WASHINGTON — The Federal Communication Commission’s proposed changes to the Universal Service Fund, which subsidized traditional phone service, to the new broadband-based Connect America Fund has drawn the attention of Iowa’s senators.
In a letter to FCC Chairman Julius Genachowski, Republican Sen. Charles Grassley and Democratic Sen. Tom Harkin registered concern that the plan could have adverse effects for Iowans who don’t live in cities. About 40 percent of Iowan live in rural areas.
“We request that the FCC be continually mindful of the need to encourage rural communication network investment,” Grassley and Harkin wrote in the letter, which was signed by 17 other senators.
Iowa leaders have also requested that the FCC clarify some issues before implementing the reform, which was announced in October but has yet to take effect. Grassley and Harkin are asking the FCC to evaluate the implications for local telecommunications companies and their consumers.
“[U]nintended consequences to all carriers serving rural areas can and should be alleviated by a [clarification] that the [October] Order will not be implemented in a manner that perpetuates unintended consequences,” the senators said in the letter.
The Universal Service Fund plays an essential role in securing state-of-the-art telecommunications services to rural areas by providing a subsidy to small local telecommunication companies. The FCC’s proposed changes include a $1.2 billion decrease in disbursement funds, which could cripple upgrade plans by small companies.
Executives of small local telecommunications companies based in a rural Pennsylvanian village and an Indian reservation were on Capitol Hill Monday to register their opposition to the FCC plan.
“Verdict against small businesses,” said James Kail, president and CEO of Laurel Highland Total Communications, Inc. (LHTC), a telecommunications company based in Stahlstown, Pa.
Like other small local telecommunications companies, Kail’s company stands to lose a substantial amount of government funding if the plan goes through. “There is a disconnect with the FCC. The FCC is arrogant,” he said.
Small companies, like Kail’s, want to expand and upgrade offerings such as fiber optics, which are already offered by big telecommunications companies serving metropolitan areas.
Incidences of waste, fraud and abuse of funds in the industry have prompted the changes by the FCC, according to Douglas K. Kitch, a principal of a telecommunications consulting firm based in Colorado Springs, Colo.
The cuts in funds will similarly affect the small local telecommunications company of Indian reservations, as they too, service a low-density area that is considered to be unprofitable by large unsubsidized telecommunications companies.
“Nobody wanted to provide service to us,” said Godfrey Enjady, a general manager of Mescalero Apache Telecom, Inc. (MATI), which was founded in 1999 to provide telecommunications services to the Apache tribe in New Mexico. “They (Apache tribal members) looked to me to provide the service.”
MATI will receive a 10 percent cut in funds this year and expects further cuts in the future, which concerns Enjady. “Our kids need to get on the Internet to be social and share information,” he said.
Two more congressional hearings are scheduled before the FCC changes take effect.