Will Universal Service Support Allow "Internet Access Only"?

Government policies enable and shape most fundamental parts of the Internet access, mobile,  fixed, fixed wireless and satellite communications businesses, it perhaps goes without saying.

That applies to rural telecom companies offering Internet access as well. In a strict sense, there is not a viable business model for most fixed communications services in many rural markets, which is why the U.S. Federal Communications Commission has universal service programs.

How such programs are operated can make a difference, though. On a visit to many communities across the rural western United States, FCC Commissioner Ajit Pai “heard repeated concerns over the last few days that outdated Universal Service Fund (USF) rules are holding back investment in next-generation networks,” said Pai.

The problem is that rate-of-return carriers (fixed network telcos) are currently ineligible to receive support for stand-alone broadband service (service providers receiving such funds must provide fixed network voice service as well).

“Dakota Central Telecom, for example, told me that it started offering stand-alone broadband standalone broadband, but had to stop providing it to new customers because it became prohibitively expensive to do so,” said Pai. “However, with USF support for stand-alone broadband, Dakota Central Telecom could start offering that service to consumers again.”

The Commission earlier had pledged to support “broadband only” support by the end of 2015. The issue is whether that goal can be met.

To be sure, some service providers prefer the policy of bundling voice with high speed access. It boosts average revenue per account.

But a growing number of consumers prefer to buy Internet access without voice, or a bundle of Internet access plus entertainment video.