are primarily small rural based telcos and cooperatives, NTCA found that 64% of survey respondents indicated they intend to reduce their rural broadband investment over the next 12 months. NTCA suggests that reduction in investment across their entire membership could equate to $300 million in delayed or cancelled rural broadband investment.

On a per company/telco average, the reduced investment will mean 854 consumers will be impacted and not see improvements in broadband, which across the entire NTCA membership could equate to over 275K rural locations.

Trump to the Rescue?
Rural broadband, or lack thereof, is getting considerable attention these days. President Trump recently mentioned it, saying he intends to include funding for rural broadband as a part of his $1 trillion infrastructure plan.

Given this ongoing budget shortfall, will any new infrastructure investment be sufficient to both make up for this shortfall and add additional funding for rural broadband investment? Time will tell.

FCC Commissioner Michael O’Rielly has already advocated that any new infrastructure funding targeting rural broadband should flow through the current USF system. He has even cited this current shortfall in the context of any new funding.

I suspect that idea of pushing new infrastructure funding through USF could see some resistance. There are a variety of new players in rural broadband, including municipals, WISPs, and other start-ups who have not traditionally participated in the USF program, and may want access to these potential funds.