NCTA Outlines Ways for FCC to Free Up Funds for Broadband Deployment

Trade group stumps for ending rural phone company subsidies in competitive areas

By John Eggerton -- Broadcasting & Cable, 11/5/2009 4:12:24 PM

Calling it a "modest first step" on the road to Universal Service Reform, the National Cable & Telecommunications Association has said it knows how the FCC can save the government up to $2 billion, freeing it up to help underwrite ubiquitous broadband deployment.

In a petition for rulemaking, NCTA has said that some can be recovered by no longer providing subsidies to phone companies in rural areas where competition exists from new entrants, like cable companies, for example.

NCTA argues that the subsidy, which was meant to support service where no other was available, no longer reflects a marketplace in which consumers can choose cable voice service in much of the country.

NCTA includes a study it says shows where the FCC is providing billions in subsidies to phone companies where they have unsubsidized competitors.

NCTA wants a two-step process. First, it wants a petition--a cable company for example--to be allowed to demonstrate that an unsubsidized wireline competitor serves more than 75% of customers in a given area, or that the state has found "sufficient competition" to deregulate retail rates charged by incumbent carriers. If that threshold was met, the FCC would require the USF recipient to demonstrate the minimum support necessary to serve the noncompetitive portions of the service area.

The cable trade group argues that before the fund can be extended to underwrite broadband as well as phone service, as some policymakers have suggested makes sense, the FCC must first "control the size of the existing mechanisms."

"As the record in the National Broadband Plan proceeding demonstrates, achieving the congressional goal of universal access to broadband capability will be difficult to achieve without government programs dedicated to deploying facilities in unserved areas and promoting adoption by underserved populations," NCTA said in its petition. "As the Commission considers NCTA's proposal to reduce support where it no longer is needed, it separately should consider whether, and how, it could redirect any savings from NCTA's proposal to provide targeted funding to programs that promote broadband deployment and adoption."

The FCC is expected to recommend changes to the Universal Service Fund part of its national broadband plan, due to Congress Feb. 17, 2010.