Is There a Need for a "Broadband" Universal Service Fund?

Background
In many places around the country, there are actually more broadband Internet subscribers than dial-up customers, and as slow dial-up users migrate to any one of several broadband offerings, that trend should accelerate everywhere that the Internet is available. Unfortunately, broadband is not yet available everywhere and, in low population density areas, especially, there is little or no financial incentive for providers to offer service.

The future economic development of New York State hinges, in large part, on the availability and affordability of broadband service to every citizen, regardless of their location. New York has instituted its own public-private forum known as the Council for Universal Broadband, the goal of which is to develop strategies to help ensure that every New Yorker has access to affordable, high-speed Internet service. The challenge is not in agreeing that this is a worthwhile goal, but how the cost of achieving the goal will be paid for. PULP participates on the Digital Literary and Community Outreach Action Team of the Council for Universal Broadband.

One option for making broadband truly universal is the creation of a federal universal service fund for broadband. The federal USF exists today and has provided funding for basic telephone service in high cost and rural areas, as well as for Lifeline discount telephone service and funding for schools, libraries, and rural health care providers, for several years. Also, the Targeted Accessibility Fund of New York administers state universal service funds for telephone service, at the direction of the New York State Public Service Commission (PSC) . But, should a new USF, which would be funded -- directly or indirectly -- by users, be created to bring broadband to unserved areas?

On November 20, 2007, the Federal-State Joint Board on Universal Service issued its Recommended Decision regarding comprehensive reform of universal service, and its recommendations included creation of a new broadband fund to stimulate greater access to affordable broadband service. On January 29, 2008 the FCC sought public comments on the Joint Board's proposal.

New York PSC: Go Slow
Not so fast, say some parties that commented last week on the Joint Board's proposal to create a “Broadband Fund.” The PSC stated in its comments that it is premature to consider creating such a fund. It believes that the FCC “should obtain more granular data on the deployment and adoption of broadband services before considering funding broadband services via the high cost support mechanism.” It added that “[i]ncreased access to broadband services will allow rural and low-income Americans to participate more fully in the nation’s economy. It will continue fostering economic productivity and increase quality of life.”

The PSC said that it is looking for additional information on availability, adoption, speeds, and prices in order to correctly determine where to target aid. It referred to state and local mapping projects, like those conducted by California and Kentucky, which identified where investment is needed. It believes that the FCC should review the new broadband deployment data it is considering before creating a Broadband Fund. The PSC concluded its comments by stating that the goal of universal broadband deployment “might better be achieved by a low cost, subsidized loan program than by an award of capital construction monies.”

Verizon, Sprint, and AT&T Question USF for Broadband
Verizon's comments agreed that public-private partnerships are the best way to increase broadband deployment and subscribership and cited the “Connect Kentucky” program as a successful example. The company also questioned whether it would be lawful to support broadband with USF subsidies in the absence of Congressional action specifically stating that broadband should be a supported service.

Other companies active in New York submitted comments to the FCC as well. Sprint's comments, for example,opposed formation of a Broadband Fund until concerns with current USF funding mechanisms are resolved. AT&T's comments proposed the creation of separate funds for fixed broadband networks and for wireless broadband networks in unserved areas.

NASUCA
In contrast to the PSC and telecom companies, the National Association of State Utility Consumer Advocates (“NASUCA”), of which PULP is an active member, expressed in its comments support for the creation of a Broadband Fund, if and when the FCC decides that broadband service is qualified to receive USF funds. NASUCA believes that a Broadband Fund should focus on unserved areas, be limited to wireline broadband service (as opposed to the not-as-yet-well-developed wireless offerings), support much higher speeds than the FCC’s current definition of broadband, and possibly be funded from a separate assessment on broadband service.

Next Steps
A ruling by the FCC may come before the end of the year on the need for a Broadband Fund, as well as other issues related to the future of the federal USF. New York’s Council for Universal Broadband will continue to meet to decide what will work best for the people of our state to bring affordable broadband to all. New York is actually ahead of many states in deploying broadband, especially due to the efforts of Independent telephone companies in rural areas and the availability of cable modem service, but gaps remain. Identifying those geographic areas and determining why so many people with broadband access do not subscribe (cost, lack of knowledge of broadband’s benefits, etc.) can be addressed and acted on by the state as well as the FCC.

Lou Manuta