Wireless firms want in on USF reform

U.S. Cellular President Mary Dillon said the ABC Plan sets aside as much as $4.2 billion for wireline providers and only $300 million per year for wireless, an amount she said was out of step with the rising popularity of wireless devices.

“At this time, when smart phones now place enormous computing power in an average person’s hands, when tablets are on the verge of revolutionizing industry and education, and when demand for mobile broadband is exploding in our urban centers, this is not an investment mix that will provide rural Americans with the opportunities they need to compete,” Dillon said.

Kathleen Abernathy, chief legal adviser for Frontier Communications, said the right of first refusal is designed to provide broadband access as quickly as possible. She emphasized that the six incumbent carriers behind the ABC Plan have already accepted the reporting requirements and regulatory framework that comes with the federal subsidies.

“The thought was, we’ll get it there faster than if you go through and try to design an auction process,” Abernathy said, adding later that the government can only afford to subsidize one telecom provider in many rural areas.

Small cable and satellite providers have voiced similar complaints about the ABC Plan, arguing it is designed to help wireline carriers keep the bulk of the funds. Abernathy said designing a competitive auction process would cause delays in the distribution of the subsidies.

FCC Chairman Julius Genachowski has said his USF reform plan, which is being kept under wraps, won’t overly rely on any single proposal. But most of the debate has centered on the ABC proposal, and it is expected to heavily influence the final plan voted on by the commission on Oct. 27.

Lawmakers at the hearing were generally supportive of the goals of USF reform, but concerned about the inequality of contributions to the fund. Sens. John Kerry (D-Mass.) and Maria Cantwell (D-Wash.) both complained that their home states contribute far more to the fund than they receive. Other lawmakers repeatedly expressed the view that any reform of USF should be technology-neutral to avoid funding backward-looking solutions, but few specifics on that topic were provided.

Chairman Jay Rockefeller (D-W.Va.) said he spoke with officials from the FCC that were “not thrilled” about the committee holding a hearing on USF reform. The commission officials, according to Rockefeller, were concerned about the GOP-controlled House deciding to hold  its own issue on the hearing. The FCC is capable of moving forward on USF reform without legislation, but the size of the fund — along with the current budgetary and political climate on the Hill — all but assures the issue will draw substantial interest from lawmakers on the relevant committees.