NCTA Says RUS Should Stop Broadband Loans Until Rules Are Fixed

Interim rules won't stop RUS from giving funding to areas where broadband already provided by operators

By John Eggerton -- Multichannel News, 5/13/2011 4:06:40 PM

Cable operators have advised the Department of Agriculture's Rural Utilities Service that it needs to fix its rules for handing out broadband development loans under the Broadband Loan Program and should stop handing out the money until that happens.

In a filing with the Department of Agriculture on interim rules for the program, which is distinct from the broadband loans RUS handed out as part of the stimulus package NCTA argued that the interim rules won't stop RUS' practice of giving out funding to areas where broadband is already provided by cable operators and others.

NCTA's issue with both the ongoing loan program and the one-time stimulus package broadband funding was that it was going to overbuild service where it was already provided, or essentially government-subsidized service that hurts their members.

"Unless RUS makes significant changes to the interim rules," said NCTA in the filing, "we are concerned that this pattern of conduct could continue unabated."

NCTA argues that the rules should require RUS to put a priority on areas where 100% of the households are unserved and its second priority on where more than 75% of the households are unserved.

For determining unserved, it says, RUS should use existing FCC and National Telecommunications & Information Administration records, not RUS public notices, and include those that are planning to provide service in the "near future."

NCTA also argues that RUS should no longer treat companies getting support from the Universal Service Fund or intercarrier compensation as though that was the same as money from customers. "That approach, in which repayment of RUS loans depends on perpetuating existing FCC subsidy regimes in their current form and at their current level, is fraught with problems."

The FCC currently has plans to reform the Universal Service Fund and is looking at possible changes to intercarrier comp as well.

"Until such changes are made, RUS should not award any new loans under the interim rules," NCTA said.