Ex-senator worried USF reform will leave rural consumers behind

The Federal Communications Commission's plan to overhaul a fund that subsidizes telecom service to rural areas could end up leaving those consumers out in the dark, according to former Sen. Byron Dorgan (D-N.D.).

The commission is set to vote on Chairman Julius Genachowski's proposal for shifting the focus of the $4.5 billion high-cost portion of the Universal Service Fund from landline phone service to broadband at next Thursday's open meeting.

But Dorgan told Hillicon he's worried that proposed caps on the the total size of the fund as well as the amount individual carriers can recoup could dissuade telecom firms from investing in rural areas.

"My concern is as we get closer to the end date, it appears to me that the answer to the question 'will rural areas be left behind' is going to be 'yes,' " Dorgan said in a Tuesday interview, noting that in many cases rural telecom firms serve very few customers per mile of line.

"If you build out the system to the rural reaches, you have to have a cost recovery system that justifies that," Dorgan said.

According to Dorgan's understanding of the plan the caps would be determined by the FCC at some point in the future, which he said would create uncertainty that could dissuade firms from building out their networks to rural customers.

"Why would you put that off?" Dorgan asked. "What they're suggesting is adopting a rule that would allow the staff to create the caps after the fact. We're talking about caps on the recovery of universal service funds, the lifeblood of small, rural telephone companies."

Dorgan said that if the FCC is looking to take apart the high-cost fund and transform it into a broadband subsidy, it must insure there are enough resources in the years ahead to sustain service.

Citing his own experience with the 1996 Telecommunications Act, Dorgan said universal service is beneficial to the entire country, not just rural customers, because anyone can use those networks when they travel across the country.

"The promise of universal service is very, very important. It's been around for decades," Dorgan said. "Everyone benefits from universal service, from everyone being able to have affordable service at comparable prices."

Dorgan currently serves as senior policy adviser and government affairs co-chairman at the Washington law firm Arent Fox, and as senior fellow at the Bipartisan Policy Center. He acknowledged doing some consulting work for rural phone companies since retiring from the Senate in January 2011.