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Universal Service Reform: How Data Can Get This Reform Effort Over the Goal Line

(February 8, 2011) - Maximizing the opportunity that broadband technology offers is a key component of the National Broadband Plan and President Obama’s innovation agenda, and today the Federal Communications Commission will take an important step in that direction by proposing fundamental reform of the $8.7 billion federal universal service fund (or “USF”). Crucial to the success of this effort will be accurate, comprehensive, and transparent data collection and analysis, and one key tool will be the national broadband availability map that will be launched next week.

The future of the nation’s economy increasingly depends upon ubiquitous access to and use of broadband network platforms and innovative communications services that ride on top of those platforms. Yet the telecom industry’s crazy quilt program of subsidies and pay-per-call compensation remain. Even the vaunted “e-Rate” that has delivered broadband connectivity to thousands of classrooms and libraries since 1996 still largely funds dialtone service.

Transforming these subsidies to support broadband will not be easy, and fundamental reform is long overdue. For instance, the current program supports only certain parts of the network, such as copper loops and switching equipment, but not other components that affect broadband availability and performance, like middle-mile infrastructure. But the faults of this rickety system have been known to broadband policy wonks for years – so what makes the current reform effort different this time?

The difference is data. Until now, FCC, Congress, and state efforts to reform the system have gotten bogged down in debates in which the various sides to this complex, multi-billion dollar issue did not even agree on fundamental facts. Facts like where broadband is available. Or what part of the country lacks middle-mile infrastructure that might need to be subsidized. Or how much of the country depends upon a subsidized telephone network for broadband access today. Without knowing those facts, efforts to transform the USF to a broadband program are destined to fail. Think about playing a football game in which no one agreed on where the goal lines were, or even how long a yard is.

This time, however, policymakers will have access data to push USF reform over the goal line. Over the last eighteen months, fifty-six states and territories have been actively surveying and mapping broadband infrastructure in their jurisdictions, covering multiple speed tiers and network technologies. Connected Nation has helped gather and process that data in twelve states and the Commonwealth of Puerto Rico. Next week, the NTIA will unveil the result of some of this effort by launching the National Broadband Infrastructure Inventory map.

Here’s one example of how that data can inform the universal service debate. One problem with the current USF system is that since we only expect recipients to offer dialtone service, no one really tracks when and where those funds are used to build networks that support both dialtone and broadband in rural America (let alone whether it is being done in the most efficient or accountable way). Much of the current debate over the FCC’s proposal to convert these “high-cost” subsidies to support broadband centers on whether the current system has created a “rural-rural” divide in which some communities enjoy widespread broadband for which their demographically-similar yet unserved neighbors pay.

How big of an issue is this? Data collected by Connected Nation indicates that this rural-rural divide seems to be real and significant. As the FCC has found, the cost of building a broadband network is significantly based on household density. So if current subsidy dollars were being spent efficiently to build broadband, one would expect that the “unserved” and “underserved” areas of the country would have similar household density. But that is far from the case in the states Connected Nation has mapped.

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For example, the household density of the areas of Nevada with access to 3 Mbps advertised speed networks is 211 households per mile; by comparison, substantially less-dense areas of Iowa (39.9 households per mile) have similar access. Similarly, the “underserved” areas of Tennessee (as defined by the NTIA) have higher population density than the “served” areas of Kansas. The data presented in the table is of course aggregated up to the state level, but since it has been collected at the Census Block level, it can be analyzed at far more granular levels.
This is only one example, but it demonstrates the power of comprehensive and accurate data, and how it can shift the policy debate towards answers and reform, and away from confusion and stasis.

Getting USF reform right and transforming this $8.7 billion behemoth to support America’s broadband future will be a tough transition. And it will only be accomplished if policymakers, the industry, and most importantly, the American public have access to transparent, complete, and accurate data. Data that can finally and definitively answer the questions that have long-vexed this debate are on their way – and that will finally bring the goal line clearly in sight.

By Tom Koutsky, Chief Policy Counsel, Connected Nation