FCC Makes $300 Million Available For Rural Landline Broadband

December 2011, Vol. 66 No. 12

The Federal Communications Commission is setting aside $300 million in 2012 as a down payment for phone companies in rural areas to build wireline broadband connections.

That $300 million is part of a Connect America Fund the FCC is establishing and funding with the $4.5 billion raised annually from the Universal Service fees paid by every telephone customer in the U.S. In the past, that $4.5 billion was distributed to phone companies so they could provide telephone service in rural areas. Some companies provided broadband too, especially in more heavily-populated rural areas. But broadband was very slow in coming to many isolated, rural areas.

Most of the $300 million downloaded by the FCC in 2012 will go to what are termed price cap carriers. These are larger companies such as Verizon, AT&T, Century Link, WindStream and Frontier who provide phone -- but not much broadband -- to the 18 million Americans that lack access to residential fixed broadband at or above the Commission’s broadband speed benchmark. The FCC predicts 600,000 rural Americans will get broadband in 2012 because of CAF funding.

Beyond 2012, the FCC will be develop a "cost model" whose purpose will be to divert much more of the $4.5 billion away from telephone service to broadband service in what are considered "high cost" areas, meaning isolated rural areas. In each state, incumbent price cap carriers will be asked to undertake a “state-level commitment” to provide affordable broadband to all high-cost locations in its service territory in that state, excluding extremely high cost areas as determined by the model. Carriers accepting the state-level commitment will be obligated to meet rigorous broadband service requirements -- with interim build out requirements in three years and final requirements in five years -- and will receive CAF funding, in an amount calculated by the model, over a five-year period, with significant financial consequences in the event of non- or under-performance.

EPA To Consider Shale Gas Wastewater Regulation

To no one's surprise, the Environmental Protection Agency (EPA) announced in October that it will think about regulating shale gas wastewater. The Department of Energy's shale gas subcommittee -- formed at the request of President Obama -- provided the impetus to the EPA by noting the "fracking" chemicals contained in the water injected into shale rock formations and the contaminants that "flowback" to the surface both should be looked at more closely in case they are contaminating drinking water sources.