Rural Cable & USF Reform

10:00 AM -- The American Cable Association (ACA) is holding their annual ACA Summit this week and some interesting insight regarding universal service fund (USF) reform is being discussed. In his opening remarks on Tuesday, ACA CEO Matt Polka addressed USF reform by saying this is "something I never talked about before to you," signaling its rising importance on the ACA policy agenda.

Truth be told, USF reform is taking a back seat, way back, to more pressing issues facing ACA, namely retransmission consent. Still, it's definitely on the radar, as rural cable companies try to figure out their role in the emerging universal service fund reform process. Indeed, this $7 billion-dollar-plus fund, which historically has been dominated by rural telcos, may soon see some company. Polka outlined ACA's policy position for USF reform with the following principles:

  • The administration of the fund must be competitively and technology-platform neutral
  • The high-cost fund should be capped based on 2010 funding
  • Support should not be offered in markets where viable competitors exist who do not receive funding
  • Reverse auctions should be used in unserved markets
  • Small rural telcos that legitimately depend on funding should not be harmed during the reform process

To their credit, the ACA has thought the issue through, and tried to reach consensus among their increasingly diverse membership. "It’s been quite a journey for us," Polka remarked when asked about the policy position process. "It took us nine months to discuss." Reaching that consensus is no easy task, with both rural cable and rural telco members.

At a briefing on Tuesday, when asked about the potential that rural cable companies may see a more broadband focused USF as worth pursuing, the response from ACA leadership was mixed. "Some will, but some don’t want any government involvement and won’t," Polka responded. ACA Chairman and WAVE Broadband COO Steve Friedman chimed in, "We pay into it, so we should be able to access it." It will be interesting to watch the reform process and the players/competitors, old and new, that engage it.

— Bernardin Arnason, Managing Partner, Pivot Group , and Publisher, Telecompetitor

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