Rural wireless meltdown
October 3 2008 - 1:26 pm ET | Jeffrey Silva | RCR Wireless News
It’s materializing into a perfect storm for rural wireless carriers. But the federal government won’t be coming to the rescue, since it is the one perpetuating the assault on Wireless Joe Six-Pack.
In May, the Federal Communications Commission capped universal service fund support for mostly wireless carriers serving rural areas. The idea — one of a series of reforms recommended by a federal-state joint board on USF reform — was to rein in an expanding high-cost USF fund in which payments to primarily wireless carriers have grown from $1.5 million in 2000 to more than $1 billion in 2007. Never mind that landline telephone companies ate up the bulk of $4.3 billion in total rural telecom subsidies in 2007. No need to touch USF rural wireline support, the FCC reasoned, because the level of payments to that constituency has been flat in recent years.
Okay then, so exactly what did rural telecom companies spend government subsidies on while wireless operators were constructing new cell sites and making cutting-edge technology available to rural citizens? Rural cellular carriers are hoping for some answers in federal appeals court.
The next shoe is likely to drop next month when the FCC votes whether to blow up the identical support rule. The provision gives rural wireless USF recipients per-line support based on that accorded to rural wireline carriers. But the FCC believes the rule distorts incentives for rural wireless to build facilities in low-population centers (where’s the evidence?). As such, the agency again is apt to slash — by possibly as much as 50% — universal service funding for rural wireless carriers.
There is nearly universal agreement that a USF overhaul is justified. But is it necessary to make rural wireless service providers the quick-and-easy fall guys? Wireless consumers are said to contribute $3 billion yearly to the overall $7 billion universal service fund, which has other components worthy of cost-cutting scrutiny. In a perversity of the highest order, USF reform is being transformed to where the cellular industry and its 266 million subscribers are becoming the big subsidizers of a system based on a waning wireline universe.
October 10, 2008 11:41 am
I'm not sure why the federal government has to subsidize any industry including wireless. If you can't afford to build a network, and you can't get a loan for the build out...tough. It seems that we haven't learned our lesson that giving something to people; who can't prove they can afford it doesn't work. This includes congress, Wall Street and any individual who can't balance their budgets. It's time to get out your history books and learn something from the great depression era generation. If you want something earn it...
October 3, 2008 01:43 pm
As I drive through beautiful southwestern Virginia, enjoying the turning leaves, it would be nice to complete and hold a call on a major state road. I sure don't want to break down and attempt to dial for help. It is obvious that if it were profitable to cover this area, it would have happened long ago.The FCC is requiring wireless carriers in rural areas to aggressively build out modern networks, and mandating accurate E-911 access, while at the same time restricting universal service support needed to accomplish these tasks. Federal policy is adrift and rural consumers, who contribute to universal service, are the losers.Congress and the FCC have intended universal service subsidies to work with competition, not impede it. Funds must be used to build networks and provide choices to rural consumers in unserved and underserved areas, not wall off rural areas to a single subsidized carrier. The FCC's NPRM on universal service, which proposes to reduce support to wireless carriers who are aggressively building out networks, could scarcely be worse for rural consumers, or a more recessionary move, at precisely the wrong time.It is now beyond debate - wireless is the future of voice. Federal universal service policy must recognize this reality and allow consumers to choose the services they want and need.