FCC poised to expand standalone broadband with $20B overhaul of USF program

The FCC has approved a proposal to modernize the universal service fund (USF) program, with a particular focus on enabling rural rate-of-return carriers to provide standalone broadband service.

Under the plan, the FCC will provide about $20 billion in support over the next 10 years to enable service providers in high cost areas to provide standalone broadband to users that use their connections to power VoIP and video streaming services.

The many reforms include targeting support to those rural areas that need money the most.

The regulator will encourage investment in areas where broadband deployments are minimal or nonexistent by providing greater capital expenditure allowances for carriers with below average deployment, and limiting allowable investments for those with above average deployment.

Rural providers will also be required to conduct broadband deployment based on the number of locations lacking service, the cost of providing service, and the support to be received. Finally, the FCC will direct USF funds to those areas without broadband competition.

Rate-of-return carriers will have what the FCC calls two paths to the Connect America Fund: the model-based option and the legacy mechanism option.

With the model-based option, service providers can voluntarily transition from legacy rate-of-return support to model-based support, similar to the Connect America Fund Phase II offer of support to the larger carriers last year. Service providers are required to deploy 10/1 Mbps in all funded locations, with 25/3 Mbps service required in areas of higher population density. Additionally, carriers are required to reach 40 percent of their buildout by the fourth year and increase 10 percent each year until reaching 100 percent by year ten.

Under the legacy mechanism option, the FCC has reformed the existing Interstate Common Line support mechanism to provide support for standalone broadband, now known as the Connect America Fund Broadband Loop.

The proposal has been met with relative support from rural-centric industry trade groups like NTCA, which represents over 900 rural service providers.

"In the end, the success or failure of this reform should not and cannot be measured merely by whether networks are built in rural areas," said Shirley Bloomfield, CEO of the NTCA in a statement. "Rather, under the law, success can and must be defined only by whether consumers and businesses in the most rural parts of America have sustainable access to services that are reasonably comparable in price and quality to those available in urban areas.  That is the only yardstick that ultimately matters."

Bloomfield added that if the elements of the reforms don't work "we will be right back at it working to have the FCC correct and address those aspects of reform for small rural carriers and the consumers they serve."

For more:
- see the release

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