A post I did earlier this week about the Great Disconnect initiative spearheaded by some rural Iowa telcos drew a slew of responses, including an email from National Broadband Plan crafter Blair Levin—which lead to a phone call with him yesterday.
Levin has drawn a lot of criticism from rural telcos, including those behind the Great Disconnect, for recommendations made in the NBP—particularly the 4 Mb/s target speed proposed for the impending broadband Universal Service fund. I agree with rural telcos that 4 Mb/s is too low and I said so in my post. What some readers objected to was my view that a 100 Mb/s USF target is asking too much right now.
Levin contacted me because he wanted the opportunity to reiterate a couple of key points that have consistently guided his thinking about USF reform—the first of which sometimes gets lost amid all the other discussion.
His first point: As the Universal Service program transitions to broadband, the first priority should be to get broadband to people who can’t get it today, rather than to increase speeds for people who already get broadband.
His second point: It is not possible to achieve both of these goals without increasing the size of the high-cost fund.
The second point is what gets rural telcos’ blood boiling. Some rural telco stakeholders responded to my recent post by arguing that broadband should be a sufficiently important priority that we, as a nation, should be willing to increase the money we devote to it to ensure that everyone has equal access–and I don’t disagree with that. The question is how we get there.
I asked Levin couldn’t we find a way to raise additional funding for broadband by broadening the base of companies that contribute to Universal Service to include broadband providers? He said he believes there is too much political sentiment against a larger high-cost fund, even if the cost to current payers remains the same.
It’s true that various policymakers have expressed concerns that the Universal Service program is out of control—and considering the very large payments that have gone to a few unusually high-cost providers, these concerns are not without justification. Levin likes to point to the example of the $17,000 that was spent in one year to help bring service to a vacation home.
I like to remind people who raise these concerns that the average rural telco collects a few hundred dollars per line per year. Nevertheless, there is some waste in the Universal Service program—and Levin’s argument is that until reformers can demonstrate that steps have been taken to curb the waste that is in the program, there will be little support outside the rural telco community for increasing the fund size.
Levin made kind of an “Ask not what your country can do for you” argument. Rural telcos, he said, shouldn’t be talking about how they will collect money from the fund. Instead, he said, the focus should be on how the money is spent.
“What we have to tell the American public is that we’re solving the problem Congress asked us to solve,” he said. “Until we do that we can’t say we want to collect a lot more money.”
I suspect some members of the Telecompetitor community will disagree?
What Levin and his cronies fail to understand is the best way to reach their goals is to emulate what is working, not what isn't. The current system brings broadband to the unserved and underserved much better than what they want to replace it with. They are emulating the wrong system. It's real simple. Go to rural America and find where broadband is currently and where it is not. They want to emulate the system that delivers no or poor broadband, not the one that works. Seems silly.
The fraud issue kills me. Why not pursue the companies committing the fraud, then trying to break the whole system, causing everyone to suffer. It's basically an admittance of incompetency by regulators, because they are either unwilling or unable to stop the fraud from a relatively small number of companies.
What fraud? This is like the administration claiming it saved millions of jobs when we have 9% unemployment. Specifically, sir, what jobs were saved? Spcifically, Mr. Levin, what fraud are you speaking of? How much is it in total? How does that compare to any other program the feds meddle in or run?
"Likes to point at" and it is one example for $17,000? Was that fraud or just an example of someone playing by the rules ESTABLISHED by guys like Levin?
I work in the Telcom industry and would say that to lay in new fiber for a couple of miles can easily cost $17,000. When you include construction costs of digging and burying the fiber, and buying equipment to light the fiber, and turning it all up for service, the cost starts to seem in line. What you don't understand is that every house the fiber runs past is now eligible for service not just the vacation home at the end of the run.
JIM
I understand what you're saying. I believe Levin's point was about a carrier receiving annual support of $17,000 per line for all homes, vacation or permanent. Funding at that level would imply that construction costs were considerably higher. That's an unusually high level of funding considering that the average rural carrier collects a few hundred dollars per line per year. But again, the average rural carrier's support level IS a few hundred dollars per line per year. A support level of $17,000 is the exception, not the rule.
Joan — what some fail to remember is the COLA (Carrier of Last Resort) responsibility. An ETC with COLA responsibilty must provide service to anyone who requests the service. Even those remote homes who are miles away. That is what universal service is all about. The $17,000 example (or as Levin tried to used "$20,000") is the exception and not the rule. Rural ROR companies have invested in their communities where the larger Price Cap companies have chosen not to. You won't find huge Stadiums with a rural companys' name on it like you will the larger companies. But you will find a company that when the community needs sponsorship and support that will and DOES give back. They played by the rules and now they are being targeted for it.
