Senate Communications Hearing to Delve Into USF Rural Broadband Funding Issues
The Senate Communications Subcommittee's Tuesday hearing on the USF and its rural broadband deployment capabilities is likely to focus on whether problems affecting funding for broadband deployment in rural areas have been fixed, but it could also examine opportunities to expand use of USF for technologies like telehealth, said lawmakers and industry experts in interviews. The hearing is one of two on Capitol Hill this week on broadband deployment issues, with the House Communications Subcommittee planning a Wednesday hearing on the accuracy of the existing National Broadband Map data on unserved and underserved areas of the U.S., plus other mapping efforts (see 1706150058). The Senate Communications hearing will begin at 10 a.m. in 253 Russell.
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Senate Commerce Chairman John Thune, R-S.D., said he will be interested to hear about the extent to which the FCC has been able to make progress in addressing USF's “stand-alone broadband” problem, which prevents rate-of-return (RoR) carriers from receiving USF support for broadband customers using other providers for voice service. The FCC revamped the rate-of-return USF support mechanisms in March 2016 to give eligible telcos the option of receiving rural high-cost USF subsidies based on a broadband cost model over 10 years. The FCC's order also updated the renamed legacy Connect America Fund Broadband Loop Support to fund stand-alone broadband service to customers (see 1603300065).
Thune said he will also seek feedback on how recent budgetary changes to the high-cost fund are “going to affect rural carriers.” FCC Commissioners Mike O'Rielly and Mignon Clyburn backed “means testing” of broadband/telecom service in high-cost areas (see 1705310055). Fifty-six senators urged the FCC in April to "consider any changes" needed to ensure affordable broadband is made available in high-cost rural areas (see 1704110052). Thune said he hopes FCC Chairman Ajit Pai's recent trip examining rural broadband in the Plains states (see 1706050054 and 1706120063) gave him “a flavor for some of the challenges” rural broadband providers face “and why USF is so important” in rural areas.
Senate Communications ranking member Brian Schatz, D-Hawaii, said he will focus on USF funding caps and will be “trying to figure out how we can utilize USF to get more broadband for telehealth” programs. Senate Communications added University of Virginia Center for Telehealth Director Karen Rheuban as a witness. Subcommittee Chairman Roger Wicker, R-Miss., is reportedly interested in hearing about ways to improve targeting of USF funding for rural broadband amid concerns “they aren't getting good results,” an industry lobbyist said.
NTCA CEO Shirley Bloomfield told us she will seek to further “connect the dots” for lawmakers about the ongoing budgetary shortfalls that the USF high-cost mechanism has faced. NTCA has been seeking a $200 million-$260 million hike in annual funding for the rate-of-return USF budget, and recent budgetary shortfall projections made the need for that funding increase “sharper and crisper,” Bloomfield said. She said she will pair USF's budgetary woes with the picture of the importance that broadband connectivity in rural areas plays in the national economy, particularly its role in spurring on job creation. Pai's Plains trip renewed the visibility of rural broadband deployment but there also needs to be conversation about “how expensive it really is” to implement, Bloomfield said. “Someone has to take a look at how you go forward” given budgetary constraints.
Charlesmead Advisors senior partner Michael Balhoff plans to tell Senate Communications that small RoR carriers alone “are insufficiently funded, possibly by $260 million annually.” The Universal Service Administrative Co. recently projected that the total 2017-2018 budget for high-cost program and CAF broadband funding will be 12.4 percent below the forecast $1.4 billion in funding demand, Balhoff said in his written testimony. “The rural trade organizations have been advocating what appears to be a reasonable solution” via NTCA's proposed $260 million funding increase, which “is not a dramatic increase, in my opinion, in light of growing broadband responsibilities.” The FCC was “mistaken” to allow a reduction in the allowed rate of return via the March 2016 order, which has had the effect of reducing “the potential funding available to small carriers,” Balhoff said.