Kill. USF. Now.

The time has come to kill the Universal Service Fund, and make sure that it is not replaced with another Universal Broadband Fund that will do nothing but line the pockets of the same telcos that have failed to deliver.

An incumbent that can’t survive without USF subsidies SHOULD go out of business so that they can be replaced by an entity that is able to survive in the market.   Fast Failure is far better than dragging the decline out over decades, while a government supported collects the money and lets the infrastructure rot away.

If an ILEC could no longer get their $150/month/line subsidy to support the market and they can’t keep it supported, they would turn around and sell it as fast as they could get rid of it, to the point of practically giving it away.  The best result would be that inefficient, government supported telcos get out of the market and are replaced with entities that are better suited to take care of the market.   The new players may not necessarily be other large corporate entities – they might be community coops, mid-sized regional or sub-regional players or even – gasp – WISPs that already have infrastructure and staff in place to handle the technical requirements and would be able to benefit from the right of way and existing copper plant.

Related to this concept – this is a giant piece of motivation for WISPs to get their billing, infrastructure, technical expertise and legal counsel upgraded so that they are ready to take advantage of these opportunities when they come up.

Comments

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  1. What about the cooperatives that make half their money off of USF and are able to, as a result, push bonded ADSL2+ to customers with speeds approaching your company’s entire bandwidth to the Internet?

    Or cooperatives that are able to spend $2000 per customer on FTTH thanks to the USF subsidies…and then push 40 Mbps internet and high-quality TV over that infrastructure?

    Or rural cellular carriers who provide highly reliable voice service to a service area the size of West Virginia (albeit less mountainous) at a cost comparable to a national carrier…unless you’re willing to stay within their local coverage area, in which case $37 or so per month (taxes and fees included) wil get you unlimited local/long distance/other calling features?

    Don’t get me wrong, some private telephone companies have done wrong by their subscribers and used USF subsidies to prevent competition rather than provide high quality service to rural areas. However the fabled “gold plated network” actually exists where I live…well not exactly, since I’m not quite in the cooperative’s coverage area, but close.

    What do I propose instead? Well, for starters, disallowing wireline operators with more than X thousand customers (probably 40,000 or 50,000) from getting USF funding at all…they should have economies of scale at that point. Also, don’t cross-subsidize landline USF disbursements with cellular USF fees, and replace monthly subsidies with per-signed-up-customer rebates. Areas with less competition will get a higher percentage of customer signups so the economics of something like that would work out. Oh wait, that sounds like Dollars for Dialup, doesn’t it?

    Full Disclosure: the “gold plated” cooperative with FTTN in highly rural areas is pushing fiber and maybe LTE to my town, and one of the places signing up for that fiber is my employer, who will be using the connectivity as

    a) A bargaining chip to get pricing down from Time Warner Cable for high-capacity circuits
    b) To serve customers as a WISP, theoretically/hopefully/likely offering cable-like speeds over the air

    The price per megabit for that bandwidth? $15. That’s the kind of bandwidth pricing that’s getting companies to relocate headquarters and add employees.

    So, at what point would you buy telco copper, on a price-per-customer basis? Frontier just paid $4000 per customer…what about you?

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