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NCTA Study: Stop Allowing USF to Secure Rural Broadband Loans

The National Cable & Telecommunications Association issued a study Thursday to drive home its point that the government should stop allowing Universal Service Fund money, and even the expectation of that funding, to be used to secure broadband build-out loans from the USDA's Rural Utilities Service.

That was one of the points NCTA members were making in D.C. meetings this week on Capitol Hill and at the FCC.

A study by Navigant Economics that was commissioned by the cable trade group, recommended that "RUS should temporarily suspend new loans to recipients of USF funds and stop leveraging USF support to qualify applicants for RUS loans."

Cable operators are concerned that proposed FCC USF reforms could be "deferred or diluted" for fear of getting in the way of that RUS program. But the study suggests that the government needs to step in. It found that RUS is relying on USF subsidies to pay for 78 cents on every loan dollar.

The USF subsidizes phone service in high-cost and tough-to-reach areas, but is being migrated to broadband support.

The paints the RUS program as a widening gyre of of inefficient infrastructure chasing RUS loan dollars.

The FCC is said to be targeting October for its proposed USF reforms. Telcos have proposed a plan, while cable operators have proposed modifications to that proposal without which they say it puts a thumb on the scale of incumbent phone companies without recognizing cable's position as the go-to provider of broadband that the USF fund will be targetting.

"The only reasonable assumption for the RUS to make at this stage is that USF revenues can no longer be counted upon to service future loans, whose maturities stretch two decades or more into the future," Navigant and NCTA conclude.