FCC commissioner Michael O'Rielly wants some answers out of the head of the Universal Service Administrative Co. about whether government broadband subsidies should be used to subsidies wide area networks (WANS) where government subsidies have already been used to lay fiber.
USAC administers the Universal Service Fund subsidies.
O'Rielly has repeatedly talked about the problem of overbuilding, something that also vexes commercial ISPs, who argue that such government-funded competition is not the objective of the funds, which should go to build out high-speed broadband where no such service currently exists. The other side argues that some overbuilding is necessary to reach unserved households while still making enough money so that such new services can support themselves going forward.
He is also no big fan of the USAC, having said in the past (though under a previous CEO) that if did not "clean up its act" the FCC should consider contracting out USAC's functions.
In this case, O'Reilly's problem is with E-Rate (schools and libraries) funding of special projects linking schools.
In a letter to USAC CEO Radha Sekar, O'Rielly pointed to the subsidies being used to support WANS among Texas Schools that are overbuilding already USF-supported providers in certain school districts.
He said at least three different regional consortia have sought to provide internet access to entire regions covering thousands of square miles "even though multiple fiber-based providers are already capable of serving the individual schools within each region."
O'Rielly said one bidder is getting over $40 million in special construction costs for a fiber build despite most of the district already having fiber connectivity. He said that in addition to raising "troubling" overbuilding issues, it will likely subsidize warehousing of capacity not needed for E-Rate purposes.
He wants to know, among other things, whether Sekar believes the E-Rate rules permit funding special construction projects (like WANS) that duplicate, part of all, of fiber networks already built using government funds, how many such WANS have already been built and at what cost, and how many are in the pipeline.
He also wants to know if USAC informed the FCC of the overbuilding risk of the WANS, an apparent gap in the rules that permits such overbuilding.
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