NCTA to USDA: Work With FCC on Rural Reforms

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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

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.