The details of the FCC’s national broadband plan are trickling out. The actual plan will be unveiled tomorrow at an FCC open meeting and delivered to Congress on March 17th. The creation of the plan was mandated by the American Recovery and Reinvestment Act of 2009, which funded the broadband stimulus program.

The plan will call for a ‘Connect America Fund’ (CAF) which is essentially a universal service fund (USF) for broadband. The Connect America Fund will begin the process of shifting USF away from supporting universal voice access to universal broadband access. We have learned that the CAF will call for minimum broadband downstream speeds of 4 Mbps.

This 4 Mbps threshold is certain to create debate. Some will argue the benchmark is way too low. Others, particularly advocates of broadband wireless, may be more enthusiastic. Early indications suggest the CAF will introduce an element of competition into USF – something that has historically not been present. One thing that isn’t quite clear yet is will ‘carrier of last resort’ apply to the CAF, which will impact those competitive implications?

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9 thoughts on “FCC Broadband Plan: USF to Fund 4 Mbps Broadband

  1. Be careful what you ask for. I read this to say that the CAF will be up for grabs, depending on who can deliver that 4 Mbps most efficiently. With a threshold that low, lots of players are now in play.

  2. Bernie – There is a real difference between a company that is structured to grow and flip vs. a company that invests long term. A highly competitive marketplace is one where multiple providers can offer and sustain services or get in and out without a huge penalty. A sound infrastructure requires serious investment (cable plant or tower construction). If the 'winner' gets the business by going cheap, the hard to reach customers go to satellite (with all the benefits and drawbacks), the medium difficulty customers will have quality problems, and the remainder – if they are lucky – might have choices between providers.

  3. And what is going to happen to the rural telco customer who cant afford a telephone and doesnt want a pc? If there is no USF the cost to those rural customers will skyrocket….

    1. Good point Chris – one scenario to consider is that customer could be offered an IP voice product over broadband, and conceivably to them, they wouldn't know the difference. Obviously there's a lot of assumptions in this scenario, and the details would have to be worked out, but it's one possible scenario.

  4. Bernie, I understand there could be a VoIP service installed. But is that considered broadband service? If only serving the purpose of VOIP? Who knows… There are two many people in rural areas that depend on a POTS line as there way of staying in touch with the world. If USF is yanked away from the Small Ilecs in rural areas there will be no one there to keep the infrastructe and back haul networks needed to keep broadband running in those rural areas….

    1. Chris – you make very valid points. I look at this as broadband replaces a POTS circuit (and this is over the long term – I don't see flash cuts happening). Carriers can then deliver a variety of apps over that broadband circuit, voice being one. So customers that don't need anything but voice, they still receive the service they need, even though, technically there is a broadband circuit to their home. USF helps fund that broadband circuit, in the same way it funds a POTS circuit today. If done right, all of your valid concerns are still met — it's not done at the expense of POTS — it's done to transition POTS to broadband.

      1. VOIP would need to be reclassified as something other than data, which may have some unintended consequences for the VOIP providers. During the transition period they would become subject to access and they won't like that.

        From a broadband loop standpoint, there isn't a cost savings if all you provide is voice, it essentially becomes a waste of resources.

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