Today, the Wireline Bureau is seeking comment on a number of issues relating to broadband funding for smaller rural carriers, known as rate-of-return carriers.
One of the problematic results of the Commission’s old Universal Service System was what we called the rural-rural divide: because the system failed to target support where it was needed and provided little accountability, some rural communities received world-leading broadband, while others, often right next door, were left behind. In part, this problem arose because of the different systems governing smaller, rate-of-return carriers, and larger companies, known as price cap carriers.
About two-thirds of all universal service support for landline service went to rate-of-return carriers, although they serve about 20-30% of the expensive rural areas where no other provider is offering voice and broadband, the areas where support is most likely needed. In many cases, disparities arose because these smaller carriers serve some of the very hardest areas to reach or because they have been aggressively extending broadband where it wouldn’t otherwise reach. But to a significant extent, the disparity simply had to do with regulatory distinctions, or arose because the old rules lacked safeguards or accountability.
In order to help ensure all Americans get access to broadband while increasing efficiency and accountability -- no matter what kind of company serves an area -- we overhauled universal service and created the Connect America Fund. These reforms required making support for all types of carriers more efficient and accountable.
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