My Valentine’s Day with Rural Telcos: Know Hope

[Commentary] It is no secret that rural phone companies are not fond of the Broadband Plan or me. (The enmity is not mutual. I have great respect for them but think the universal service system on which they have come to depend is problematic for the country.) Thus, it was felicitous that I spent Valentine’s Day at the National Telecommunications Cooperative Association Convention, participating in a two round debate.

The first round involved debating two rural Telco executives. My primary message--more as a former analyst than as a Broadband team member—was the debate over USF/ICC reform will probably be resolved through an industry consensus or result in a stalemate, and that a stalemate hurts them because every significant market and political trend is weakening their position. I asked them, if not now, when? Their message for me was that rate of return regulation had worked well and ought to continue unchanged. When I pointed out that it resulted in 7 million homes without broadband at the same time that we were spending $20,000 a year for a single home in some areas, they responded that it was only $17,000, while also saying that there should be no cap on how much the government should subsidize. Both executives said we should be willing to pay the more than $50,000 a year per house that would be necessary to provide access to the last .2% of U.S. homes. By way of contrast, the FCC NPRM proposes a cap of $3,000 a year. I agree with the FCC proposal for many reasons, including what I think should be higher priorities, such as adoption and higher connectivity for anchor institutions.