WASHINGTON, July 24, 2013 - The Federal Communications Commission (FCC) is undercutting the potential for rural broadband, according to a former leader in the agency.

Former FCC chief economist Simon Wilkie says his report demonstrates how implement caps on Universal Service Fund (USF) support for small telecommunications providers has the effect of chilling investment in broadband infrastructure. Wilkie is currently an economics professor at the University of Southern California, but was the FCC Chief Economist from 2002-2003. Wilkie's study used seven years of cost data to identify the effects of the model on predictability of USF support and incentives for responsible and efficient broadband deployment.

The study was commissioned by the NCTA-The Rural Broadband Association (NCTA),  found United States Telecom Association (USTelecom) and Western Telecommunications Alliance (WTA). Wilkie’s key findings include:

  • Uncertainty—specifically in the fear that network deployment efforts will result in tripping the limits on support—has dampened rural carriers’ investment in the broadband infrastructure needed to connect unserved rural Americans and enhance existing service.
  • A prolonged period of uncertainty and efforts to “game the system” by delaying or deferring much-needed investments merely to attempt to stay below the limits  could very well induce a “race to the bottom” as the benchmarks continue to decline over time precisely due to such gaming.
  • The FCC’s “one-size-fits-all” approach for limiting small carriers’ support will lead to even more infrastructure delays as the most efficient companies sit on the sidelines out of fear of having support reduced in the future.


USTelecom President Walter McCormick said the study proves that regulatory uncertainty is holding back the potential for rural broadband.
“The Communications Act explicitly states that rural Americans deserve communications services that are comparable in quality and cost to consumers in urban areas,” McCormick said. “The framework for the investment and support needed to provide these services is fracturing, due to the regulatory uncertainty.”


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