Today (Tuesday, May 17), I attended the opening session for the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO) 2011 Legislative & Regulatory Conference in Washington, DC. As with the NTCA Legislative and Policy Conference back in March, the central theme of this conference was spreading the word about how the FCC's proposals for USF Reform threaten the very existence of small independent rural telecommunications companies and cooperatives. The main difference between these two conferences, besides the attendees, was that this time the rural carriers had significant ammunition to take to their Congressional staff with the RLEC Plan for USF Reform, which was released last month. OPASTCO put forth a strong message of unity with the other Rural Associations (NTCA, WTA and NECA), and urged members to focus on USF and ICC issues above any other current points of contention, such as the AT&T-T-Mobile merger, Net Neutrality and video retransmission consent. This illustrates just how important it is that Congress hears the message of rural telecommunications loud and clear, because rural telecom delegations normally come to DC to describe a variety of issues as many of these individuals only get one or two chances every year to communicate face-to-face with the rulemakers in DC. One of the speakers today really emphasized the importance of focusing on USF Reform by saying that most of the other current big issues won't really matter in the end if rural Americans are left behind in broadband deployment and adoption--which is almost certain to be the case if the FCC's USF Reform NPRM is adopted without change. The FCC is hoping to adopt final rules for USF Reform in the upcoming months, most likely by the end of the year.
I heard something very frustrating at the conference, which is the FCC has not been very warm to the Rural Associations' arguments so far. The FCC Commissioners and staff have somehow managed to develop some really inaccurate perceptions of small rural telephone companies. The FCC apparently thinks rural carriers purposely lose money and that all rural carriers get a rate of return of 11.25%--something we learned is not true from the studies conducted for rural carrier comments in the USF Reform proceeding. The unfortunate truth is that a significant percentage of rural carriers earn a negative rate of return, and yet they continue to make significant and even miraculous efforts to deploy broadband in high-cost, low-density regions of the country. The FCC thinks rural carriers are wasteful and inefficient, and yet they want to give the money to larger companies who are even more wasteful and inefficient, and who have no interest in serving populations more sparse than 20 people per square mile. I can't help but be overwhelmed with questions that I imagine will never be answered to my satisfaction... How did these perceptions come to be in the first place? How can they be overcome...and fast? Why does the FCC want to trivialize the significant broadband accomplishments that hundreds of small companies have made in the last 15 years, in places where there is literally no business case to provide service? I know that I am lucky to have a very unique perspective and insight on the rural telecom industry, and I want to do everything I can to help both lawmakers and the general public to see past faulty premises and misconceptions about rural telecommunications providers. I just hope its not "too little, too late," for me and for all the wonderful rural telecom owners, managers and advocates who are tirelessly communicating these issues in both the state and federal arenas. I definitely felt some sense of satisfaction when I read the Federal State Joint Board comments on USF, they also largely disagreed with the FCC's proposals and they seemed very in-tune with the issues that rural carriers are most concerned about such as reverse auctions and the unfounded cap on the fund, of which there is no legal basis or logical reason for imposing other than pure ignorance, in my opinion. The FCC wants to impose all these significant changes of USF--and I am not disagreeing with the fact that USF needs to be "modernized" to include broadband--but the FCC's proposals will ultimately end up causing significant harm to rural telecom carriers and therefore to rural consumers, either through higher rates, lower quality, or by eliminating broadband service entirely in some rural areas.
NTIA Chief of Staff Tom Powers addressed the conference this morning and touched on several key issues, such as spectrum policy, broadband adoption, and Internet policy. He described the most critical broadband adoption challenges, where 46% of broadband non-adopters (in a recent broadband adoption survey) cited "lack of interest" as the main reason why they do not use broadband. He made some interesting points about the difference in adoption rates between rural and urban users--there is about a 10% difference in adoption and that 10% can primarily be accounted for by lack of availability in some rural areas, especially when factors like income and education are constant between urban and rural groups. The NTIA is encouraging programs to increase broadband adoption by targeting the "lack of interest" non-adopters, especially minorities, senior citizens and persons with disabilities. It is discouraging that some of the people in America who could probably benefit the most from broadband either can't get it or don't understand the benefits. It is even more discouraging that rural telecom providers may not have the chance to convert the remaining non-adopters if USF is restructured in a detrimental way, and as a result the remaining rural non-adopters could be waiting years until another carrier comes along. I think it is important to consider that broadband non-adopters are not going to be clamoring for service, lobbying Congress, and reaching out to competitors if their current broadband provider vanishes from the market. They will not take matters into their own hands and build community wireless networks. They will simply be left behind, and be economically, educationally and culturally disadvantaged without broadband.
I enjoyed this conference and as usual I met many great rural telecom advocates from all over the country. I really applaud everyone who traveled to DC to meet with Congressional and FCC staff this week, because we are running out of time to communicate our concerns about USF Reform on the Hill. I know our efforts at the NTCA Legislative & Policy meeting in March were successful, because the letters that NTCA members presented to the House and Senate were circulated and signed by many senators and representatives. I hope the OPASTCO members will be even more successful with their lobbying efforts this week! I was finally inspired by this conference to start moving forward on my Master's thesis, which will be about USF Reform. My broad topic, "Will RLECs Survive 21st Century USF Reform," is starting to become a little more constrained, and now I am thinking about focusing more specifically on whether (and how) RLECs will survive reverse auctions and a cap on the fund, which I believe will be the most likely and most negative outcomes of the final rules.
Think I'm done talking about USF yet? Think again! Tomorrow is the much-anticipated 3rd FCC Workshop on USF Reform, taking place in Omaha Nebraska, complete with a special FCC Commissioner trip to a rural telecom provider in Diller, Nebraska! I can't even imagine how excited the employees at that rural telco must be right now--I'm really excited for them! I hope to have a review of this meeting posted by late tomorrow evening. I also signed up for a webcast on Thursday about consolidation in the wireless industry, which I am really looking forward to watching.