FTTH Council urges FCC to preserve “High Cost Fund” to keep U.S. rural high-speed broadband on track

Maintaining the High-Cost universal service fund is critical to ensuring that the nation’s broadband universal service goals are achieved, according to a document filed today with the U.S. government Federal Communications Commission (FCC) by the Fiber-to-the-Home (FTTH) Council, a non-profit organization that advocates for the expansion of next-generation broadband.


Maintaining the High-Cost universal service fund is critical to ensuring that the nation’s broadband universal service goals are achieved, according to a document filed today with the U.S. government Federal Communications Commission (FCC) by the Fiber-to-the-Home (FTTH) Council, a non-profit organization that advocates for the expansion of next-generation broadband.

The Commission is considering severely reducing the High-Cost portion of the Universal Service Fund, a U.S. government initiative meant to meet goals mandated by the Telecommunications Act of 1996, which supports rural carriers who currently provide broadband services in high-cost areas. It would be replaced with a Connect America Fund (CAF), the aim of which would be to bring broadband to only unserved areas at a level of bandwidth that is generally below what is available in most urban and suburban communities – with a standard of about 4 megabits per second for download and 1 megabit for uploading.

In its filing, the Council said that continuing the High-Cost funding, which many rural telecommunications providers use to upgrade their broadband capabilities, will “maximize deployments of high-performance networks” in rural areas, while the fund’s elimination would result in millions of rural residents not having enough bandwidth to access applications that will soon be standard in urban and suburban areas.

An estimated 8-10 million people live in areas where broadband providers are receiving support from the High-Cost fund.

Noting the emergence online of advanced video applications, cloud computing and a host of essential services in the areas of education and health care, the Council cited research concluding that consumer demand for symmetrical bandwidth will “easily exceed 25 Mbps within just five years.”

While supporting reforms of the High-Cost fund to increase efficiency, the Council urged the FCC to retain the fund and combine it with the CAF and thereby accomplish the aims of both funds, “enabling users in unserved areas to finally be able to access broadband and users in high-cost areas to have access to the same high-performance broadband services offered in urban areas.”

The Council provided a number of data points, including some presented by the FCC’s own staff in the development of the National Broadband Plan, indicating that broadband users are already accessing and using services with symmetrical bandwidth of 25 Mbps, and that services related to telemedicine-related videoconferencing and to online education are already requiring in excess of 5-10 Mbps. In addition, the filing referred to statements presented by the Commission on its website noting the importance of high-performance broadband services to small businesses.

“Broadband networks are deployed not to individual premises but to communities, and it is the overall demand from these communities that will accelerate higher-performance broadband,” the Council wrote.

The Council also cautioned that the possibility of ending the High-Cost fund has resulted in a number of private sector carriers already feeling the pinch from their lenders, who consider the continuation of the fund a critical factor in determining whether to make new loans for facilities upgrades.

“By enabling these wireline service providers to continue accessing the High-Cost fund, the Commission will ensure that many more users will have access to high-performance broadband services” as they continue to secure lending to upgrade their services and offer more bandwidth to rural customers, the Council said.

Many of those providers will invest in all-fiber networks to “future-proof” their systems against constantly accelerating bandwidth demands, the Council said, and thus the Commission should want to encourage near-term upgrades because immediate deployment of high-performance networks is most beneficial and capital efficient. In addition, it wrote that “deploying FTTH networks leads to immediate and substantial operating cost savings,” and it provides far greater performance returns than other technologies in comparison with the capital required to make the upgrades.