More than two-thirds (69%) of small telephone companies have postponed or canceled plans to upgrade their landline communications networks because of uncertainty about Universal Service and inter-carrier compensation reform, according to data released today by rural broadband association NTCA.
The NTCA estimates the total value of canceled projects at $492.7 million based on data collected last month via a survey sent to NTCA member companies. A total of 185 companies responded – or 34% of the 538 unique email addresses in NTCA’s membership email database.
Of those who said they had canceled or postponed projects, 62% said they had postponed projects, 18% said they had canceled projects and 11% said they had postponed and canceled projects.
“Limiting rural carriers’ ability to recover the cost of bringing high-speed broadband to our country’s most hard-to-serve areas is hindering efforts to plan and execute necessary network upgrades, resulting in millions of dollars in lost or postponed investments,” said NTCA Chief Executive Shirley Bloomfield in an announcement of the survey results. “Ultimately this troubling trend will mean fewer dollars flowing to communities for economic development and jobs.”
Bloomfield added that this is “precisely the wrong direction” the country should be moving in to stimulate the economy and that it “undermines the national objective of making high-quality, affordable broadband available to every American.”
The Federal Communications Commission has begun to implement a plan to transition today’s voice-focused Universal Service program that covers some costs of delivering phone service in high-cost rural areas to focus instead on broadband. But details of how that program would operate for rural rate-of-return telcos have not been resolved.
The FCC also has begun to implement plans to phase out the inter-carrier compensation (ICC) system that also helps cover rural communications network costs. But certain details about those reforms – such as whether carriers should be required to interconnect in IP format, thereby avoiding ICC — also have not been resolved.