Friday, January 18, 2013

Using the Connect America Fund and the Universal Service Fund to Commoditize Rural Broadband Access Through the National Public Safety Broadband Network (FirstNet)

Just read an interesting article by Walter McCormick of USTelecom Associates, titled “FCC Receives Boost from Sen. Schumer to Advance Broadband Investment”, dated 01-17-2013. I also read an article titled, "FCC Takes Heat For NewBroadband Subsidy Plans As AgencyTries to Give Away $185 Million". By Karl Brody of DSL Reports. 

As written, “In a letter to Chairman Genachowski, Sen. Schumer requested the Commission to release $485 million from the Connect America Fund (CAF) to expand broadband Internet deployment, some of which could be invested in places like New York’s Hudson Valley region. Of the $485 million, Sen. Schumer noted that $185 million is left over from unspent 2012 funds and $300 million is available this year.  He applauded Chairman Genachowski for proposing new ideas for getting these CAF funds flowing into the economy.”

I have a proposal as well, that is that the FCC should consider the fact that with the commoditization of Internet access maybe it is better served as a common utility rather than a service offering from a commercial carrier carried on commercial infrastructure.

It’s a fact that the commercial carriers are desperately trying to shed pre-existing infrastructure to improve their ROI (return on investment), which is not a bad thing. But it limits their ability to build out to areas that produce little to no return on investment. Yes, the CAF and USF (Universal Service Fund) is supposed to help eliminate this problem, but in reality it just aggravates the issue. Why? Because if the commercial carriers use the money to help build out to these areas they still have to maintain and manage those assets for the long-term, which means they become responsible for the long-term future. In essence they are “left holding the bag”. In reality though you still do not eliminate the issue of ROI…it just prolongs the inevitable.

If we allow the service to be commoditized as a utility service then we envelop the issue of ROI into a much larger asset base of utilities; or into a financially doable model where as the commercial carrier can bid for transport access to the customers as Priority 3 users a consolidated Public Safety Broadband Network (PSBN). In short, we can use the already existing infrastructure of commoditization of the Utilities; and/or we can allow the carriers to access these rural clients through the PSBN infrastructure, thus they avoid the ROI problem by not having to build anything…. just a pure revenue deal. Did you know that there are 31 State Electric Cooperatives in the State of Oklahoma and they cover more than 75% of the rural geographic landmass of the State...and they all have extensive communication infrastructure?

It just makes sense to use the underutilized bandwidth and spectrum on the PSBN (termed as priority 3 usage by the NTIA/FirstNet) for rural broadband access, which means the ability to allow rural, or local regional carriers, national carriers, or even the Utilities to sell broadband access to the rural Americans that lack broadband coverage. How we can achieve such a solution is quite simple…. through a State generated Public Private Partnership that will help build the statewide portion of the National Public Safety Broadband Network.

Regardless of the valiant efforts of Sen. Schumer maybe we should consider that the funds associated with the CAF and the USF should be utilized to extend rural broadband coverage through the National Public Safety Broadband Network as Priority 3 users. Sounds like a great way to fiscally save some money, align better priorities, and adjust the course to where the market is heading. But what do I know I’m…

Just some guy and a blog….

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