Broadband Stimulus & USF Reform

By Paula Bernier, Executive Editor, TMC  |  March 01, 2011

This article originally appeared in the March 2011 issue of NGN.

I did a whole lotta interviews and session coverage at the recent ITEXPO (News - Alert). And I can honestly say that I took something away from each and every meeting, speak and panel. But one of the more fun interactions I had was with Rick Peppers, president of engineering firm Telplexus.

Peppers talked with me candidly about the experiences of his firm and its clients relative to the broadband stimulus.

It’s no secret that living through the broadband stimulus has been a rocky ride for many service providers, and helping independent telcos as they work to build networks based on those funds continues to be an interesting experience, says Peppers.

While the Murfreesboro, Tenn.-based outside plant design firm helps to smooth the broadband stimulus terrain for its independent telco clients (four of which are broadband stimulus award winners), Peppers explains that some entirely new concerns have cropped up along the way for broadband stimulus fund awardees and their partners.

For example, the broadband stimulus money comes with Davis-Bacon wage requirements. That means that contractors have to pay union scale. However, prevailing wages for jobs like fiber optic splicers are not defined, says Peppers. That means service providers and their contractors are required to define wages for such workers, he says, but that can be a tough proposition, particularly given the fact that once those wage levels are defined the involved companies have to stick with them over the course of the job.

Another tricky aspect of the broadband stimulus process has been the NTIA’s environment assessments, says Peppers, who says the ones by RUS are less intrusive. With the NTIA, he explains, broadband stimulus award winners and their partners have to determine the carbon emissions of vehicles used on the network construction site. The tricky part is that these estimates have to be submitted to the NTIA prior to any construction, so the construction folks that will be using the bulldozers, diesel trucks and other vehicles aren’t even at the table yet. The NTIA offers some guidelines to arrive at the estimates, but arriving at the actual numbers can be time consuming, Peppers says.

I also asked Peppers about whether he thinks President Obama, who during the State of the Union address talked about the government investing in IT, might be considering an additional broadband stimulus program. Peppers didn’t comment on that, but he did say that rather allocating more funds for broadband network builds, the government should focus on spelling out its plans around the Universal Service Fund. Uncertainty around the USF and related issues, he adds, is in some cases causing service providers to hold back on new network investments. And, as TMC (News - Alert) has reported in the past, the broadband stimulus program itself led some service providers to delay network investments.

Looks like Peppers’ wish may just be granted, as the FCC (News - Alert) last month issued a Notice of Proposed Rulemaking on USF reform.

The reform is clearly aimed at moving the nation more fully into the broadband era, in which voice is just another application, and away from the legacy, circuit-switched network and the existing regulation that continues to prop it up. In fact, I’m told that AT&T and Verizon (News - Alert) are pushing for the end of POTS completely.

Unplugging POTS would be a good thing for a big carrier like AT&T, which continues to support costly legacy systems while its cableco competitors have newer, potentially more feature-rich and cheaper to maintain VoIP networks. Of course, USF reform and abandoning legacy networks is a scary notion for many telcos in rural areas that get significant funding via the USF.

But wherever you stand on all that, it’s clear that the existing USF regulatory structure has a lot of problems, including – as the FCC notes – inequity of funding between rural areas and service providers; rules that reward companies for losing customers; and others that have produced a rural-rural divide.

Edited by Stefania Viscusi