Grassroots telecommunications leaders from across the country - who took dire warnings to Washington, D.C. in late April saying that mandatory reforms and proposals of the federal Universal Service Fund (USF) will bring devastation and negative economic impact to the nation – took no encouragements from FCC Chairman Julius Genachowski’
“This was the first time an FCC Chairman has appeared before the Appropriations Committee since 2002,” said Bob Boaldin, president of Epic Touch Co., a telecommunications company based in Elkhart, Kan. “Why does the FCC plan to pull the rug out from under rural telecommunications;
A leader in telecommunications for more than half a century, Boaldin has promoted and provided telephone, internet, wireless and cable TV services for America’s rural communities. His work has taken him from the nation’s remote rural areas to the halls of Congress on both sides of the aisle and the inner offices of the National Security System.
Kansas Senator Jerry Moran, who requested Tuesday’s hearing, told Genachowski the FCC order hinders the funds necessary to recover loans made to rural telecommunications companies. While the waiver process set up by the agency does address those concerns, Moran called them seemingly impractical and the threshold “very high.” He expressed concern that only phone companies not able to provide voice service any longer would qualify for a waiver.
When pressed for a response on the potential for loss of voice services, Genachowski comments included, “…we recognize that flash cuts don’t make sense;” and called voice service a fundamental service …“critical to preserve” … “and certainly anything we would do that would inadvertently shut off voice service to an area or community is something that we would stop.”
“I will hold Mr. Genachowski to his comment that the FCC will stop the loss of voice service to rural America as the orders and proposals are being changed; knowing that our research shows these orders will hurt rural America including the most recent FCC order released on April 25 which did nothing to help our concerns in Kansas,” said Boaldin.
The April 25 FCC order delayed and changed some of the reforms, but some in the rural group visiting Washington, D.C., were not impressed with the 72 page order.
“This was released by the Bureau Chief and not by the full voting commission,”
Describing the reform of the federal USF as more of a grand experiment than a focused effort to update and fine-tune a system that has worked well, Boaldin said experts and independent studies agree it will mean that rural Americans will say goodbye to broadband Internet access in some of the more remote corners of the nation.
This is an irony when the FCC’s new Connect America Fund is supposedly a positive focus on broadband. Rather than accelerate broadband build-out to the 18 million Americans living in rural areas who currently have no access to broadband, it actually hurts those rural telecommunications companies that have braved the remote areas to bring services to those very areas and are willing to continue to do so, Boaldin said.
Jim Bond of Public Service Telephone Co. in Reynolds, Ga., whose company has been providing telecommunications services for four generations, and Roger Hermsen of Nsight in Green Bay, Wis., compared notes with their peers and confirmed that the negative effect is being played out across the nation.
Focusing on Kansas, a study by Wichita State University's Center for Economic Development and Business Research recently concluded that these reforms “will have a significant, negative economic impact on rural Kansas” forcing the state's Rural Local Exchange Carriers (RLECs) “to dramatically change their operations” and “…will, at minimum, cease operations in numerous highly rural communities across the state.”
“In reality, the report understates the potential impact, which is likely to be far worse because the impact of some of the proposed reforms can't yet be quantified. The RLECS across the nation built in good faith to use funds ordered by the FCC and now that that revenue stream will be taken away loans will be in default to the federal government and other lenders and rural telecommunications companies will be lost. As history shows us Congress can move very slowly and on Wednesday Mr. Genachowski observed that in the end the FCC may need the help of Congress to work though concerns on Rural Utilities Service loans,” Boaldin said.
As Kansas telecommunications companies are closed, the fall-out will be lost jobs with a total wage impact of an estimated $51 million over the five-year period in Kansas thus affecting personal income taxes, state property taxes, retail sales-tax collections, possibly resulting in the curtailing of local services. The collateral damage will include rural health care, education and agriculture, he said.
“My contemporaries from other states are facing the same dire truth. Multiply these Kansas numbers by 50 states plus the nation’s territories and the so-called Connect America Fund is a recipe for rural devastation. Mr. Genachowski spoke often on Tuesday of fiscal responsibility. These orders punish those rural companies that have been fiscally responsible. We implore the FCC to decline to act on several aspects of the proposals at this time, or until a time that the FCC is clear on the order,” Boaldin said.