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View from the Hill Blog: Brushing Up on Your ABCs

By Grace Boatright, National Grange View From The Hill Blog (9/16/11)

  SEPTEMBER 16, 2011 --

Rural America is closer now than it’s ever been to finally obtaining high-speed broadband Internet. Tuesday, Sept. 13th, the Congressional Rural Caucus held a briefing to bring together participating parties for a brief discussion about the status of the ABC (American’s Broadband Connectivity Plan) proposal and what we can do to bring this issue to fruition. Our National Grange Legislative Director, Nicole Palya Wood, represented the National Grange and rural America at large as the briefing’s only advocacy group. Other participants included the Western Telecommunications Alliance, Windstream, and USTelecom. Together, they have been working to speed the deployment of high-speed Internet to rural America. America’s Broadband Connectivity Plan, the proposal sent to and currently under revision by the Federal Communications Commission, seeks to deploy broadband Internet to more than 4 million Americans dwelling in rural areas. The FCC has made clear that the proposal is just starting point for further negotiations, but the fact that they are taking it seriously is a vast improvement for an issue that has stretched for nearly a decade. Naturally, with any prolonged debate, certain parties have arrived on the scene to object. In this case, the objecting party is state governments, who feel that the terms of the ABC steps on their toes and relinquishes them of too much authority.

The states’ objection rests mostly in the issue of intercarrier compensation. Intercarrier compensation refers to how companies pay one another to exchange traffic on their networks. For example, if a Verizon (large company) customer makes a call to a small rural town in the middle of nowhere Texas, they are going to have to transfer that call to the town’s local provider (small company) in order to complete that call because Verizon does not offer service in that area. I know most of us think of cell phone service as being this complex, matrix-like, space station, signal going to a satellite and bouncing back to earth system, but the above example actually happens all the time. In the past, the fee that companies charge each other for this service has ranged from tenths of a penny all the way to 35 cents, depending on the company and where the call is being transferred. However, the terms of the ABC proposal would establish a flat fee of $0.0007 per minute for all calls. Herein lies the primary complaint of the states.

Historically, and legally, states have had the authority to determine these intrastate rates, while the FCC oversees interstate rates. States were granted this authority under the Telecommunications Act of 1996. America’s Broadband Connectivity Plan, they say, both cuts into their legal authority and will significantly reduce the revenue that small local companies generate to serve remote locations, a cost that will inevitably be transferred to the consumer. Yes, the states will lose some authority should this proposal pass, but according to Robert Mayer of USTelecom, state mandates can actually have unintended adverse consequences and “impede free-market forces by distorting economic signals, adding unnecessary costs for services.” Intrastate rates are one such unnecessary cost, as is the cost of being a “carrier of last resort,” another complaint by the states. ABC would also eliminate these “carrier of last resort” obligations, which require that companies who receive funding from the Universal Service Fund provide phone service to any customer who requests it. Yes, the proposal would eliminate such requirements, but it would also free those funds for the greater goal of bringing broadband to everyone more efficiently and effectively than those obligated companies ever could.

These are just a few of several objections to the ABC proposal and I’m sure more are to come as relevant parties further review this issue. Nonetheless, it’s a good plan that works to bring Internet to a group that has historically been sent to the back of the bus. Never before have so many groups, both large urban carriers and smaller rural companies, been at the table in agreement with such great momentum and consensus. Let’s just hope that everyone can settle their differences and workout a compromise to ensure that this most relevant issue does not get punted by the FCC for another 10 years.

-Grace Boatright
National Grange Program Assistant

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