Qwest Proposes Universal Service Changes
Posted by samc on June 28th, 2007Qwest proposed Wednesday to create a program that would subsidize high-speed Internet deployment to underserved rural areas that are not cost-effective for companies to service, reports the Denver Post.
The program would be managed by state public utilities commissions and funded by the Universal Service Fund. The USF fund receives about $4 billion annually from a surcharge on the bill of every U.S. customer. About $1 billion of that is funneled to wireless carriers that provide service to rural customers, said Steve Davis, Qwest’s senior vice president of public policy.
Qwest’s 14-state local-phone service territory includes vast rural areas. They want to change the wireless phone subsidy from per-user to per-household, which would cut the amount given to wireless carriers by about $500 million annually. That money would be used for Qwest’s broadband deployment program.
Unlike AT&T, Verizon, Sprint or Clearwire, Qwest does not own cellular frequencies or WiMAX frequencies at 2.5 GHz.
Strategies differ on how to deliver broadband everywhere:
- Clearwire & DirecTV/EchoStar will deliver a triple play with Mobile WiMAX and satellite television.
- Sprint’s WiMAX could offer a similar triple play.
- Verizon, which won the $10B federal IWN contract, appears to be angling for a 700 MHz rural subsidy for broadband wireless everywhere (although FiOS is an urban fiber play).
- AT&T hopes to extend their U-Verse IPTV service beyond copper’s three mile limit for a triple play.
- Qwest is getting into IPTV, using an approach similar to AT&T’s, with Denver and Portland two of the first cities.
All would like free money from Uncle Sugar — or more precisely a piece of the USF billions.
Currently, most USF funding collected from ratepayers goes to prop up rural twisted pair infrastructure or subsidize duplicative wireless cellular carriers.
Qwest has submitted their proposal to the FCC. Their program would be within the purview of the FCC and wouldn’t require new legislation. According to the Denver Post, the FCC would have to approve the proposal by the end of the year for the program to be launched by Qwest’s goal of fall 2008.
Currently, universal service funds are allocated by state PUC’s to eligible telecommunications carriers. The current proposal would allocate USF subsidies to the lowest bidder in an under-served region. That has the potential to reduce the inefficiencies that plague the current USF system, say proponents.
Under the Qwest program, state utilities commissions would identify regions that need broadband deployment. Companies would submit bids for one-time subsidies to provide the service to residents in those areas.
The USDA’s $1.2 billion Rural Utilities Service program, which is tasked with funding rural broadband deployment, was attacked this May by Congress for not doing anything of the sort. The Washington Post reported that since 2001 more than half the money has gone to metropolitan regions or communities within easy commutes of a mid-size city.
Members of the House committee said the five-year, $1.2 billion Universal Service Fund to provide rural communities with broadband was broken. It missed many unserved areas while channeling hundreds of millions of dollars in subsidized loans to companies in places where service already exists, charged the committee.
| VERMONT: RHODE ISLAND: SOUTH CAROLINA: KENTUCKY: OREGON: Source: U.S. Census Bureau, 2005 |
“If you don’t fix this, I guarantee you this committee will,” House Agriculture Committee Chairman Collin C. Peterson (D-Minn.) told James M. Andrew, administrator of the Rural Utilities Service this May. “I don’t know why it should be this hard.”
A study found more than half the funds instead went to urban broadband deployment, and just one out of sixty-nine loans went to wiring a region without any broadband service whatsoever.
The USDA has responded by issuing a new set of proposed rules aimed at making sure the fund is doing what it was originally designed for. The USDA is also pushing to have the program extended until 2012 as part of the 2007 Farm Bill.
Three planned statewide broadand wireless networks in the United States include the states of South Carolina (31,000 square miles), Vermont (9,249 square miles), and Rhode Island (1,044 square miles).
ConnectKentucky is being hailed in Congress as one model for federal high speed internet policy. Currently, 93 percent of Kentucky homes can access broadband, and ConnectKentucky expects every household to be capable of using high-speed Internet by the end of the year. Rep. Rick Boucher (D-Va.) cited the program’s success when he outlined a national plan for universal high speed internet access.
source : dailywireless.org
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