USF and Rural Reform

Peter : On Rad's Radar?
Peter
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

USF and Rural Reform

In a recent conversation with a buddy of mine at a state PUC, we were discussing small rural ILEC's. Many are cash strapped which makes providing advanced services difficult - no cash to buy a head-end (half a million or more). 

RLEC's can get RUS loans for the upgrade to fiber, but OPEX and labor for installation are not covered by the loan. That creates a quandry.

Why are the RLEC's cash strapped? They get all that Universal Service funding (both state and federal). But they are losing the best clients to cellular and satellite (and in some cases cable).

I have a couple of clients that are small MSO's who are in a similar situation. They are losing customers to DirecTV.  It costs big money to replace an MSO (cable) system in the ground. (Verizon started at $2000 per home passed and supposedly has it down to under $900 per home passed). There are other costs besides the fiber, optics, conduit and labor - the head-end, the softswitch for Voice, and the set-top boxes. The set-top boxes used to cost $400 each but supposedly are dropping towards sub-$200. But at $5 per month rental fee, even the $200 can't be capitalized. 

With Verizon dumping its unprofitable landline regions onto companies that have no hope of deploying broadband to their regions, the question becomes what are we to do about American Broadband Deployment in Rural America?

At some point, if you want really fast broadband, you will have to move to an area with it.  However, with our current housing situation, how will you do that? If you live in an area without broadband, your economic options are slim. Communities with fiber add more jobs, have higher income, a broader tax base - than communities without fiber. 

My friend says that maybe Broadband isn't a right for everyone. It's just too expensive. Even the $7.2B BTOP funding is a drop in the bucket when you spread it out to 50 states. Can we bridge that Digital Divide?

We talked about how the FCC policy has not helped to further broadband deployment in the US in the last 8 years. Revenues at the RBOC's go up, but we haven't done anything about the Tipping Point of the PSTN. At what point does the PSTN become endangered because too many ILEC's can afford to keep it working? Or the disparate VoIP Providers and Cable Companies can't deliver dependable E-911 or inter-connect efficiently. (Inter-Carrier Compensation Reform anyone?)

The new FCC as well as the RUS and NTIA are managing a lot of funds. USF contribution factor is now 12.9%, but the contributions are dropping as landlines decline. So the thing they need to look at is Going forward what do we do to preserve E-911 service in America as well as spread the availability of true Broadband for economic diversity.
 



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