Telcos Still Face Uncertainty in Deploying Broadband, NARUC Told
DENVER -- FCC reforms have both complicated and benefited the deployment of broadband, speakers said Tuesday at the NARUC meeting. As telcos have transitioned to focus on offering broadband service as well as voice, the reforms promise a shift in purpose and support but also have created uncertainty, stakeholders said.
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"We've had years of building uncertainty in the rural telecom space,” said NTCA Senior Vice President-Policy Mike Romano. He pointed to the FCC’s National Broadband Plan, the November 2011 USF order and other elements that affect every small rural company in negative ways, both with “near-term and long-term harm.” He cited ways companies were affected and how fewer loans were given, with what he called “lost jobs and lost wages” and companies “putting the brakes on investments.” Get the caps right, shelve the further NPRM associated with the USF reform, adopt a meaningful waiver mechanism and develop a targeted Connect America Fund, Romano recommended. “Stalemate is the rule, and incremental progress is the exception,” Romano said of Washington, while expressing hope for the creation of certainty.
But the FCC’s Connect America Fund has helped Frontier Communications with its focus on broadband, said Executive Vice President-External Affairs Kathleen Abernathy. Moving from a phone company to a broadband company is “incredibly expensive,” she said. Investments are more at risk, and banks are less willing to give major loans, she said. The telco typically lacks resources to bring fiber to the home but attempts to bring fiber to the digital subscriber line access multiplexer, she added. She called the broadband transition the “right direction,” due to consumer expectations, despite the “incredibly competitive” nature of the market and difficulties. “We've been pleased with what the FCC has been doing in the price cap arena,” said Abernathy, a Republican FCC member last decade.
Consumer expectations call for fiber rather than copper, said Triangle Telephone Co-op General Manager Rick Stevens of Montana. “Our copper plant in the field is running out of gas.” The co-op once had invested in a hybrid copper-fiber deployment but switched to fiber as copper prices skyrocketed and fiber prices dropped, he said. The processes for the USF are “broken, let’s fix it,” he said, expressing worries about how reform has affected the co-op and may continue to, citing possibilities of a “death blow” to its broadband plans. The co-op is facing a 5 percent revenue decrease per year for the next six years, and 59 percent of total revenue come from the USF and intercarrier compensation, he said. “Our revenues are going to be hit directly.” Getting fiber to the home costs $15 million to $20 million per exchange on average, he said.
"Over 90 percent of the companies that we're working with are experiencing delays because of the uncertainty or the direct impacts” of the FCC’s quantile regression analysis, said GVNW Consulting President Jeff Smith. The consulting firm serves rural telcos. He described “many, many carriers” that have delayed “needed capital projects.” It’s hard to say whether the analysis works currently due how certain variables are off, he said, pointing to the climate variable and how it has affected Alaska telecom. The regression analysis could be a good diagnostic tool, but it is “being used to punish” rather than identify where additional review is needed, he said. FCC “staff is just ignoring some of the harsh realities of the cost to serve high-cost areas,” he estimated. The staff lack the luxury of dealing with the chairman, who controls the overall direction of the agency, said Abernathy.