The FCC Takes on the USF

Carl Weinschenk

The way in which the government funds telecommunications is among the most arcane of topics. It involves legislative and regulatory history, math, politics and other disciplines with which most people would rather not deal. At the same time, doling out telecommunications funds is vitally important and, like it or not, must be examined.


The United States is, of course, a vast nation that has significant rural and urban populations. In general, it is attractive for carriers to concentrate on more densely packed areas simply because -- as Willie Sutton famously said when asked why he broke into banks -- "that's where the money is."


Historically, the government, through the Universal Service Fund (USF), has sought to compensate for this imbalance by requiring carriers that serve urban areas to subsidize folks who live in rural areas.


The changes in telecommunications makes the traditional approach as obsolete as a rotary phone. It is possible to see this in two ways: by looking even superficially at the anachronistic way in which the USF works and by looking at the results. A recent study by Pando Networks put the U.S. 26th in broadband speeds. Not surprisingly, a state-by-state analysis of the data consistently showed that the New Yorks and Californias have far greater average speeds than the Wyomings and Idahos.


Suffice it to say that just about everything has changed since the rules were created. The cost of both local and long distance calling has plummeted, new wired platforms have emerged, wireless has exploded, data has risen to be equal or to surpass voice in importance, a wide range of competitive companies have entered the fray and telecommunications has become a main engine of the economy.


Both Ars Technica and Bloomberg Businessweek describe the challenges in transforming the system and the Federal Communications Commission's (FCC) ideas on how they plan to do this. Good background is available at Datamation.


Reforming a system that so clearly is out of date is more difficult than changing its name, which will become the Connect America Fund. Change is particularly hard in today's harsh political environment in which the positions taken by various players are as much about gaining power in the future as confronting issues at hand. The USF/Connect America Fund isn't the only initiative, of course. For instance, a subcommittee of the Agriculture Committee in the House of Representatives held a hearing on rural broadband last month. But the USF and its fate is a major piece of the puzzle.


Hopefully, the important and seemingly non-controversial goal of providing competitive broadband to rural citizens can escape the political morass of Washington, D.C. Americans who live in these regions haven't given up. PR Newswire reports that "more than 125" rural workers visited D.C. last week for "Broadband WORKS for Rural America" advocacy day. That's great. But, based on the way in which things have played out during the past year or so, there is good reason to be skeptical.

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