RLECs Linking Arms on USF Overhaul
Worried about the new shape of the Universal Service Fund, rural telcos have said they're going to come up with a USF formula of their own, said a joint ex parte filing by the Independent Telephone & Telecommunications Alliance, the National Telecommunications Cooperative Association, Organization for the Promotion and Advancement of Small Telecommunications Companies and the Western Telecommunications Alliance.
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The RLECs, whose members make up suppliers of about one-quarter of the nation’s end-users access lines, met with commission staff and said they're “working together to try to develop effective solutions to rural universal service and intercarrier compensation issues.” All four rural associations indicated that “substantial upgrades will be needed to meet the minimum rural broadband speeds targeted by the National Broadband Plan … and their members will continue to need high-cost support and intercarrier compensation revenues during the foreseeable future,” according to the ex parte filing published Thursday.
The rural telcos are feeling squeezed by the impending changes in USF, one of their lobbyists told us. Last December, CoBank, which provides most of the loans for rural telcos, told the FCC in its own ex parte filing that it was cutting back its financing for RLECs by up to 40 percent. “If this uncertainty continues, or if regulatory reform initiatives ultimately impair the ability of our customers to recover their historical and future costs of providing services, we expect to continue to lower the maximum allowable leverage,” CoBank said in its filing.
Many rural telcos are worried that the FCC won’t provide enough money to support the National Broadband Plan’s goals of USF-supported broadband deployment, said ITTA Vice President for Regulatory Affairs Joshua Seidemann. “That is a primary concern, that our companies are not faced with an unfunded mandate,” Seidemann told us.
Some rural telcos have walked away from government loans under the Broadband Initiatives Program because of uncertainty over USF reform (CD Sept 27 p4). The commission is working on three separate rulemaking notices on USF for its December meeting. The RLECs have stressed in their meetings with FCC staff that instability will cause adoption rates to fall, the rural lobbyist told us.
FCC officials didn’t respond to requests for comment. An ILEC official told us that USF reform is long overdue and without it the National Broadband Plan won’t launch. The problem is that the FCC has lost valuable time with the reclassification debate, the ILEC official said.