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Funding uncertainty puts rural Internet plans in jeopardy [Milwaukee Journal Sentinel](Milwaukee Journal Sentinel (WI) Via Acquire Media NewsEdge) Oct. 05--Efforts to expand high-speed Internet access in rural Wisconsin could be slowed or stopped as broadband providers say they're frustrated over uncertainty in federal funding. The Wisconsin State Telecommunications Association, a group that represents mostly rural telecom providers, says half of its member companies are delaying or canceling projects because of changes at the Federal Communications Commission aimed at bringing an $8 billion Universal Service Fund into the digital age. The FCC's goal is to make high-speed Internet access available in all of rural America by 2020, with some of the funding coming from a fee that's added to consumers' and businesses' monthly telephone bills. But telecom providers say recent changes in the Universal Service Fund and Intercarrier Compensation program mean they can't predict how much of the money will be available to subsidize rural broadband projects. That makes them hesitant to invest in expansions that cost millions of dollars. In some cases, about half of the cost of an expansion project has been covered by the Universal Service Fund, but that's less certain going forward. It puts projects at a "huge risk," said Shirley Bloomfield, chief executive officer of the National Telecommunications Cooperative Association, based in Washington, D.C. Without the federal support, private lenders could back away from these projects, according to Bloomfield. The Obama administration has identified universal broadband as critical to driving economic development, producing jobs and expanding the reach of cutting-edge medicine and educational opportunities. Often, rural areas lack high-speed Internet access because the cost of extending the service in thinly-populated communities is too expensive for telecom providers to justify the expense without subsidies. The FCC says reforms implemented last November were necessary because the Universal Service Fund had become inefficient and wasteful. The agency "imposed long-overdue fiscal responsibility and accountability measures" limiting use of the fund, said Sharon Gillett, who earlier this year stepped down as chief of the FCC Wireline Competition Bureau. The timing of the telecom industry's complaints is questionable given the upcoming elections, said Barry Orton, a telecommunications professor at University of Wisconsin-Madison. "Nobody can say they don't have any chutzpah," Orton said, adding that telecom providers were against the University of Wisconsin-Extension getting federal money for broadband expansion but are now upset because some of their projects could be at risk. Telecom providers say they're serious about delaying or canceling expansions in rural areas because FCC changes have made it nearly impossible to predict how much federal funding will be available. They're upset about new requirements that jeopardize funding if a company exceeds caps placed on capital expenditures and operating expenses. "The top 10% of our companies have made investments that get them into the penalty phase," said Bill Esbeck, Wisconsin State Telecommunications Association executive director. "The FCC actions threaten our continuous reinvestment in broadband infrastructure," he said, adding that some components of the federal reforms are retroactive and could penalize companies for investments already made in rural broadband. TDS Telecommunications Corp., based in Madison, is reconsidering expansions in rural areas, said Andrew Petersen, vice president of external affairs and corporate communications. "We have invested extremely heavily to get as much broadband out to as many locations as we can. But in 2013 and beyond, we have said that all projects short of maintenance and ongoing network management need to be revisited," Petersen said. Likewise, the Marquette-Adams Telephone Cooperative, in Oxford, has placed projects on hold. "Some of them, I am not sure we will get to at all," said Jerry Schneider, the cooperative's general manager. The Associated Press contributed to this report. ___ (c)2012 Milwaukee Journal Sentinel Visit the Milwaukee Journal Sentinel at www.jsonline.com Distributed by MCT Information Services |