From shovel-ready broadband to heavy lifting on USF reform : Stakes high for wireless

For all the hoopla that preceded congressional approval of broadband funding in the $787 billion stimulus bill signed into law by President Obama – and the controversy apt to follow the vaguely defined $7.2 billion grant programs – the most profound impact on the availability of high-speed Internet access in the United States is likely to flow from universal service fund reform and other regulatory changes. Such issues involve billions of dollars on an annual basis.
At its essence, improving U.S. broadband penetration – which lags more than two dozen countries, despite this country being the world’s biggest high-speed Internet market – will probably require a dramatic redistribution of government telecom subsidies. The Obama administration may offer more clues to its broadband objectives when it unveils its 2010 budget proposal in the coming weeks. The stimulus bill directs the Federal Communications Commission to submit to Congress a national broadband plan a year from now. In addition, the legislation authorizes $250 million (out of the $7.2 billion broadband funding total) for developing a national broadband inventory map that would be published in two years.
Acting Federal Communications Commission Chairman Michael Copps and state regulators have been pressing to make broadband a component of a recalibrated universal service regime that currently provides about $7 billion in federal support for low-income and rural citizens, rural healthcare facilities, schools and libraries. Reforming outdated intercarrier compensation guidelines – which govern payments wireless and other telecom service providers pay one another for carrying each others’ traffic – is viewed as inexorably linked to changes in universal service support in high-cost rural locales.
“Today, mobility and broadband are the services most highly valued by consumers and new means of providing these services have emerged, while others are on the cusp of emerging,” cellular industry group CTIA told the FCC in November. “Wireless networks have evolved into powerful drivers of economic development and economical means of assuring broadband deployment in rural areas. Reform of the universal service and intercarrier compensation mechanisms must focus on consumers and acknowledge and account for these tectonic shifts in the communications landscape.”
Capping USF
Copps was irate when the then-GOP-controlled FCC voted last May to cap the high-cost universal fund, which has fostered increased rural wireless deployment and whose overall size grew to $4.3 billion in 2007.
“The need for reform is patently obvious. As this country continues to lag in so many international broadband rankings and as consumers and competitors around the world are receiving high-speed and high-value services, Americans in urban and rural areas and on tribal lands are falling further behind,” Copps stated. “One critical element of turning this ship around is re-tooling the universal service system with broadband deployment as its mission. And while my colleagues on the Federal-State Universal Service Joint Board unanimously agreed to make broadband part of the system, today’s order has the effect of putting this off to another day. So, too, does it put off the many other difficult questions regarding sustainability of the fund that the joint board wrestled with and put in its recommendations six months ago.”
Wireless vs. wireline
Rural cellular carriers, which want federal telecom policymakers to more closely scrutinize the share of high-cost USF support given rural wireline operators, have entangled the FCC in litigation over the universal service cap in the U.S. Court of Appeals for the District of Columbia Circuit. It makes for somewhat of a quirky situation, with the new Democratic-led FCC earlier this month filing a court brief defending an agency action orchestrated by Republicans who until recently held sway.
All told, Obama’s call for universal broadband is chock full of moving parts. The $7.2 billion made available for broadband grants provides fertile ground for mischief, given the tight timeframe – the end of fiscal 2010 – by which more than half of the money must be spent. A major portion of broadband grant dollars in previous House and Senate bills wouldn’t have been freed up for several years, defeating the idea of creating a stimulus effect through near-term job creation. Still, Congress included provisions to try to keep close tabs on grant processing and ultimately how the dollars are spent by requiring updates every 90 days.
The legislation creates a new Broadband Technology Opportunities Program at the National Telecommunications and Information Administration, a unit of the Commerce Department that would oversee the distribution of broadband grants – totaling $4.7 billion – to unserved and underserved areas. The new law doesn’t define “unserved” and “underserved” and likewise leaves questions of grant eligibility and baseline qualifications to NTIA. Grant recipients would have to underwrite up to 20% of the proposed project’s cost, though hardship waivers will be available. It is anticipated that there will be at least one grant in every state. Recipients will be required to adhere to open access/nondiscrimination provisions in the FCC’s broadband policy statement.
The remaining $2.5 billion in broadband grants will be administered by the Agriculture Department’s Rural Utilities Service, whose broadband grant program was criticized in a 2005 inspector general report. The department reportedly has corrected systemic problems.
With the FCC and NTIA key to fast-track broadband stimulus implementation, there remains a wrinkle that’s anything but inconsequential. Obama has yet to nominate individuals to fill the top posts at the FCC and NTIA. Julius Genachowski, a high-tech entrepreneur and former FCC official, is expected to get the nod for commission chairman. Appointment of a new NTIA chief could face a longer delay, owing to Obama’s problems in getting a commerce secretary in place. And even when the FCC and NTIA slots are filled, both agencies will be busy with staffing, possible reorganizations and ensuring a smooth digital TV transition by the new June 12 deadline.