fccFour telecom groups have come together to urge the FCC to increase the Universal Service Fund budget to at least $2.4 billion for 2018 for the high-cost portion of the program. The request took the form of a letter from ITTA – The Voice of America’s Broadband Providers, USTelecom – The Broadband Association, NTCA – The Rural Broadband Association and WTA – Advocates for Rural Broadband.

Small rural telecom companies that receive USF support had the option in 2016 of moving to a cost-based support option known as the alternative Connect America model (A-CAM) or continuing to receive funding based on the traditional mechanism, which bases support on a carrier’s embedded costs. Those carriers choosing A-CAM had to commit to more aggressive broadband buildout requirements.

More carriers than anticipated chose the A-CAM model, which created a funding shortfall for both that program and the traditional program.  Since then the FCC has increased budgets for the programs but not enough to cover the entire shortfall, which means the commission has had to reduce broadband buildout targets commensurately.

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According to the letter sent to the FCC yesterday, “[o]ngoing uncertainty over universal service funding is deterring investment, harming rural consumers and businesses and undermining the commission’s goals of universal service and closing the digital divide.”

Universal Service Fund Budget Recommendations
Increasing the high-cost Universal Service Fund budget to $2.4 billion annually would enable A-CAM funding recipients to receive support at the level initially offered to them in 2016, the letter says. The rural telecom groups advocate using the remainder of the increased budget to “mitigate, if not eliminate, the insidious and unpredictable budget control that is undermining broadband investment and affordability of services” from carriers remaining on the traditional high-cost program.

The budget control mechanisms that the letter references have been controversial since they were first introduced several years ago. Carriers argue that they cannot predict in advance whether their funding will be reduced as a result of the control mechanism and as a result, the carriers are less willing to invest as they cannot know for sure how much of those investment costs they will be able to recover through the program.

The letter also asks for an inflation adjustment to be applied to the high-cost USF program budget.  The groups argue that other USF programs have such a factor.

Other recommendations included in the letter:

  • If the above recommendations are made, the FCC should not need to establish a “floor” of support, the letter argues. But if reductions to support must be made in the future, they should be based on each carrier’s unconstrained costs over the prior three years or the carrier’s then-current unconstrained support, whichever is lower. This approach would “prevent wild swings in support” but would not, in and of itself, result in predictable and sufficient support, the letter states.
  • The FCC should fully fund the existing A-CAM and traditional programs before making any new offers of A-CAM support.

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2 thoughts on “Telecom Groups Urge FCC to Increase Rural Broadband Focused 2018 USF Budget to At Least $2.4B

  1. I could be wrong, but contrary to the article, I believe that ACAM and Alaska companies were fully-funded for their programs, and all of the funding shortfall of the Budget Control Mechanism fell squarely on the shoulders of telecom companies in the "traditional" USF system.

    Many of these traditional companies were not eligible nor able to elect the ACAM model because they'd already deployed broadband funded by either internal operating budgets or private loans or RUS government loans.

    And many, if not all, of the traditional companies who were performing admirably in investing to bring broadband to the local consumer, had their funding cut.

    So let's see: reward those that don't "perform", while penalizing traditional companies who actually do serve their consumers. Doesn't make sense. I hope the FCC can straighten this out so ALL consumers can have broadband funded by sustainable and predictable regulations that make sense.

    1. Thank you for reading, Mike. According to the letter from the associations, the A-CAM program still isn't fully funded. However, it is correct to say that the FCC has closed a larger portion of the funding gap for A-CAM carriers versus carriers remaining on the traditional USF program and you raise a good point about the possibility that carriers who had no choice but to remain on the traditional program because they had already upgraded broadband are in a sense being penalized. Having said that, I'm sure there are companies that qualified for A-CAM because they just couldn't make the deployment economics work before and that they would have deployed broadband sooner if they could have made the economics work.

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