Cuts to Universal Service Fund threatens communications in rural areas

August 16, 2012 at 6:30 pm

The Daily Yonder has a good piece today about the cuts to the Universal Service Fund (USF), which had provided offsets to the cost for small, independent communications companies and cooperatives to provide telephone and internet service to rural areas across the nation. Telephone consumers pay into the USF and those funds had been used as a subsidy to help expand service to even the most remote areas of the nation.

While it was successful in expanding telephone service, the Federal Communications Commission (FCC) recently decided to overhaul the program and replace it with the Connect America Fund,  which is a broadband based program. As a result, funding has been cut for companies and cooperatives that have relied on the USF and other cost-offsetting programs. Consumers and businesses in rural areas will likely see their internet and phone rates go up, a deterioration in service, and possibly even having their service discontinued in the future.

Politico provides the example of residents in the remote Adak Island in Alaska. Despite being prone to earthquakes, tsunamis, and cyclone winds, the island is serviced by two cell phone providers who have relied heavily on USF subsidies and federal loans from the Rural Utilities Service. The changes made by the FCC now mean that federal support for one of the companies will be an immediate cut by 84 percent.

The post on the Daily Yonder makes the good point that the goal should be not just about expanding access, but how to keep it in rural areas at a price and quality that is comparable to non-rural consumers.  Economic development will be severely hindered in communities if they do not have proper access to internet and telephone service. Both infrastructure and price supports are needed to ensure that rural consumers do not carry an undue burden, just to have the same services and opportunities as their urban and suburban counterparts.


Entry filed under: Economic Development. Tags: .

Recovery from Great Recession is weakest in recent history NC’s unemployment rate went up


TSC Twitter

Error: Twitter did not respond. Please wait a few minutes and refresh this page.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 36 other followers

%d bloggers like this: