Small Telcos Rally on Hill Before Next Congress

Rural telcos also will lose a long-time advocate in the House to retirement, Rep. Bart Stupak, D-Mich. Dorgan hopes “a fair amount of work” on broadband “can be done this year, even when we're still here,” he told us. The FCC is “moving on so many critical issues,” including the Universal Service Fund and intercarrier compensation, he noted. After Dorgan and Stupak leave, rural carriers will “still have strong advocates here in the Congress, I'm convinced,” he added.

"I think it’s going to be tougher for us,” Derrick Owens, WTA’s director of government affairs, told reporters. “But that doesn’t mean we won’t continue to work with whoever is there and talk with them” about the importance of rural areas and their phone companies to economic development, he said. OPASTCO spokeswoman Martha Silver said a record 150 delegates from the associations’ member companies attended the conference, up 30 from two years ago.

Dorgan doesn’t want to see rural areas “left behind” on telecommunications, he told the conference. The senator said he’s collecting colleagues’ signatures for a letter he plans to send soon to FCC Chairman Julius Genachowski. The letter would urge the commission, as it puts its broadband plan into action, to ensure that rural areas get the same broadband speeds as urban areas, he said. The plan aims to get 100 Mbps to 100 million people but defines universal service as 4 Mbps for universal service, he said. “Seems to me what you're doing again is creating a digital divide.”

Dorgan said his letter will set out “a wide range of issues that reflect the interest of rural areas in this country” and say that “there’s a right way and a wrong way to do this, and the build out of this infrastructure is very, very important.” Broadband policy should “provide strength to local companies,” he said. “We need more competition not less. … If we don’t pay attention here, we'll be left with a circumstance where the small companies just can’t exist, can’t make it, and the big companies will gobble each other up, and pretty soon you have one or two companies nationally."

Matsui urged more cooperation between rural and urban interests. “Members representing urban districts need to better understand the need to expand broadband access to more Americans residing in rural, unserved areas,” she said. “In turn, members in rural areas need to have better understanding of the broadband needs in urban, underserved areas.” Matsui emphasized that her bill to make broadband more affordable for low-income Americans (HR-3646) would help rural and urban areas alike. “Though some might be tempted to argue that this proposal will only benefit urban consumers, this is simply not the case,” she said. Companies will have more incentive to build out to rural areas if more people there can afford it, she said.

"I don’t think there has to be a divide” between rural and urban members, Matsui told reporters afterward. She’s working with Boucher to add her adoption proposal to his comprehensive USF revamp bill (CD May 14 p5). “My supporters have been across the board,” she said. “Sure I have urban supporters, but I have rural supporters too, because I think they see this as a way to … move forward their concerns and possibly get something actually happening here.” Matsui said she’s “hopeful” a USF overhaul can get done this year. Genachowski, Boucher and Matsui are trying to revamp USF “with each other, not against each other,” Matsui said. “We'll just move forward to see how far we can get."

Integrating Matsui’s proposal into Boucher’s comprehensive package could increase momentum for a USF overhaul, said WTA and OPASTCO executives. “I think it’s a very integral piece,” said Rose. OPASTCO and WTA back the goals of Matsui’s bill, the executives said. “Adoption is significant, and it’s huge and it’s important,” said Owens. “But you have to have that underlying network available in order for people to adopt broadband.”

OPASTCO and WTA worry that the FCC’s plan for USF will discourage investment by small rural companies, because the revamp would spread existing funds among more companies but not increase the number of contributors, Rose said. In a survey of 23 percent of OPASTCO members, released Tuesday, 56 percent said they would reduce network investment given what they knew of the FCC’s plan, and 40 percent said they didn’t know how their investment would go. If USF revenue is cut, 92 percent said they would invest less, 65 percent said they would raise prices, 65 percent said they would cut staff, and 42 percent said they would cut services. And 39 percent said they wouldn’t increase broadband speeds.

Some companies that won broadband stimulus awards from NTIA and RUS aren’t sure if they should accept the money, said Owens. Because of the FCC’s plan, the companies aren’t sure whether they'll be able to repay their loans to the NTIA or the RUS, he said. Without guaranteed revenue from USF and intercarrier compensation, companies can’t make the investment, Rose said. Small rural carriers plan to urge legislators to write letters to the FCC on concerns about the broadband plan, said Randy Tyree, OPASTCO legislative policy vice president. OPASTCO, WTA and the National Telecommunications Cooperative Association are involved in the effort.

The FCC’s plan to reclassify broadband as a Title II service was a popular topic at the conference. Johanns said in his speech that Genachowski’s proposal would “institutionalize uncertainty” and it puts the agency on a “collision course with the courts.” If Genachowski wants to make policy, he should have run for Congress, Johanns said. The FCC chairman asked his counsel how he could regulate broadband after the Comcast decision, when he should have been asking, “Has Congress by statute given me the power to regulate in this area?” There doesn’t seem to be “much appetite in the Senate to give the FCC broad new powers,” added Johanns. “In an election year, the Senate is probably getting pretty close to not wanting to take on further, very difficult issues, and I don’t see the consensus is there."

Matsui “is encouraged” that the FCC is looking at ways to move forward, the congresswoman told reporters. “We need to find a way to do this, to accomplish this,” she said. But “we are still not in a position at this point in time to really decide how we want to do this."

OPASTCO and WTA haven’t taken a stand on the reclassification proposal, said Rose. Small rural telcos are already regulated by Title II. The associations are on “both sides” of the net neutrality issue, he said. Small companies interconnect with the big carriers’ networks, so they want “nondiscriminatory access as companies to the Internet” and “we want our customers to have nondiscriminatory access,” but “at the same time we really need to manage our network well.” -- Adam Bender

OPASTCO Notebook

Small rural telcos won’t be lobbying this week on the USF bill by Boucher and Rep. Lee Terry, R-Neb., because it hasn’t surfaced, said Tyree. Boucher’s office Monday night told OPASTCO they were sending language over to the legislative counsel to get it “lawyered up” into a form that could be introduced, he said. OPASTCO has heard that “three or four times before,” so introduction could still be a while off, Tyree said.

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Matsui plans to introduce smart-grid legislation “in the coming weeks” to complement recommendations in the FCC’s broadband plan, she said. “I'm also looking at other ideas to include in the proposal to create a coordinating mechanism between the federal government, states, and industry to develop a set of national smart grid standards and goals so this nation can promote a smarter electric grid that empowers consumers to make choices, that can save us energy, and can save them money."