States Need To Adapt to Broadband-Focused World, Experts Say

State policymakers must continue to address how to ensure communications services are available and affordable for consumers so industry can adapt and bring everything into the now broadband-focused playing field, USF experts said in interviews Friday. A white paper, released Friday, by Sherry Lichtenberg, National Regulatory Research Institute principal researcher, said state USF support includes high-cost support, funds for broadband access for schools and libraries, funding for Lifeline and dedicated broadband funding. A key finding in the review is the limitation on high-cost support for areas where competition has driven down the cost of service, reducing the need for support, Lichtenberg said.

States that are reducing high-cost support are using those savings to fund broadband initiatives and examining ways to increase broadband penetration, Lichtenberg said. For example, Colorado is moving high-cost funds from areas with effective competition to its broadband fund, Lichtenberg said. It's expected that more funding will be allocated from USFs for broadband deployment, she said. More states will also be looking at Lifeline, but not just because the FCC has decided to change the rules, Lichtenberg said. Instead, she expects that states will follow Wyoming's lead and stop using state money to fund the program altogether. “The question is, whether some states may start cutting back or whether they'll have to divert funds to other uses. Whether the money will have to go to broadband instead of to something else,” she said. "There is a charge that the states ought to continue to look at needs and decide where the needs are most important. And I think also [they need] to look at competition and where competition may make this support less necessary."

Of the $52.6 million collected in Kansas for the fiscal year ended Feb. 28, the state USF provided $48.9 million of high-cost support to companies, with the remaining $3.6 million used to support other programs, such as Lifeline, dual-party relay, the Telecommunications Access Program and administrative costs, said Sandy Reams, Kansas Corporation Commission assistant telecommunications chief. The future for state USFs is dependent upon technology, the changes in tech and consumers' communications choices, she said. “How we view universal service may need to be revised as consumers rely not only on voice services, but also opt more and more to rely on communications methods that rely on broadband service,” she said. “In response, some state USFs are moving away from supporting only voice services to supporting broadband services.”

Agreeing that things should be transitioned over to broadband instead of voice, Blair Levin, nonresident senior fellow at The Brookings Institution, said the current programs supported by USFs shouldn't be dropped but should be adjusted. The consensus is that broadband is going to be the core communication service in the future, so if there is a conversation about keeping consumers engaged in the economy and civic life, it’s imperative that those same consumers have the ability to get online, he said. That has many challenges, Levin said. “All government programs that were built in the era of the voice/TV network are being adjusted to accomplish the same public purpose, but in the era of the broadband/IP network.”

South Dakota doesn’t have a state USF, but it uses a large majority of its federal USF money for high-cost funds to help build out the broadband network because there are so many rural areas, said Chris Nelson, South Dakota Public Utilities Commission chairman. Because agriculture is a huge economic engine in South Dakota and many rural states, it’s important to ensure those businesses are able to connect to the broadband network, he said. While there have been significant strides in getting rural areas connected, more work is needed, Nelson said. “Everybody agrees that as a country we need to do what we can to continue to provide broadband and get it into places that don’t have it so we end up with universal service in the broadband areas across this country,” he said. “From South Dakota’s perspective, the USF funds flowing through that high-cost fund have been very, very successful in assisting our companies and pushing that broadband further out into rural areas.”