Telecom Experts: Separate USF and Broadband Stimulus

U.S. government funding aimed at bringing broadband to unserved areas should go beyond the current Universal Service Fund, which mainly supports traditional telephone service in rural areas, some telecom experts said Tuesday.

U.S. President-elect Barack Obama has called for broadband roll out to be part of his approximately US$800 billion economic stimulus package, and in recent years, several lawmakers and advocacy groups have called on the USF to shift its focus from traditional telephone service to broadband. But reforming USF involves several sticky issues, and the nation's broadband needs may exceed the available funding for USF, said speakers at a event in Washington, D.C.

While efforts to convert the USF may continue, the U.S. government needs to make available a variety of incentives for wire-based and wireless carriers to bring broadband service to the entire U.S., said Gregory Rohde, executive director of the E9-1-1 Institute and E-Copernicus, a broadband financing consulting firm. A mixture of tax credits, grants and loans may be needed to bring broadband to the approximately 10 percent of U.S. residents who do not have it available, he said.

Obama's assertion that a major broadband roll out will create thousands of new jobs has led to some advocacy groups offering some "very bold ideas," Rohde said. In recent weeks, Free Press, a media reform group, has called for $44 billion in new government programs for broadband and the Information Technology and Innovation Foundation suggested a $30 billion broadband program would create about 950,000 new jobs in the U.S.

"The Obama administration, as well as players on Capitol Hill, rightfully believe that stimulating more broadband deployment is part of our [economic] solution," Rohde added.

Several members of Congress believe that USF needs to be reformed and needs to focus less on traditional telephone service and more on broadband, said Jennifer Schneider, legislative counsel to Representative Rick Boucher, a Virginia Democrat and new chairman of the House of Representatives Subcommittee on Communications, Technology and the Internet. Boucher has pushed for changes in the USF in recent years.

But Congress could also separate the USF from other broadband funding, with the USF going to subsidize telecom providers maintaining existing networks in rural areas, while other parts of the Obama stimulus package could go to new broadband deployments, she said.

One audience member asked the panelists whether the broadband stimulus money should go mostly toward bringing broadband to unserved areas or whether it should also be used to provide competition in areas that have limited broadband options. Some critics of some of the proposals being discussed have suggested that the broadband money would be a huge give-away to large telecoms, with small competitors left out.

Rohde and Curt Stamp, the president of the Independent Telephone and Telecommunications Alliance, agreed that the money should first fund broadband to places that don't have it available, but Rohde suggested the stimulus money should provide for competition. The current USF has allowed funding for five or more carriers in some areas and that's unnecessary, he said, but if the lone broadband provider in a region provides only DSL (Digital Subscriber Line) service instead of improving its network, competitors should be able to receive broadband stimulus money.

While some of the broadband proposals suggest money should go toward providing multiple megabits per second of download speed, wireless carriers shouldn't be left out of the mix, said Jay Driscoll, director of government affairs for the wireless trade group CTIA. Wireless carriers are working to improve their speeds, but most are offering 3G service of speeds under 768Kbps, which is the U.S. Federal Communications Commission's definition of the minimum speed necessary for broadband.

Wireless carriers will provide much of the service in remote areas, Driscoll suggested. A recent study commissioned by CTIA found that about 8 percent of U.S. residents do not have access to 3G wireless services and the cost of bringing service to those people would be about $22 billion, less than some of the broadband stimulus proposals.

"The wireless industry is building and deploying multiple broadband networks and we're doing it without any stimulus whatsoever," Driscoll said.

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