KATHY
Your COLR point is well taken. I don’t think people are suggesting that many rural carriers collecting high per-line amounts in USF funding are doing so fraudulently. I certainly don't believe that to be the case.
"Too much political sentiment against a larger high-cost fund"? Guess where that sentiment comes from! It comes from the very one's that don't want to pay to have their 'goods hauled to market'. It comes from the lobbyist's of the very companies sending the data that gobbles up the bandwidth on the networks we provide to the customer! They want to drive down the information super highway and make billions of dollars without having to pass through a single tollbooth. Sometimes a tollbooth is necessary to get the right kind of infrastructure in place.
If Mr. Levin is OK with America having sub-standard speeds in many rural areas and some urban areas, and the FCC and federal government stop issues press releases and reports about how our broadband lags in the world, I will have to be satisfied with Mr. Levin's response.
If, on the other hand, we want near-universal coverage and near-universal world-class speeds, then capping the funds, as politically attractive as that is, will be inadequate.
It's the same policy makers who bemoan the state of American broadband speeds and service compared to other countries (even though these surveys usually compare apples to oranges) who then turn around and say "we can't increase the amount of money" we spend on building broadband. They seem to expect our world rankings to improve magically. These policymakers either need to come up with more money or they need to stop complaining about our world rankings.
Good article and summary. Coincidentally, we interviewed Blair Levin yesterday and he echoes this article:
http://www.viodi.tv/2011/04/28/blair-levin/
As an interesting counterpoint, Bill Hegmann of NECA gave his perspective on the NBP in this video interview at the 2011 MTA Convention.
http://www.viodi.tv/2011/04/28/hegmann-nbp/
Say what you want about Levin, but I do think he deserves some credit. I don't agree with his policies, but I do commend him for leading this charge. It's not easy to lead the charge of reform. I think we can all agree the system needs reform. It takes a lot of courage to take that challenge on – its much easier to stand on the sideline throwing rocks or launching arrows. I hope that the debate leads to more sensible reform, but I do think Levin deserves some credit for his willingness to get out in front and move the process forward.
He might deserve some credit for getting it started. But he also needs to have an open mind and realize that his proposal is not perfect. Take some input and advice from people who are actually providing broadband service every day, instead of insisting that you know it all. And quit playing games with numbers like the $17,000 comment that is just meant to make the whole industry look bad when anyone who knows anything about the industry knows that is the exception and there is more to the story. Those kind of games are just childish.
Unfortunately, I believe the FCC has already made up their minds. It probably doesn't matter what 'facts' they are given. The rules more then likely have been written and they are just going through the official motions. When Rural America is completely destroyed then we can say … "told you so" but by then it is too late.
As an industry watcher and back-woods economist, the $17,000 build to the vacation home is an example of what I look at as first costs. When the second vacation home is added to the network for $500 my network costs for serving the second home is not $17, 500, and this is what an old telephone dog instructed me on base economics of building out a telco broadband network.
What I don't understand is the antiquated engineering mentality that builds middle mile (intercity) networks and a year later is digging down the same path to update the last mile networks. I have always wondered if these same network designers were not able to think in a parallel world?
Aren't we lucky that the planners and designers of the United States Interstate Highway system wasn't set up by the F.C.C. and it's expatriates? You ride the roads, you pays the money. If you haul heavy loads with more axels, you pay permits costing more money. Your comments were on target.
Personally, I think asking Netflix to pay is silly. The consumer is already paying the "shipping" costs. If you're not charging enough for what the consumer is using, charge them more.
When I buy something from Sears, or even Amazon, *I* pay the shipper, not Amazon unless they are running a special…in which case they *alone* pay, not both of us.
They are bandwidth hogs. Consumers are already complaining about pricing.
It is not the same as purchasing a product from Sears.
Levin is not being quite honest here. Levin is anti Rural anything, so what is the FCC and the obama admin doing with the broadband stimulus money. Well in Bush Alaska they are creating a monopoly with GCI, who now charges ERATE for 6Mbps at around $600,000 to the schools. Of course the schools only pay 5% of this, while the taxpayer pays the rest. Now GCI is telling thes schools and clinics who use ERATE and other government programs, that the bandwidth is going to double, after the fiber/microwave that has been funded and paid for by taxpayers is completed. So the agencies giving out the money, did not give the funds to native corporations, or cooperatives who are not in it for profit, but they gave it to GCI, a private company who has the Politicans in their pockets. And this is what Levin really wants, as GCI is fighting to not even give 4mbps down to the residential customers.