Parnell concerned about broadband plan

Posted: Monday, July 12, 2010

In a letter to the Federal Communications Commission, Gov. Sean Parnell laid out a number of concerns he has with regard to the way a national plan to establish broadband infrastructure in underrepresented areas will be implemented in Alaska.

Parnell said he is concerned the termination of an existing telecommunications subsidy in favor of a new one to support broadband development will hurt Alaska communities dependent upon the old subsidy. He also worries the FCC will redirect funding currently being routed to small, rural telecommunications carriers to larger carriers that can establish economies of scale by serving urban areas.

Much of this has to do with ambiguity regarding how specific tenets of the plan will be implemented.

As part of the American Recovery and Reinvestment Act of 2009, the FCC was required to come up with the National Broadband Plan, the intention being that every American would have access to a broadband Internet connection.

To make the plan more palatable and cost-effective to the public, it dictates that existing funding designed to make cost-prohibitive service areas more accessible to telecom companies be reallocated into a new pool of money that would support broadband infrastructure.

The existing fund, the universal service fund, or USF, was established in 1997 after the passage of the Telecommunications Act of 1996 to make telephone service available to everyone. Telecom operators are required by the FCC to pay a portion of their interstate end-user revenues into the fund. As of the third quarter of 2010, the percentage to be paid by telecom operators is 13.6 percent.

The fund has four components, including funding funneled into schools and libraries, rural health care, the "high-cost" component and the low-income component.

The broadband plan seeks to eliminate the high-cost component and funnel the money into a new fund referred to as the "Connect America Fund."

According to the text of the plan, voice service is the only service that must be provided if the high-cost component is used. The plan states that while that component is often utilized by rural operators that provide broadband, the new fund would make broadband service a requirement in addition to voice service.

The high-cost component funnels money into much of the telecom infrastructure in rural Alaska that would be inefficient for operators to maintain otherwise. Parnell is concerned that eliminating the high-cost component in favor of the new one would hinder existing infrastructure.

Specifically, state officials worry that the elimination of the high-cost component will leave existing infrastructure unfunded, with uncertainty remaining as to who would be left to pick up the slack.

"Much of Alaska is home to rural Americans whose needs are neglected by this plan. Redirecting the high cost component of the Universal Service Fund to the Connect America Fund will hurt rural areas where continued support is needed both to maintain and to advance the quality of universal service and broadband access provided today," he wrote.

According to a report from the Federal-State Joint Board on Universal Service, telecom operators in Alaska took nearly $183.3 million out of the high-cost component in 2009, representing the fourth-highest state total in the nation behind Kansas, Mississippi and Texas.

According to John Katz, director of state and federal relations for the state and special council to Parnell, the letter is intended to provide a framework for the state to address the most pressing concerns with the plan.

Since the letter was sent out, Russ Kelly, associate director in Parnell's Washington D.C. office and Jim Kohler, deputy director of information technology for the Division of Enterprise Technology Services of the state Department of Administration, have co-chaired an informal team of state officials seeking to respond to rulemaking from the FCC implementing the tenets of the plan.

One of these rulemakings, a notice of inquiry and notice of proposed rulemaking, were released April 21. The rulemaking seeks comment on how the FCC might efficiently target USF spending so the burden to taxpayers is lessened. Additionally, the notice of proposed rulemaking seeks, according to the rulemaking's introduction, comment on specific "common-sense reforms to cap growth and cut inefficient funding in the legacy high-cost support mechanisms and to shift the savings toward broadband communications."

Kohler, who spoke at a Commonwealth North luncheon June 23 about the plan, is concerned that the push for efficiency may leave communities in Alaska marginalized as the funding is funneled toward carriers serving largely urban areas.

If the FCC continues to "march down this road, the impact for the state is huge in a negative way," Kohler said.

Parnell's letter contains other concerns. Among them, he said he's worried the plan's stated intent to establish new infrastructure for public safety, homeland security, education and health care will greatly burden states due to the potentially high cost of providing such infrastructure.



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