The FCC’s overhaul of the Universal Service Fund (USF) and intercarrier compensation yesterday met mixed reviews as the wireless industry criticized the amount of funding provided to mobile broadband and its impact on rural operators.
The $4.5 billion fund provides just $300 million in annual subsidies to wireless operators, plus a smattering of one-time subsidies. The mobile broadband budget eventually will rise to $500 million a year.
“While the FCC is to be commended for its establishment of a dedicated Mobility Fund and making significant funds potentially available through 2014, the decision to set the long-term funding-level for mobile services at only 11 percent of the high cost fund is troubling,” CTIA President and CEO Steve Largent said in a statement.
The Rural Cellular Association (RCA) also expressed reservations about the plan. Steve Berry, head of the RCA, pointed to the fact that wireless pays in 75 percent of the Universal Service Fund but receives just 9 percent of support.
“By anyone’s estimation, this number is insufficient and falls short of consumer needs,” he said.
The FCC also decided to phase out support for multiple wireless operators in a single market. The changes will cut funding for cellular service in rural markets, which are significantly more expensive to serve than urban areas.
Eric Graham, vice president of government relations at C Spire Wireless, said the regional operator may have to stop offering service in rural areas that won’t be profitable without subsidies.
“We expect that the result of this order will be that we have to turn off towers,” Graham said. C Spire hasn’t determined how extensive the cuts will be, but expects it will have to reduce its coverage. Graham estimates that C Spire will lose 40 percent of its USF funding by mid-2014.
“The biggest irony in all of this is we were getting very close to the point where we could have used USF to deploy 4G,” Graham said. “But instead, the commission has employed a new mechanism that will prevent us from getting 4G out to rural areas as fast as we could have without its USF reform.”
Not all were disappointed with the changes.
AT&T regulatory affairs executive Bob Quinn said in a statement that “while no one can say that it is thrilled with all aspects of what the FCC did,” the reforms were an important step to make long-overdue changes to a subsidy system that had become wasteful and fraught with abuse.
“This is a significant achievement worthy of congratulations and its impact on all Americans should not be minimized,” he said.
Sprint had a similar reaction. “The Commission’s decision to transition to a system of bill-and-keep for terminating traffic and curb wasteful traffic pumping schemes is vital to a healthy and efficient market for both voice and broadband services,” said Charles McKee, Sprint federal and state regulatory affairs executive, in a statement. “The reform of Universal Service in a manner that focuses on the broadband technology preferences of consumers will better promote competition.”
Filed Under: Industry regulations