NCTA to USDA: Work With FCC on Rural Reforms

By John Eggerton -- Multichannel News, 2/6/2012 12:01:00 AM

Washington — The National Cable & Telecommunications Association last week advised Secretary of Agriculture Thomas Vilsack to work with, not against, the Federal Communications Commission to reform the Universal Service Fund’s highcost program, which supports communications service in rural and hard-to-reach areas.

In a letter to Vilsack, Michael Powell, president of the cable-operator trade group, said all parties had to make concessions, but that the reform effort needs to proceed. Powell said he appreciated that USF reform has “significant consequences” for the phone companies that receive loans from the USDA’s Rural Utilities Service (RUS), but that those rural carriers’ assertion that the reform order is a “downside only” approach is wrong.

“In light of the significant benefits provided to rural telephone companies in the USF reform order,” Powell said, “it is disappointing that these companies are encouraging your agency to interfere with the commission’s implementation of this new regime,” he wrote.

The NCTA was weighing in after three trade groups for rural telcos — the National Telecommunications Cooperative Association, OPASTCO and the Western Telecom Alliance — wrote Vilsack to take issue with the FCC’s USF reform, adopted last fall, and asked the Agriculture Departmnet to intervene to advise against some of those changes.

Specifically, they asked Vilsack to advise the FCC not to: “reduce the rate of return available for investments made in rural areas; (b) apply and extend a series of new caps to further reduce USF support payments for rural local-exchange carriers (RLECs); (c) eliminate the last vestiges of intercarrier compensation payments without a clear path for replacement or restructuring; and/or (d) carve up RLEC serving areas in a way that will make it even more difficult to justify new investments or recover existing investments.”

The NCTA is no fan of the RUS. Last spring, it called on the USDA to block all RUS loans until it had reformed a program “plagued” with problems. One of the reasons the NCTA backed USF reform was to try to root out subsidies going to areas where there was already a business case for providing that service through the private sector.