Federal Internet plan to connect America aims at high-cost rural areas

By Josh Peterson | Watchdog.org

SANTA FE, N.M. — A Federal Communications Commission plan to subsidize rural high-speed Internet is attracting hundreds of organizations from 48 states, a federal official said recently.

Speaking to a gathering of state and local regulators in Santa Fe last week, Carol Mattey, deputy director of the Federal Communications Commission’s Wireline Competition Bureau, told her audience the agency had received nearly 950 “expressions of interest” in the agency’s plan to subsidize rural broadband Internet through the agency’s Connect America Fund.

Connect America is part of the larger Universal Service Fund, which the agency created in 1997 to meet congressional communications service goals for the nation.

The FCC proposed in its filing for the first quarter of 2014 that telecom companies add a 16.4 percent charge onto the end of their subscribers’ monthly phone bills to pay for the USF,

Mattey was one of several panelists speaking at the Current Issues 2014 conference, hosted by New Mexico State University’s Center for Public Utilities Advisory Council, March 9-12.

“The only states that do not have any interest are New Jersey and Hawaii,” Mattey told the audience, which included representatives from the telecommunications and energy industries.

Electric utilities, specifically mentioned by FCC Commissioner Mignon Clyburn during her keynote speech the previous day, were only one of several industries interested in the program.

Rural telephone cooperatives, cable companies, tribal entities and wireless operators also expressed interest in receiving taxpayer-funded broadband dollars.

Mattey said while the agency did “a lot of outreach” in February to gauge interest and determine a budget for the program, it would only provide Connect America funding to expand service in high-cost areas.

Mattey told her audience a “quick scan” of some of the proposals, however, were “from areas that are not high-cost.”

“And while we appreciate the interest of certain areas in getting funding, the commission’s intent is not going to be providing Connect America funding in areas that we would consider to be low-cost,” she said.

Mattey said the commission is interested in proposals that improve connection speeds.

The FCC program is only one of several federal broadband initiatives in existence.

Organizations are already competing for money from the U.S. Department of Agriculture’s Rural Gigabit Network Pilot Program, which Watchdog.org previously reported.

Federal taxpayer funds of $50 million were appropriated toward the project as part of the so-called Farm Bill, or Agricultural Act of 2014, which President Obama signed into law in February.

FCC Commissioner Mike O’Reilly sounded a “duplication alert” in early March, cautioning against the agency’s money being used to achieve similar ends.

The Farm Bill is also not the first time federal dollars went toward the build-up of the Internet’s infrastructure in rural areas.

Within the Obama administration’s stimulus package was the $4.7 billion Broadband Technology Opportunities Program, which a 2013 investigation by the New York Times found was fraught with waste.

Also on the same panel as Mattey was Roy Lathrop, director of state government affairs for the National Cable & Telecommunications Association, who told audience members the Utilities Telecom Council had been very aggressive in encouraging its members to express their interest in the new FCC program.

The UTC, which lobbies on behalf of utilities telecommunications, began its Rural Broadband Council in March 2013 as a trade group to engage the FCC and represent utility broadband interests.

Alyssa Clemson, UTC’s manager of industry affairs for rural and infrastructure issues, told Watchdog.org in an email statement that if rural utilities do not actively seek federal broadband funding “in many parts of rural America their members will continue to go without broadband access.”

Many of the RBC’s members, hopeful the FCC’s new program would provide access to funding to aid in rural broadband deployment, filed expressed interest in the program.

Contact Josh Peterson at jpeterson@watchdog.org. Follow Josh on Twitter at @jdpeterson

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