Broadband services

Will USF Reform Include Muni Networks?

5:15 PM -- Federal Communications Commission (FCC) Chairman Julius Genachowski didn't reveal the details of his Universal Service Fund (USF) reform package today, but he dropped a few intriguing hints. (See Genachowski Tees Up USF Reform.)

Notably, Genachowski refers to "public-private partnerships" that involve a full range of service providers -- wireline, fixed wireless, satellite and mobile -- but doesn't specify what kind of public entities might be involved.

Could he be opening the door to involvement of local governments, namely counties and municipalities, in USF-funded broadband networks?

Craig Settles hopes so. The CEO of broadband consultancy Successful.com, a consultant and an strong advocate of local control of broadband networks, Settles believes that competition is the answer to available and affordable broadband, and local control is the answer to competition.

Municipal networks are anathema to service providers as unneeded competition and unwarranted interference, but there's a reason they haven't gone away, despite some high-profile failures. There are too many reports of USF dollars going into the pocket of a local telco that earns double-digit profits -- and anger over those accounts was exacerbated by last summer's revelations by The Washington Post that AT&T Inc. (NYSE: T) and Verizon Wireless were raking in millions in USF money for building wireless networks they were probably going to build anyway.

So far the current FCC's record on muni networks is somewhat mixed, Settles points out. The National Broadband Plan makes clear mention of them, and says states should rescind existing laws against them. But the $300 million Mobility Fund announced last fall appears to cut them out of the action in favor of wireless network operators.

We'll have to wait until tomorrow to see which way the FCC goes on this one.

— Carol Wilson, Chief Editor, Events, Light Reading

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paolo.franzoi 12/5/2012 | 5:13:35 PM
re: Will USF Reform Include Muni Networks?


ARE local government cooperatives.  So, are already doing the USF thing. Google "Telephone Cooperative", it won't get them all.




cnwedit 12/5/2012 | 5:13:34 PM
re: Will USF Reform Include Muni Networks?

No need, I'm well aware of telephone coops, I've been writing about them for years and well aware of their USF funding.They are long-standing organizations that date back to the introduction of the telephone.

There is now a new generation of muni networks and that's what I talking about here.


paolo.franzoi 12/5/2012 | 5:13:34 PM
re: Will USF Reform Include Muni Networks?


So, the MUNI networks you are discussing are CLECs.



paolo.franzoi 12/5/2012 | 5:13:33 PM
re: Will USF Reform Include Muni Networks?



No - a CLEC is not a carrier of last resort.  That is an ILEC that you just described and it MUST bring you all services if you want them.  Things like 4 wire E&M circuits or Dry Alarm Contacts.  If you pick and choose the services you deliver - you are a CLEC and can deliver just what you want to whom you deem worthy.

If you can call a MUNI and its an ILEC as Carol and I already discussed - those are the IOCs and have been around forever.  If you can't order a Coin First Pay Line - you are a CLEC (okay that was an exaggeration but you get the point).



spc_markl 12/5/2012 | 5:13:33 PM
re: Will USF Reform Include Muni Networks?


I don’t think “CLEC” would be an encompassing enough term because it implies cherry picking of customers, particularly enterprises.  A muni would serve all entities in the community – government, business and residential.


cnwedit 12/5/2012 | 5:13:28 PM
re: Will USF Reform Include Muni Networks?

I get the distinction you are making here, but I think there is room for a new generation of locally controlled service providers particularly in rural areas and small towns/cities served by larger carriers who don't have any real interest (or financial incentive to have interest) in the local economy. They would grow out of the same conditions that prompted electrical coops and telco coops in years past. And advocates of these muni networks would like to see them able to get Connect America funding.

paolo.franzoi 12/5/2012 | 5:13:28 PM
re: Will USF Reform Include Muni Networks?


I guess my contention would be is that they would be better served becoming the ILEC and Carrier of Last Resort.  I have great trouble funding non-ILECs with Taxpayer money for local services.  They can cherry pick services and customers to suit their needs.  I would think it would be a much better deal for everyone if their was a way to package up the local ILEC lines and sell them to the muni/coop/government to take over as an IOC.  Then they have a base to build from and customers to maintain.  If I were an RBOC and don't want to invest in a property, it seems like a good trade.  Get the lines off my hands and get them to folks who want to invest.  Otherwise, I would be applying to drop my ILEC tag for that property.

TLDR:  If you want federal government money - do everything required to be a full line SP.  If you don't want that money - do whatever you want. 



paolo.franzoi 12/5/2012 | 5:13:27 PM
re: Will USF Reform Include Muni Networks?

I means Cherry Pick in terms of services as well as customers.

For example, I recall talking to a Jewelry store about why they order Dry Pair Contact closure circuits.  The answer was it lowers their Insurance Bill compared to other methods.  Since this is a very low volume service the costs to deploy service is quite high compared to the revenue derived.  So, typically what I see is a very narrow range of services offered.

So, I am very happy that a local community wants to spend its own tax money to do these upgrades.  I am not happy if they want me to help pay for them if they are going to have an ILEC whine and complain about this stuff.  To do so, they would have to become an ILEC - which is a LOT more work and costs a LOT more money.  This is why nobody wants to do this.  But it just seems like a massive inefficiency in the system to fund these things nationally.

So again, happy that folks want to build their own high performance infrastructure.  They want me to build it...nope sorry...become an ILEC.  For example, locally we had to tax ourselves to cover road system improvements that have been requested since 1963.  The Feds/State never got around to them so we just taxed ourselves and did them.  But it was our choice.



cnwedit 12/5/2012 | 5:13:27 PM
re: Will USF Reform Include Muni Networks?

Most of the municipalities who have built their own fiber networks have used public bonds and have committed to serve anyone - it's not in their best interests to cherry-pick because they need all the customers they can get, plus their goal is to boost economic development and retain their population.

The other model that munis use is to build open access networks, which any service provider can use. Again, the idea there is to reach everyone, in the fastest most efficient way possible.

I certainly understand your logic but I also understand those who object to government money being pumped into private companies that don't always live up to their promises. Millions in USF dollars went to Verizon and AT&T to build out wireless networks on which they now make substantial profits.

paolo.franzoi 12/5/2012 | 5:13:25 PM
re: Will USF Reform Include Muni Networks?



So, they can go fund themselves anytime they want and avoid making the extensive list of services to be an ILEC (really do you want to have to buy ISDN cards)?  But for Federal Funding, they should be doing so because there is NO carrier present.  If they want, they can still do UNE-L based DSL locally and build plant later.  There are LOTS of options.  But to get MY dollar to do YOUR town (remember - federal fund), then be an ILEC (like any of the other IOCs).  You want to be a CLEC then be a CLEC.  No federal funding, fewer restrictions.

To me money comes with obligations.


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