FTTH Council: Mend, don't end 'High-Cost' component of USF

July 14, 2010
JULY 14, 2010 -- In a filing before the Federal Communications Commission (FCC), the Fiber-to-the-Home Council reiterated its support for the National Broadband Plan's "Connect America Fund" (CAF), but also urged the FCC to reconsider its recommendations to reform the Universal Service Fund (USF) by ending a program that supports the efforts of rural telecoms to upgrade to high-bandwidth networks.

JULY 14, 2010 -- In a filing before the Federal Communications Commission (FCC), the Fiber-to-the-Home Council reiterated its support for the National Broadband Plan's "Connect America Fund" (CAF), but also urged the FCC to reconsider its recommendations to reform the Universal Service Fund (USF) by ending the "High-Cost Fund," a program that supports the efforts of rural telecoms to upgrade to high-bandwidth networks

In its filing, the FTTH Council expressed concern that ending the "High-Cost" component of the USF and depending on the CAF to replace it will end up "stranding users in high cost areas" and making it more difficult to meet the National Broadband Plan's goal of providing 100-Mbps broadband service to 100 million U.S. homes by 2020. Instead, the council said, the FCC should consider reforming the High-Cost fund and using it in tandem with the CAF to more effectively encourage broadband deployment in unserved areas as well as broadband improvements in high-cost areas.

The council noted that the High-Cost fund's approach of leveraging private investment for capital expenditures by providing support to carriers for their operating expenses has helped expand broadband deployment into previously unserved areas. It said that rural telecoms receiving High-Cost support as a group spend up to $2 billion annually in new, broadband capable infrastructure.

"The CAF appears to be primarily focused on making 'dollar-for-dollar' grants for capital expenditures to construct broadband facilities in unserved areas," the FTTH Council said. "In other words, because deployments in these unserved areas are unlikely to provide a sufficient return to attract investment, the CAF is not leveraging its funds. This is understandable given the objectives of the CAF, but it is a very expensive endeavor."

In addition, given the fund's importance to the operating revenues of many rural carriers, the FTTH Council expressed concern that many private lenders are now holding up financing for network upgrades and deployments until the issue of USF reform is settled -- something the Council said is already hindering the efforts of rural carriers to help meet the goals of the National Broadband Plan.

Earlier in the week, the American Cable Association expressed its support for capping the High-Cost Fund (see "ACA supports FCC Connect America Fund for broadband infrastructure").

Visit the Fiber-to-the-Home (FTTH) Council

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