Rural Broadband Alliance: USF Reform Funds Skewed Toward Incumbents

Says that the radical restructuring of the Universal Service program will trigger economic crisis
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Add the Rural Broadband Alliance to the list of those who say the FCC's draft proposal for reforming the Universal Service Fund -- a second draft was issued over the weekend, but is not believed to be dramatically different from the first -- is skewed toward incumbent carriers.

In a letter to FCC Chairman Julius Genachowski, the alliance of 70 small and rural telecoms said that according to reports about the draft, which has not been made public, it appears to be a radical restructuring of the Universal Service program and intercarrier compensation that will "trigger an economic crisis in rural America."

They argue that the reforms will redistribute funds to large carriers and reduce support available to small rural carriers, which they say will put small businesses and jobs at risk.

The proposal includes giving incumbent carriers right of first refusal in areas where they already get subsidies for phone service. A central part of the reform is moving the subsidies from phone service to broadband build-outs, which also means phasing out that traditional phone support. The alliance said it would reserve "all legal rights and remedies" including to recover "historic capital investments."

The alliance pointed out that President Obama appeared to be campaigning in key battleground states with talk of commitments to small business growth, but that that seemed at odds with the FCC's reform plans.

"Your administration has announced its commitment to broadband deployment and regulatory reforms that will spur job creation and overall economic expansion," the letter said. "But, there is a major disconnect between the president's message and what our rural representatives have heard from the FCC chairman's office. Instead of stimulating the economy, these new rules will further frustrate the economic recovery in rural America and lead to even more job losses and missed economic opportunities," said RBA Executive Director Steve Kraskin.

Kraskin said it was "unthinkable" that Genachowski would propose "the retroactive application of new rules to deprive small businesses of an opportunity to recover investments made in reliance on existing government programs."

The chairman has talked about giving a glide path to those whose support is being phased out over time, but also that it is important to migrate to broadband as expeditiously as possible.

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