Pai says FCC needs to solve the rural standalone broadband problem by 2016

FCC Commissioner Ajit Pai says that in order to enable rural telcos to deliver a compelling broadband-only option to consumers and businesses, the regulator needs to make changes to the USF (Universal Service Fund) rules regarding financial assistance to build networks that support these services. 

Rural operators will need access to government funds to deliver a broadband-only service in rural areas, something that today they can't access.

Traditionally, rural providers that have sought USF funds have had to use them provide traditional telephone service, a requirement that's at odds with the reality that consumers are increasingly dropping their POTS (plain old telephone service) and are using either wireless for voice or their broadband lines to access over-the-top VoIP players like Vonage.

During a recent trip he made where he visited service providers deploying broadband in rural areas of Colorado, Montana, Nevada, and North Dakota, Pai said he heard from a number of service providers that were frustrated they could not get assistance to deliver a broadband-only service.

"For I also heard repeated concerns over the last few days that outdated Universal Service Fund rules are holding back investment in next-generation networks," Pai said in a statement. "Specifically, rate-of-return carriers are currently ineligible to receive support for providing stand-alone broadband service."

One of the providers that said it's frustrated by the USF process is Dakota Central Telecom, a rural provider that said it could not scale the broadband only option on its own.

"Dakota Central Telecom, for example, told me that it started offering stand-alone broadband, but had to stop providing it to new customers because it became prohibitively expensive to do so," Pai said. "However, with USF support for stand-alone broadband, Dakota Central Telecom could start offering that service to consumers again."

Pai has been a key advocate of providing funding for broadband-only services to rural providers. In June, he proposed new revisions to the Universal Service Fund (USF) to give rural telcos a chance to take advantage of funds to deliver a broadband-only service.

He said that this "plan was consistent with the direction suggested by over 60 members of the U.S. Senate and over 110 members of the U.S. House of Representatives."

Some of the lawmakers that have called for similar changes to USF include Sen. John Thune (R-S.D.) and others that have called for further USF reforms.

Led by Thune, who is chairman of the Senate Committee on Commerce, Science and Transportation, and fellow committee member Sen. Amy Klobuchar (D-Minn.), a group of 61 senators wrote a letter in May to FCC Chairman Tom Wheeler asking him to realign the USF rules, particularly for smaller rural carriers.

For more:
- see this FCC statement

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