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Rural telecom providers band together against national broadband plan

By B. Adam Burke
North Liberty Leader
NORTH LIBERTY- Rural Iowa telecom providers have joined forces to raise awareness about a Federal Communications Commission plan they say will hurt rural broadband service.
The Iowa Telecommunications Company Coalition, made up of the Iowa Telecommunications Association, Iowa Network Services, and the Rural Iowa Independent Telephone Association, set up a website, www.thegreatdisconnect.org, to educate telecom customers about the plan.
At 376 pages, the FCC’s (Federal Communications Commission) National Broadband Plan (NBP) is a major push for a nation-wide data services overhaul that originated in the 2009 American Recovery and Reinvestment Act (also called the stimulus package).
The NBP has been estimated to cost between $20 and $350 billion, part of which may be offset by an auction of wireless spectrum to future 4G wireless providers. The NBP is projected to be fully implemented by 2020.
The FCC’s NBP calls for more access to high-speed broadband, aiming for up to 100Mbps speeds in urban and densely-populated areas but capping rural broadband speeds at just 4Mbps.
Currently, South Slope Cooperative Communications Company and other rural providers are cross-subsidized by the Universal Service Fund (USF). The USF pays rural telecoms for building fiber and wire lines to outlying customers and providers pay into the fund .
The NBP will shift the USF into a “Connect America Fund” and phase out its telephone service focus for broadband data connection service.
South Slope CEO Justyn Miller said his company had developed a business plan to offer 40Mbps service to rural customers if USF money was in place. Now his company’s plans may be delayed because the NBP states a goal for rural broadband of only 4Mbps.
Miller said South Slope is finishing fiber expansion to all of North Liberty in the next 12-months and would like to begin connecting Ely, Fairfax, Newhall, Norway, and Walford. But the company is taking a cautious approach as they wait and see where USF money will go. Miller said South Slope’s fiber connection plans for Solon, Tiffin, and Oxford fiber could be completed in around five years.
USF money, which subsidizes rural telephone and broadband, has recently been targeted in deficit-reduction talks as a budget-focused U.S. Congress discusses eliminating $1 billion of the telecom subsidy. In 2010, the fund doled out about $7.5 billion to telecom providers across the country. Critics contend the cross-subsidy is inefficient and costly.
Miller explained that South Slope pays into the USF as a support charge. By federal law, telecommunication carriers are required to contribute to the fund, which also provides data access funding for schools, libraries, and rural health care facilities.
South Slope also receives money from the USF to enable them to bring service to high-cost areas. Miller said all of the money South Slope receives from the USF is reinvested in stringing more fiber lines to customers and maintaining local service.
Joe Hrdlicka of the Iowa Telecommunications Association said his group represents companies like South Slope, that mostly “rely on three sources for income:-rates charged to customers, universal service fees to provide access to high-cost areas, and inter-carrier compensation or access fees.”
“Rural carriers are eligible for USF because it costs a lot more to run a mile of cable and serve 10 people than it does to run a mile of cable and serve hundreds of people,” he said.
USF subsidies pay for these high-cost fiber and cable build-outs.
Providers like South Slope must provide service to any customer who requests it. USF money is used to help telecoms bring service to rural and hard-to-reach outlets.
“If they’re going to reform the USF program, we want them to do it fairly,” Hrdlicka said.
If the rules for the USF revenue stream change significantly, Hrdlicka said rural telecoms could have problems because it could “drastically affect their ability to provide telecom services, build out more lines, and pay back loans.”
Hrdlicka also explained that, at some point, “Wireless needs wire,” implying that cell towers are wired to networks built of fiber, copper and other land-based formats.
In an interview with PC World magazine, Blair Levin, who authored the National Broadband Plan for the FCC, defended his plan because he said it balances rural and urban broadband needs.
Levin stated, “4G [wireless] is going to end up being more important to more people over the next couple of years than increases in wireline speed.... It’s not about speed, it’s about use; it’s not about wireline, it’s about the right mix of wireline and wireless; and it’s not about residential, it’s about different product markets. And it’s not just about rural, it’s about everywhere and having the right speeds for the right places. We spend a huge amount of money on 20th-century [voice] technology in rural America and that needs to be changed.”
Almost 19 million rural Americans still don’t have access to broadband data services.
According to the Independent Telecommunication Companies Coalition, if left unchanged, “the National Broadband Plan has the potential to raise rates, limit community services, affect jobs and drain the state of resources that could be better suited to other endeavors.” Since the NBP is still just a plan, there is time for rural consumers to take action. The coalition encourages people to visit www.thegreatdisconnect.org, for more information about communication services and why they matter to Iowa residents. The website contains information on how to contact legislators, members of the FCC and other government leaders.