I am the type of person that likes to see things done based on facts and hard data. Emotional pleas, feel good efforts and programs that don’t produce any measurable results frustrate me to say the least. Right now there is a lot of effort being put in the the Universal Service Fund (USF) to figure out how it could be used to fund broadband deployments. This on the surface seems very logical. The USF was originally created to make sure everyone had equal access to phone service. In rural areas it was just not profitable to run phone lines to locations that were a great distance from the telephone switching offices when there might only be one person on this line. I am not an expert in current USF regulations and uses, but understand it to basically be a fund where all telecommunications providers contribute by a means of assessing a per line fee to existing customers. These funds are then distributed to the companies providing phone service to areas that are deemed unprofitable in their own right. The USF reimbursements are paid per line every month to sustain phone service in the high cost low/no profit situations. Now I am probably over simplifying the program, but you get the general idea. Apparently there are formulas calculated state by state that determine these high cost lines and therefore who would be eligible to receive USF funds. I have heard that some of the monthly subsidies can be over $100 per line per month (that’s in addition to what the customer pays for phone service). There are many phone companies that have come to rely on this fund and their respective reimbursements to maintain their profit margins and bottom line. Any attempt to reorganize the USF fund is going to meet with great resistance from the entrenched phone companies. Any erosion to their current draw from this fund will be a battle to say the least. The telecom lobby has a lot of power inside the beltway. Keep that in mind. Also keep in mind the USF fund is used for other purposes of which I won’t pretend to know much about nor try to address. These are things like adoption, E-Rate for schools and libraries, and free cell phones for people who are eligible for certain social programs (yes welfare people can get free cell phones now and companies are able to make a profit from it as well).
So how does this apply to broadband you ask? Most people believe there will be some sort of shift away from funding unprofitable voice phone lines to funding unprofitable broadband services. The idea is to get high speed Internet to those pesky unserved areas of the US. If it were just up to the phone companies, they could shift their focus from voice to data and keep collecting the funds. The problem with this thought process is that the phone companies are not the only people who can provide broadband Internet services. The cable companies, fixed Wireless Internet Service Providers (WISP’s), Satellite Internet companies, cellular providers and private fiber companies offering broadband services can also offer broadband Internet services, and they want their fair shake at these funds too.
Why do I care?
Last year I purchased a data set that shows which census blocks have active broadband subscribers for all the United States. This is based on real live user reported data compiled from various sources and represents about a 15% statistical sample of broadband subscribers as compared to the total number of occupied households. It also indicates if this broadband service is Cable or DSL where applicable. The data set has the number of occupied households (based on live mailing addresses) in each census block along with the land area for each. All information on high speed internet activity was compiled for the first two quarters of 2009. In a nutshell it tells where the cable and DSL services are deployed over the whole country at the census block level (oh and it did not cost me 351 million dollars to get this data).
Why is this important? Well if you think about it, this gives a snapshot of where the private sector has been able to deploy broadband profitably without any subsidy. Now in some rural areas the DSL is probably being somewhat subsidized by USF on the voice line, but that would only be to those DSL providers that have lines that qualify for USF now. Since we know where the profitable systems are deployed without USF funds and without stimulus money, we can determine the thresholds that private industry will support in their deployment of broadband services! This can be expressed in households per square mile and is determined on a very granular level of study, the census block. Furthermore it can be studied state by state and not have to be averaged over the whole country. The data points to the household densities in areas with broadband and those without. It is further analyzed for cable and DSL household density figures to investigate if either industry has a major difference in their deployment strategies.
My feelings have always been that the USF reform should be structured somehow to allow any broadband provider access to the funds. How that final structure works out, I have no idea. I do know that whoever gets input to the final process should not be allowed to deceive the decision makers with slanted or bogus data thus gaining their industry favor to these funds over another. Now I may put a target on my back for putting this idea and thought process out there, and even more so with the data that I compiled. I am not saying that I have all the answers. I am saying that there is data available to tell where private sector has been able to sustain broadband without financial help. Any re-purposing of the USF fund should not allow the money to be spent in areas that meet the criteria that shows private sector can already do it without these funds. The money should be spent to get broadband to those who have none. If that can be done successfully and there is money left over, then it can be considered for other purposes, OR, here’s a crazy idea…. We lower the required contributions to the USF fund so that the consumer can pay a lower fee!
Here is a sample of household density data for various states: