In general support of government plans to offer all Americans affordable broadband Internet access, the American Cable Association provided comment on April 18 that includes recommendations on how best to structure the new Connect America Fund for broadband support proposed by the Federal Communications Commission. ACA urged the FCC to rebalance its proposals to ensure that the new fund will be fiscally responsible and competitively neutral.

"ACA endorses the FCC's effort to design Universal Service Fund programs that embrace affordable and universal broadband as the primary objective.  Because taxpayer dollars support the USF program, it is critical for the FCC to create a broadband fund that is efficient and does not skew local markets by funding providers whose direct competitors are unable to receive USF money," ACA President and CEO Matthew M. Polka said.

For decades, the USF program awarded support to carriers for the purpose of ensuring affordable telephone service in rural America. Recognizing the new era in which consumers greatly depend on fast and reliable links to the Internet to learn, communicate and compete economically, the FCC has embarked on a new mission of channeling USF money to broadband providers for the first time so that all households can access broadband service and have every chance to benefit from the broadband economy as they did from affordable access to dial-up telephone service.

Just as committed as the FCC is to a reinvigorated USF program, ACA is recommending adoption of several proposals that will reinforce ideas that the FCC has already embraced as necessary to sustain a broadband-centric USF that maximizes service to end users while minimizing financial burdens on the program's sources of funding support. ACA's proposals are designed to balance the strongly competing interests within the trade group's diverse membership while ensuring all recommendations will serve the public interest to the fullest extent.

Among ACA's top recommendation are:

Capping The High-Cost Fund: Quadrupling in size since passage of the Telecommunications Act of 1996, the $4.4 billion HCF has become too costly for consumers footing the bill. A hard cap at the 2010 funding level will help eliminate excesses and inefficiencies and see to it that remaining funds are allocated precisely to only those areas that truly require support.

Eliminate Support in Competitive Markets: Because competition has developed in many areas where entities currently receive High-Cost support, funding in such areas is no longer required or can be more effectively targeted. USF support should not be provided where there are competitive providers offering service without access to USF money.

Reverse Auctions to Award Support on a Competitively Neutral Basis: These mechanisms should be used to award capital grants on a competitively neutral and objective basis for the construction of infrastructure in an unserved area. Reverse auctions will likely attract competitive bidding; improve the quality and performance of broadband service and support; and will limit any government role in providing competitive advantages among broadband providers. 

Special Rules For Smaller Telcos: A balanced approach to reform suggests the need for an eight-year transition for current USF recipients with fewer than 100,000 access lines. These smaller providers are most reliant on current High-Cost funding to provide service to consumers and will suffer most if funding is reduced significantly and precipitously.  These smaller telephone companies have generally demonstrated competence in providing service and have a deep commitment to their customers.