The National Cable & Telecommunications Association (NCTA) has some real problems with government funding programs that target rural telcos. On Friday the organization asked the Rural Utilities Service to stop making loans through the broadband loan program until reforms to the program guidelines can be made. The broadband loan program provides low-interest loans to service providers deploying broadband infrastructure in rural areas that cannot get broadband service or where there is limited service availability.

In comments filed with the RUS, the NCTA suggested broadband loan program reforms including limiting loans to areas where at least 75% of people cannot get broadband. The NCTA also suggested that the RUS reconsider how it treats funding that rural telcos receives through Universal Service and inter-carrier compensation programs. Currently those funding streams are considered to be revenue for the purpose of the broadband loan program, but the NCTA argues that this is not an appropriate policy, considering that the FCC plans to reform the Universal Service program and phase out inter-carrier compensation.

In response to an email inquiry from Telecompetitor, a spokeman for the U.S. Department of Agriculture, the parent organization of the RUS, said, “USDA will review the National Cable Television Association’s comments with the others we received in response to the interim regulations published in the Federal Register on March 14.” That comment period closed May 13, the spokesman added.

The NCTA’s latest action came just a month after the organization issued a report critical of three RUS broadband stimulus awards made through their BIP program.  But although that is a separate program from the broadband loan program, that didn’t stop the NCTA from attaching its April report to the comments sent to the RUS on Friday as evidence that the RUS has “provided broadband funding to entities in areas where broadband already is made available by cable operators and other broadband providers without government subsidy.”

The chief operating officer of one of the service providers singled out in that report told Telecompetitor today that its award was made within program guidelines. The award, to Rural Telephone Service of Kansas, was based on the fact that 75% of the award area lacked sufficient access to broadband, said Rural Telephone Service COO Rhonda Goddard. That 75% number, she said, was based on geography.

“In western Kansas, everything is a long way away,” said Goddard. “We have customers clear out on the ends of our exchange areas.”

In its report the NCTA argued that Rural Telephone Service’s project included downtown areas of rural communities where broadband service was already available from other providers—and in some cases, from Rural Telephone itself, albeit at lower speeds than what was targeted for the stimulus project. Goddard argued that construction to the outlying rural areas that lacked broadband would not have been economically feasible—even with the stimulus funding—unless Rural Telephone were also allowed to overbuild the downtown areas and earn advanced services revenues from those areas.

“The government was smart in allowing recipients of stimulus funds to use some of the money in more populated areas because that allowed us to also serve rural areas,” Goddard said.

The NCTA argued that 83.3% the Rural Telephone project area can already get broadband, but that number was calculated on a household basis rather than a geographic basis. It’s also worth noting that the RUS currently defines broadband as a service delivering at least 768 kb/s downstream. If the new 4 Mb/s downstream target proposed for the National Broadband Plan were used, the number of households that can get broadband would be lower.

The Rural Telephone Service stimulus project will bring fiber-to-the-home to the project area, enabling the infrastructure to support speeds as high as 1 Gb/s.




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