Thursday, January 27, 2011

Broadband plan could benefit rural communities while hurting some rural telecom companies

Rural telecommunications companies are getting their message out about what they see as shortcomings to the federal government's National Broadband Plan, but some added perspective is needed to balance their claims.

Ned Valentine of The Dispatch in Clay Center, Neb., recently reported that Mike Foster, the CEO of Twin Valley Telephone, told the local Rotary Club that the broadband plan "has stopped expansion of broadband service in rural areas by small companies and will bankrupt many of the 900 companies presently serving rural areas." Foster also claimed the plan would help urban areas at the expense of rural ones.

At the center of the controversy is the use of the Universal Service Fund, which was developed by the Federal Communications Commission to bring phone service to all of rural America by placing a charge on every U.S. phone bill. The National Broadband Plan would use USF money to fund broadband Internet service, regardless of the technology used, meaning some rural telecommunications companies could lose the USF funding they currently receive for phone service. Some companies may receive less funding because wireless broadband services are cheaper to provide in their area, while other USF funding might go to cable companies, depending on efficiency and other factors.

Foster told the Nebraska group that USF funding would go to large telecommunication companies like AT&T to provide broadband that isn't as fast as what some rural communities already receive. "Rural companies have had a great track record in providing those services and investing in our rural areas," Foster said. "We haven't done a great job of talking about it." The broadband plan would require Internet speeds of at least 4 megabytes per second. While some rural areas enjoy faster speeds, but the speed of other advertised broadband service in rural America actually falls short of that target.

The goal of the National Broadband Plan is to provide universal broadband service across the country regardless of the technology used. While that may hurt some rural telecommunication companies' bottom line, it may still benefit rural communities. It depends on the circumstances. For more background on the National Broadband Plan you can read our items here and here.

1 comment:

Nancy said...

Here in northern Maine, I received a State of Maine official survey on broadband access just yesterday. We pay $80/month for satellite - the only (relatively) high-speed internet service we can get - and would love to have a lower-cost, faster option.

Interestingly, neither the paper survey nor the cover letter include a URL for ConnectMe, the agency doing the survey!