Without Universal Service Fund (USF) support, the sustainability of existing rural networks and services could be at risk, according to a new report from NTCA–The Rural Broadband Association and Cartesian, a global consulting firm.
Universal Service sustains rural connectivity and ensures affordable broadband and voice service in rural communities that otherwise may lack a business case for investment.
The Universal Service report also found:
- A 40% reduction in USF support would mean that broadband operators couldn’t continue operations on existing networks, threatening the long-term viability of broadband access in rural areas.
- About half of the cost of network operating expenses are due to labor costs, which rise faster than inflation in rural areas.
- Rural connectivity would be threatened without USF support. Without these funds, telecom operators would be forced to cut back or discontinue service in underserved areas.
“As network demands increase and operating costs rise, the Universal Service Fund continues to serve a vital role in sustaining rural networks and ensuring affordable access to broadband and voice services,” NTCA CEO Shirley Bloomfield said in a prepared statement about the report.
“This report highlights just how delicate the balance is for robust, reliable, and affordable rural connectivity and how important it is for policymakers to take into account market dynamics and sustainability when making decisions.”
In her statement about the report, Bloomfield said — as she told Telecompetitor earlier this year — that if Universal Service support disappeared, many broadband providers would not be able to make the business case for expanding their networks.
Last year, the U.S. Supreme Court determined that the USF does not violate the nondelegation doctrine of the U.S. Constitution and the contribution system to the fund is not an unconstitutional tax. The court also found that the Federal Communications Commission has legally managed the program with the help of the USF administrator, the private, non-profit Universal Service Administrative Co. (USAC).
