Rural Telecoms: USF Reforms Are Pushing Us Toward Fiscal Cliff

Take complaint about FCC action to president in letter asking to be included in budget-fixing legislation

Rural telecom providers have taken their complaints about
the FCC's Universal Service Fund (USF) reforms to the White House, tying the
issue to the "fiscal cliff" negotiations.

The USF funds telecom build-outs in high-cost areas where
there is not a business case absent the government subsidy. The FCC is moving
that support for phone service in high-cost, particularly rural, areas to
broadband deployment, the new must-have telecom service, and to reform
subsidies to reflect the move of voice to IP delivery. The goal is also to
provide a "glide path" for that migration given that the switch-over
will take time, though rural carriers suggest it is more like a crash landing
for their particular economies.

In a letter to the president, the Rural Broadband Alliance
asked to include language in fiscal cliff legislation suspending some of the
reforms and require the FCC to submit them to the Federal State-Joint Board for
their recommendations.

The carriers say the "well-intentioned but
misguided" changes -- part of the FCC's migration of support from
traditional telecom to broadband -- has led to job cutbacks and consumer rate

USF reforms include phasing out some legacy phone support as
the FCC migrates to wired and wireless broadband, legacy support smaller
carriers have been using to secure long-term loans made by another government
agency, the Agricultural Department's Rural Utilities service (RUS).

"The rural small businesses will not receive the needed
and anticipated revenues from the universal service mechanisms that they had
understood to be 'sustainable' and 'predictable' when they were encouraged by
the government policy and programs to make the investments to bring universal
service to their rural communities," they wrote.

"We recognize and appreciate that the goal of the outcome of
the broader fiscal cliff debate is to bring more certainty to our markets and
accelerate our economic recovery, create new jobs, and improve the economic
outlook for all Americans," the RBA said in its letter. "This broader
discussion lends itself to the inclusion of provisions that address the need
for a careful review of well intentioned, but misguided FCC policies that are
proving an obstacle to new investment by small businesses in rural America and
creating rippling effects throughout the economy."

The FCC has argued that there is a waiver process in place
for companies having a hard time with the reforms, a point made by Commissioner
Mignon Clyburn in a June Senate hearing on the issue that featured some
criticism of the program
by senators concerned about the impact on rural
carriers of phasing out legacy support.

"The Connect America Fund is already working to expand broadband access to the 19 million rural Americans who lack it, while at the same time increasing fiscal responsibility in order to be fair to the consumers and small businesses nationwide who pay into the fund through universal service fees," the FCC sasid in a statement. "The accompanying reforms of the outmoded Intercarrier Compensation system will unleash over $1.5 billion in annual benefits to consumers by eliminating hidden callings costs while removing major barriers to deployment of advanced broadband networks.  The FCC continues to work closely with all stakeholders as we make this once-in-a-generation transition to bring broadband and voice service to all of rural America."