Rural telecom firms bash broadband plan in letter to Obama

By Gautham Nagesh - 10/24/11 01:55 PM ET

A coalition of rural telecom firms wrote to President Obama on Friday blasting the Federal Communications Commission's plan to overhaul a grant program aimed at connecting rural areas.

"Your administration has announced its commitment to broadband deployment and regulatory reforms that will spur job creation and overall economic expansion," wrote the heads of the National Telecommunications Cooperative Association, Organization For the Promotion and Advancement of Small Telecommunications Companies, and the Western Telecommunications Alliance.

"However, the FCC is preparing reform measures that will completely undercut such investment and growth by sidestepping the broadband issue while simultaneously cultivating an environment of continuing regulatory and economic uncertainty throughout much of rural America."

The FCC is set to vote on chairman Julius Genachowski's plan to shift the focus of the $4.5 billion high-cost portion of the Universal Service Fund from subsidizing landline phone service to broadband Internet at Thursday's open meeting.

The Commission has been mum on the details of Genachowski's plan, but several observers have said they expect it to borrow heavily from a proposal offered by six of the country's largest phone companies, dubbed the America's Broadband Connectivity (ABC) Plan.

The cable industry, rural telecom firms and other competitors have all argued the ABC plan heavily favors incumbent telecom providers rather than opening the competition to alternative technologies. The carriers have countered that the quickest route to expanding service is to trust those firms already in place.

The letter argues the FCC plan is inconsistent with the administration's commitment to reducing regulatory barriers for small businesses to boost job creation. They accuse the agency of pursuing its own agenda instead of working to assure all rural consumers have access to broadband.

Because of political pressure to both limit the size of the high-cost fund and prevent increases in the monthly fee consumers pay on their phone bill to fund the USF, there has been speculation the FCC plan will ultimately fall short of guaranteeing universal broadband service.

For evidence, some point to the fact the FCC is planning to rename the subsidy program as part of the changes, eliminating the term "universal service," which was closely associated with the nation's commitment to ensuring all consumers have access to home phone service.