Levin Criticizes ABC Plan for Rate-of-Return, First Refusal Provisions
The incumbent-backed America’s Broadband Connectivity plan is flawed because it retains the rate-of-return system, gives incumbents the right of first refusal for universal service funds, and doesn’t address the nation’s broadband adoption gap, Blair Levin of the Aspen Institute said Monday. Speaking at a roundtable sponsored by the Minority Media and Telecom Council, Levin criticized the $300 million set-aside for wireless carriers, which he called “the wireless dividend,” and blasted the Department of Agriculture for asking the FCC to guarantee Rural Utilities Service loans, which he said creates “horrible false incentives.”
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The ABC plan addresses the 5 percent to 10 percent of the country that lacks broadband; but up to one-third of Americans aren’t using broadband, Levin said. He called the adoption gap the “33 percent problem” and said it should take precedence in any universal service overhaul. “What is illogical and unprincipled is to argue that we have to spend money subsidizing networks for those persons for whom the cost of a market-based build-out would create a prohibitive barrier, but we are supposed to ignore persons for whom cost or other factors create prohibitive barriers,” Levin said: “My fear is, if the FCC moves ahead without a full accounting of the 33 percent problem, everyone’s going to say universal service has been solved -- and it won’t be.” And unless the distribution side of universal services is “cleaned up,” contribution can’t be fixed, either, Levin said.
"There’s going to be a court challenge no matter what,” Levin said of the pending universal service reforms. “There’s going to be push-back from Congress no matter what you do, even though the FCC has a lot of jurisdiction.” So it’s best to make the biggest changes now, regardless of the political implications, Levin said. He’s “putting the cart before the horse,” an FCC official said. The commission has already convened a team to work on adoption questions. It’s led by FCC Chairman Julius Genachowski’s aide, Josh Gottheimer.
USTelecom Vice President Jonathan Banks, whose group helped broker the industry agreement, said: “The ABC plan moves a long way to spending the money the right way.” Industry feels that the rate-of-return model “is better suited, at least for now, than using a national model,” he said. He said he understood that there were complaints about the incumbent-backed plan, but it was the most comprehensive plan out there and it had wide support. “If we let this opportunity go by, I think it’s going to set everything back,” Banks said.
The six ILECs’ “comprehensive framework was built to take into account the sorts of concerns that Blair articulated,” Banks said. He said the rate-of-return provisions of the ABC plan are “substantially different” from the status quo. The right of first refusal “is a complicated balance among the need to get broadband underway, the need to get efficiencies around existing infrastructure, and the need to preserve a substantial fund for experimenting with new technologies in high-cost areas,” he said. On Levin’s concerns about the “wireless dividend,” Banks expects the savings from money that would go to competitive eligible telcos will likely “be freed up by the commission and that the best place to invest it, we feel, is in getting broadband out as quickly as possible in rural areas,” Banks said. “Blair’s looking ahead on adoption and more power to him for doing that,” Banks said. “I think we all believe that fixing this fund has to come first. And then we have to move on and do adoption and contribution.”