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Pai Pans Overcomplicated USF Reform Plans

FCC Commissioner Ajit Pai said he is not confident the FCC can keep its pledge to Congress to deal with the issue of subsidizing stand-alone rural broadband by the end of the year.

Currently, the FCC's Universal Service Fund subsidizes traditional telephone service in rural areas, but not broadband-only service, which works against its goal of transitioning phone subsidies to broadband more broadly.

In a speech to an NTCA--Rural Broadband Association policy conference in Washington Monday (Nov. 16), Pai said that "[t]hrough of a quirk of regulatory history, our rules governing small, rural carriers continue to provide universal service support only to networks that supply telephone service, not stand-alone broadband service. That regulatory system has increasingly come under strain as consumers flee landlines in favor of wireless and Internet-based (or “over-the-top”)


He said rural carriers are not investing for fear they can't migrate to deploying the next generation services their customers want or they will lose the Universal Service funding they need.

He pointed out that at a Senate Commerce Committee hearing earlier this year, he and his fellow commissioners all pledged to solve the stand-alone broadband issue by the end of the year. He said he has a plan that would do that, but that time is running short.

"Unfortunately, I’m starting to hear speculation that it’s just not going to be possible for the Commission to act by our end-of-the-year deadline. I strongly disagree with that view. There is no reason whatsoever why we can’t act by Dec. 31 if our focus is on solving the stand-alone broadband problem," he said.

He said too many people have waited too long for broadband, which he says they can get if the FCC will focus on rural broadband an not overcomplicate the issue. "They don’t need another complicated and theoretically elegant reform plan that no one understands and doesn’t reflect how the world actually works," he said.

NTCA is all for providing stand-alone broadband subsidies in rural areas, and so are a bunch of legislators. A year and a half ago, almost four dozen senators from both parties called on the FCC to reform the Universal Service Fund telecom subsidy program ( so that it supports broadband-only service in rural areas.

The FCC is migrating USF support from traditional telephone to broadband as part of its revamp of USF, and the senators pointed to that USF goal of increasing broadband adoption.

Currently, a smaller, rate-of-return carrier (NCTA's membership) is eligible for support if a rural consumer buys phone service, whether or not they take broadband. But carriers don't get USF money for broadband-only rural subs.

In his own speech to NTCA in September, FCC Chairman Tom Wheeler said the FCC needed to get the reforms done, but needed to get them right, as well, which meant insuring the money was being well spent and providing a "reasonable" transition period from phone to broadband. (