Rural Broadband Alliance: USF reform will do more harm than good

blog.lkconsulting.net Rural telcos think current reforms will drive up prices for consumers

July 9, 2012 | By Sean Buckley

The FCC may have good intentions with refocusing the Universal Service Fund (USF) toward funding new broadband rollouts, but the Rural Broadband Alliance thinks that the reforms will drive up prices for their rural telco members' customers.

A key provision of the USF regulation reform, which went into effect last Sunday, calls for a cap on USF payments to rural telcos.

However, members of the alliance argue that the FCC needs to revise the caps it puts on these service providers.

Stephen Kraskin, legal counsel to the Rural Broadband Alliance, said customers will notice new charges on their phone bills. "Some of our companies have started job cut backs, some have frozen planned investments and related jobs, some are not filling jobs, and others are cutting back," he told Computerworld.

While the FCC says the reforms are all about driving new broadband investment, Kraskin said the caps actually will not only inhibit these service providers from increasing broadband speeds, but others might not be able to pay back their Rural Utilities Service (RUS) loans.

However, the FCC argues the reforms are necessary. "The commission's bipartisan reforms bring long overdue fiscal responsibility and accountability to USF, eliminating inefficiency throughout the program," a spokeswoman said in an email. "These reforms will require some carriers that are spending much more than their peers to adjust."

The spokesperson added that the reforms will actually give these telcos more money to spend on expanding their respective broadband rollouts, creating new jobs, but not drive up service costs.   

This is not the only group to rail against the FCC's USF reforms.

Previously, three other organizations that also represent rural telcos--the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), the Western Telecommunications Alliance (WTA) and the National Exchange Carrier Association (NECA)--jointly filed a petition for reconsideration and clarification with the FCC.