Ross Boettcher of the Omaha World-Herald reports that the Great Disconnect, a lobby created by the Iowa Telecommunications Company Coalition, says "the changes will undercut their ability to afford investments in their infrastructure and cost their customers more in the long run." The CEO of Western Iowa Networks, a rural telecom provider, told Boettcher the company's revenue comes from three places: customer charges, compensation from other carriers and subsidies from the Universal Service Fund. Rep. Lee Terry, vice chairman of the House Energy and Commerce Committee's subcommittee on Communications, Technology and the Internet, who was key in early plans to change the Universal Service Fund, told Boettcher that changes in the subsidies would hurt rural providers: "We knew USF was going to be flattened, capped and reduced, but what the providers weren't counting on was another third of their revenue stream being phased out." Sheila Navis, executive director of the Rural Iowa Independent Telephone Association, said the burden to pay for broadband infrastructure expansion will fall on consumers.
The FCC hasn't yet released details of rules for the Connect America Fund, but an executive summary released last week reveals the phasing out of inter-carrier compensation fees over five years. Boettcher reports that rural broadband expansion will be opened up to a competitive bidding process, which will keep costs down for consumers and give more incentive to larger companies for expanding broadband services in rural areas. This was likely a result of FCC Chairman Julius Genachowski's pledge that consumers' bills would fall as hidden fees associated with subsidies evaporated. (Read more)