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ACA Calls On The FCC To Modernize Universal Service For The Broadband Age

Fiscal Discipline With Allocation Reforms Will Yield Sufficient Funds To Subsidize Rural Broadband Networks, Trade Group Says

PITTSBURGH, May 24, 2011 - The American Cable Association called on the Federal Communications Commission to modernize the Universal Service Fund in a way that both removes inefficiencies from the program and promotes access to affordable broadband Internet for all Americans, especially those who reside in high-cost rural areas.

"Under Chairman Genachowski's leadership, the FCC is poised to create a new mission for the Universal Service Fund, which is to rely on High-Cost fund money to support rural broadband deployment for the first time in our nation's history," ACA President and CEO Matthew M. Polka said. "With adoption of needed reforms proposed by the ACA in detail, the independent cable community fully anticipates the FCC's new Connect America Fund (CAF) will make significant headway in bringing about universal broadband service. Clearly, the status quo is unacceptable."

ACA's support for a major overhaul of USF was included in comments filed Monday with the FCC, which is expected to adopt new rules later this year. Since its inception, USF has focused on support of affordable dial-up phone service in high-cost areas. In light of the Internet's remarkable rise as an indispensable tool of commerce, learning and communication, the FCC is seeking to revamp USF to reflect this momentous change wrought by innovative digital technology.

In its comments, ACA urged the FCC to embrace a number of reforms to make USF in the broadband age as economically efficient as possible, to stretch the value of consumer funding; and as fair as possible, to take into account the needs of traditional USF recipients that will eventually experience reductions in support. Unlike some industry participants, ACA agrees with those who believe USF's traditional focus must change and a new forward-looking regime needs to be adopted.

Central to ACA's vision for USF is that reform must be fiscally responsible and competitively neutral. The $4.4 billion High-Cost fund has grown enormously since passage of the Telecommunications Act of 1996 and is riddled with inefficiencies.  The FCC should cap the fund and use the funds recovered from the elimination of inefficiencies to fill the CAF's coffers.

A key objective for ACA is recognition that USF funding for providers in competitive markets cannot endure indefinitely. ACA is urging the FCC to eliminate High-Cost support where competition exists. Unless this change occurs, unsupported competitive providers are likely to withdraw from the market and supported providers that remain will likely grow even more reliant on USF funding, an unwelcome outcome.

In terms of competitive neutrality, numerous providers are capable of deploying broadband networks. To use its funding most efficiently, the FCC should encourage as many providers as possible to participate in bringing broadband service to unserved households. To ensure service is sufficient and robust, funding recipients should be bound by service requirements that are part of the award criteria.

ACA recognizes that many telecommunications carriers will need time to adjust to the CAF's requirements. As a result, the FCC should provide a reasonable, but not unlimited, transition period for smaller incumbent telephone companies because of their greater reliance on support. This also will help ensure that no household currently receiving supported service will be stranded.

ACA's support for reorienting USF for broadband rests on the belief that USF serves the important objective of ensuring that vital communications services reach Americans who are unserved or underserved by the private sector. ACA agrees that communications services and funding mechanisms to be supported need to evolve in response to consumer demand and market conditions.

About the American Cable Association

Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 900 smaller and medium-sized, independent cable companies who provide broadband services for more than 7.6 million cable subscribers primarily located in rural and smaller suburban markets across America.  Through active participation in the regulatory and legislative process in Washington, D.C., ACA's members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business.  For more information, visit http://www.americancable.org/

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