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Sunday, April 19, 2009

National broadband? NIMBY!

Back in January, I voiced my fears that the Obama administration’s goal of increasing broadband access might threaten E-Rate funding. Now the FCC has released a Notice of Inquiry (NOI) about the national broadband plan, and a couple of paragraphs seemed to me to be like the creepy music that plays in the movie to foreshadow doom. Or is that one of my kids in the next room playing on the keyboard?

The NOI has no hint of any plan to take funding from the E-Rate, but that was the point of my earlier post: harming the E-Rate might be an unintended consequence of the expansion of Universal Service.

But first, an aside: in paragraph 33, the FCC asks whether it should "collect additional data from broadband providers, consumers, health care providers, schools, libraries or other governmental organizations." You know that annoying Block 2 on the 471? Look for that to grow. Not a threat to the program, but a bother for applicants.

In paragraph 39, the FCC asks how the Universal Service programs "might be better targeted to address broadband deployment." Paragraph 40 makes it clear that they're really talking about the High Cost and Low Income programs, which seem better suited to providing broadband to consumers, but I see two potential problems for E-Rate.

First, someone might propose that the Alaska Order be expanded to all areas without broadband access to the Internet. Schools rural communities would be allowed to provide high-speed wireless access to residents after school. It seems like a good idea, except that it's bound to increase the amounts charged to the E-Rate, putting the program under further strain.

The second potential problem is much more serious. The FCC buries the lead question for the E-Rate in the last sentence of the Universal Service section of the NOI: "What effect would including broadband as a supported service have on the size of the universal service fund, and on contribution requirements?"

Here is the threat that I talked about back in January. Right now, the USF contribution factor is over 11% and growing, thanks mainly to the High Cost program. But Universal Service program as a whole gets negative press as a result. If the USF has to pay for broadband access to every home, and the contribution factor climbs to 30%, what will happen? Will the E-Rate be cut? Will the carryover from previous years be carried over to another part of the USF?

I guess I'm a funding NIMBY: I'm all for nationwide broadband, but don't put the funding source anywhere near my program.


  1. What do you think the effect would be if the ISP's were required to also contribute?

  2. I wondered about that, but I don't know much about the contribution side of this program, so I kept my thoughts to myself. (I can hear some of you thinking, "He keeps some of his thoughts to himself?") Since you asked:

    I think it would mean an increase in the regulation of the Internet (which is not good), a decrease in competition in the ISP sector (which is also not good) and an increase in the cost of Internet access for everyone (which is definitely not good).

    On the other hand, it doesn't make sense to have everyone's Internet access paid for by a tax (oops, I meant user fee) on long distance phone service, so if the Universal Service Fund is going to be used to subisdize Internet access, then ISPs should be paying into it.

    Oh, and there would be one unintended good consequence: forcing ISPs to fill out Form 499 may make it more difficult for some scammers like these guys: