The Senate Commerce Committee held a hearing yesterday on Universal Service Fund (USF) reform. It’s a hot topic. As the FCC looks to implement the national broadband plan, USF reform is front and center. There is considerable debate on how to transition the $7 billion fund from supporting universal availability of dial tone to universal broadband.

Much of the discussion during the committee meeting centered around the debate of Title II regulation for broadband and the impact that would have on USF reform. But Windstream CEO Jeff Gardner made some interesting points in his testimony.

There’s been much talk about the digital divide between rural and urban America – a divide that many argue will be exacerbated by the national broadband plan, which sets broadband speed targets of 4 Mb/s for services supported by the new Connect America Fund (CAF), and implied targets of 100 Mb/s for urban areas under the so called ‘100 squared’ initiative. On the surface, one could draw a conclusion of a pending and significant broadband digital divide, where urban America enjoys speeds of 100 Mb/s and rural America inches along at 4 Mb/s..

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But as Gardner points out, a rural-rural broadband digital divide already exists, where vast differences in broadband availability exist in rural territories. “We have heard about the fear that reform might create a rural urban divide, but the National Broadband Plan has recognized that the current rules have already created a rural-rural divide,” said Gardner.  He is correct.

Within the context of broadband, there are two rural Americas. Generally speaking, rural Americans served by small rural local telephone companies and/or co-ops tend to have very good access to broadband services (whether they actually subscribe to it is a different story). Rural Americans served by large tier one and tier two carriers like Qwest and Verizon may not be so lucky. As Gardner points out, “About two thirds of all housing units without broadband are located in the service territory of larger [companies like] Windstream, Frontier, CenturyLink, Qwest, and AT&T.”

It’s an important distinction because our current telecom policy has basically created a broadband digital divide in rural America, never mind the urban-rural divide. As policy makers craft the next generation of broadband policy they should keep this in mind. Does the national broadband plan and the CAF address this issue, or exacerbate it?

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9 thoughts on “Forget Urban-Rural Broadband Digital Divide, What About the Rural-Rural Broadband Divide?

  1. I'm confused. In his testimony, Jeff Gardner said that Windstream has built out broadband to about 90% of its territory. He also bragged about Windstream's industry-leading take rate. Yet he's also saying there's a divide between two rural Americas. The small rural companies also say they've built out about 90% as well. Doesn't sound like a divide to me, at least not as far as Windstream's territory is concerned.

  2. Its not confusing, the tier one's due to their dense urban areas have not qualified for USF support in the past. They see this as a way to get a piece of the pie. Since they are mostly union shops, Obama and his cronies will see it passed and the small mom and pops are getting sold down the river. The digital divide mantra was created by the baby bells, not the rural carriers.

  3. This is precisely why the bbplan is flawed. If the goal is to get broadband to more rural customers, then look at what's currently working. The plan as I understand it, wants to install the rules that have led to these areas with no broadband, everywhere. Seems counter intuitive.

  4. Gardner has a good point, but the plan builds out his unserved rural areas at the expense of underserved rural areas. If the plan is implemented as written, it will be wireless carriers overbuilding his unserved areas anyway. The plan undermines the Universal Service principles of comparability and affordability. Gardner has areas that need some help. Let's help those consumers but not by degrading service to other rural consumers. Expand the contribution base and move the entire country forward. This is infrastructure investment that will be critical for our country's future. How much do we spend on other infrastructure?

  5. I love how statistics can be manipulated to say whatever you want them to say. Even most of the Tier 1's can say they serve 80-90% of the customers in rural area. That is mainly due to the fact that they have put DSL devices in their CO or concentrators. If you are outside of 6 Kft or so from that office, you are out of luck. Most RLECs have a way to get at least some "broadband" to almost all of their customers. That might be 100 Mbs or it might be 512k, but they are proud to say that they are serving everyone. I personally know average schedule companies doing the same thing without cost based support. However, that pride in giving good service and trying to future proof their networks is being used against them at the FCC. The Tier 1's are saying things like, "See what these guys are doing? They are putting in FIBER where good businessmen like us can't afford to even put in replacement copper! They are obviously GOLDPLATING their system and taking advantage of the USF!" Since the FCC hears it every single day from them and the once or twice a year the RLECs show up in Washington all they here from us is to not to change the systems and saying, "look at the fiber we put in!", the FCC staff has come to agree with the big guys. It doesn't help when the big guys have decided to manipulate the contribution factors using VOIP and other means to make it look like it is out of control. The FCC doesn't want to hear that is has been CLECs, Wireless, and Schools and Libraries that have been responsible for the growth. It doesn't fit with their views of the current system, so they choose to ignore it. Let's just give the big wireless companies some money and let 4 Mbs be the new standard for broadband in rural. They even put out a flawed cost model to support it, without being able to show the model parameters of course. What a country!

  6. I'm crying crocodile tears. Boo hoo! I don't believe what some of the large carriers are trying to represent. That they can't afford to take care of their customers?!? SBC acquired AT&T for $25 billion and spent another $78 billion to get Bell South. Twenty miles down the road from where I work AT&T doesn't offer broadband service to 300 of their customers. What is wrong with this picture?

    If they spent less on lobbying congress and more on their rural facilities, they might be farther along.

  7. Good points but i thought that the very large companies gave up being regulated and were offered the opportunity to set their own rates because of this unregulated factor. They then promised to keep up with technology and provide state of the art communications to their customers for this freedom and if the little guys agreed to go along with this concept not fight the changes created by Judge Green and the MFJ in return for support from the system (access and USF). The concept that the big guys had the gravy customers they would take some of the gravy and spread it to the rural customers and keep them in pace with their urban gravy customers. Then this cellular thing came along and they shifted their focus on cellular. Now i am willing to bet that the same customers who are undeserved by the big guys with the lack of broadband are also undeserved by the big guys wireless service also. Maybe some FCC staffer with a pocket protector should check this out I guess you can invest in technology or in fat bonuses and higher dividends. Then when you do not fulfill your obligation you can turn around and blame it on the system and accuse the little guys who kept up their end of the bargain. Just my opinion maybe a fable at best.

  8. There is also a question of competition. Current and proposed policy will lead to extremely limited competition in urban areas (perhaps 2-3 real competitors) and no competition in rural areas. So much for market-based solutions.

  9. The standard needs to be the same for rural and for urban, the reform needs to come up with a plan where the broadband provider gets more money for rural and more money for the more bandwidth they provide.

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