Revamp Said Needed for Rural Broadband Policy

Standard costs for broadband subsidies should be set, said Dave Burstein, editor and publisher of DSL Prime, saying the cost of a typical RUS project is two to five times that of a private effort. Internet bandwidth is “unnecessarily expensive” in rural areas because of excessive “special access” charges and national backbone operators’ refusal to deal, said Brett Glass, CEO of Lariat.net, a Laramie, Wyo., ISP. He prefers financial incentives to price regulations. The FCC should reorient USF mechanisms to offer adequate services at reasonable charges, said Mark Cooper, director of research at Consumer Federation of America. To do that, costs in rural areas and rates in low-income households nationwide should be subsidized, he said. Bringing down backhaul costs by special access or overbuild is critical, Burstein said. But backhaul isn’t a problem for Hiawatha Broadband Communications, of Winina, Minn., said CEO Gary Evans. Finding a wireless partner is the problem, he said.

A way to reach unserved and underserved areas is to offer low-interest loans subordinate to current credit facilities, said James Bruder, CEO of MetroCast Communications, a rural service provider. “We also need middle-mile grants that would allow for the interconnection of isolated communities that could be done in partnership with the local communities,” he said. Bruder urged expansion of USF to providers beyond incumbent telcos. His company, which isn’t applying for stimulus money, has worked with other providers and with communities to overcome geographical hurdles to offer service to isolated places. But service provider Windstream prefers grants to loans, said Frank Schueneman, senior vice president. He urged federally funded subsidies for rate payers of local services to stimulate demand. But “don’t heavily subsidize what would be provided without subsidy,” Burstein said. “Biggest dollar is home equipment and installs, which are only necessary if there’s a customer paying.”

Satellite company Wildblue Communications sees technology neutrality as critical, said President Kenneth Carroll. Rules can accidentally exclude technologies or create hurdles, he said, citing the BIP/BTOP mapping requirements for nationwide projects. A balance between economics and service capabilities is important because each technology has optimal deployment characteristics, he said, urging market by market analysis of considerations like population density, topography and community needs. The main tests should be cost-effectiveness and sustainability rather than the highest speed. He called for assessing different technologies to decide their suitability for deployment. Technologies earlier in their life cycles, like wireless and satellite, may be capable of significant technology gains at relatively low cost, he said.

Regulators should devote spectrum with nonexclusive licenses to wireless broadband, subject to mandatory spectrum etiquette, Glass said. He urged opening the upper half of 3650 MHz band to the IEEE 802.11y standard and increasing power limits in counties with populations less than 200,000 for wireless service providers covered by Part 15, a section of the FCC’s rule regarding unlicensed transmissions.

The FCC needs to “fix the broken middle-mile market,” he said. It should also create incentives or requirements for nationwide fiber backbone providers to offer access at amplifier sites and ensure that Form 477, a reporting requirement to determine the extent of local broadband competition and deployment, and broadband mapping data, are kept confidential and released on in aggregate to protect competition, he said. The current spectrum auction regime seems designed to preclude small, local and independent carriers from winning spectrum with exclusive licenses, Glass said. “Anticompetitive tactics” by telco and sometimes cable incumbents are also barriers, and they would be increased by broadband mapping efforts that revealed competitors’ proprietary information. The threat of regulation of network management like potential prohibition of caps or traffic prioritization has also spooked investors, he said.

The lack of access in unserved areas is an investment problem rather than public policy problem, said George Ford, chief economist of the Phoenix Center. Policy shouldn’t reduce the effectiveness of the money spent in unserved areas, he said, and regulators should get competition issues off the table in unserved areas. But that leads to another problem, he said: How to pick the winners and losers. The FCC should also get the secondary spectrum market going, he said: “We also can’t subsidize consumption.”