Mapping Broadband Availability-CAF

Detailed mapping to establish market failure before universal service/state funding is resorted to is a wise step which is economical and would also create less market distortions. Indian USOF does this for many schemes but the results are not available in the public domain. They should be.

A news item reports that, In USA, a  "[t]]he FCC has released an interactive map of the 600,000 or so homes and businesses getting broadband thanks to the second round of funding in phase I of its Connect America Fund (CAF) broadband subsidies.That will give independent telcoms information with which to challenge those funds if they believe they are going to areas already served by broadband. The FCC points out that the map could change due to those challenges.The Connect America fund [CAF] is part of the commission's effort to transition Universal Service Fund monies from traditional phone subsidies to broadband. The FCC last month announced that over $385 million had been requested by providers in 44 states. Now it is identifying where they will provide service down to the census block level as part of an effort to insure the money is not used to overbuild existing service.Phase I money goes to incumbent telcos in the best position to get expand quickly to unversed areas."

The mapping is a great idea, but favouring the incumbent is one I am not so much in favour of.

The Demand Side of Broadband Expansion-Telemedicine

As per the telecom live magazine (August issue) the Department of Telecommunications is collaborating with other ministries/ departments to establish the utility of the NOFN. This includes the Ministry of Health & Family Welfare which has reportedly stated in an inter ministerial meeting held in June 2013 that fibre connectivity and computers are critical for telemedicine applications. There is no doubt about that but a proper and detailed assessment of needs and gaps would be critical for BBNL to usefully boost telemedicine in rural India in a systematic manner.

We could learn something from USA 's experience. It has for the past 15 years run a programe to subsiise connectivity fo rural healthcare. 

As per an article titled, "FCC Rural Health Care Program coming up woefully short" in November 2010 a Government audit  said that the FCC "has not conducted an assessment of the telecommunications needs of rural healthcare providers as it has managed the primary Rural Health Care Program, which limits FCC's ability to determine how well the program has addressed those needs." In addition, government auditors found that the FCC has not developed specific performance goals for the Rural Health Care Program and has developed "ineffective" performance measures." 

However another article, "$400 million FCC fund to bolster rural telemedicine networks," describes the Federal Communications Commission plan to expand on the above-mentioned programme to " make up to $400 million available to healthcare providers in order to create and expand telemedicine networks nationwide, linking urban medical centers to rural clinics while providing greater access to medical specialists and instant access to electronic health records. "

It is said that, 

"According to the FCC, the Healthcare Connect Fund could cut the cost of broadband healthcare networks in half, through group purchases by consortia and other efficiencies. The fund will provide a 65 percent discount on broadband services, equipment and connections to research and education networks, and healthcare provider-constructed and owned facilities (if shown to be the most cost-effective connectivity option), while requiring a 35 percent HCP contribution.To be eligible for the funding, applicants must be public or not-for-profit hospitals, rural health clinics, community health centers, health centers serving migrants, community mental health centers, local health departments or agencies, post-secondary educational institutions/teaching hospitals/medical schools, or a consortia of the above."

USOF India needs to learn from successes and pitfalls of such initiatives while coming out with specific programmes to address demand side of the broadband ecosystem.

U.S.A's Universal Service Programme

A Study titled "Unrepentant Policy failure-Universal Service Subsidies in Voice and Broadband" by Hazlett and Wallsten makes a scathing attack on U.S.A's US programme. In particular, it criticizes the High Cost Fund and the E Rate programme. It suggests shortcomings in FCC's reform efforts. For example resorting to bidding only when the incumbent refuses to "offer services at subsidies based on cost models." The USF programme has been criticized for introducing market distortions. One of the sources of this distortion being a tax on long distance services and wireless voice services to fund the programme. Another being the distortion to competition by subsiding one technology (landline) vis-a-vis competitors (satellite and cable). 

Reproduced below is an extract of the Abstract:

In  the  first  half  of  2013,  the   Universal  Service  Fund  levied  a  nearly  16  percent  tax  on users  of  fixed,  mobile,  and  VoIP  communications,  spending  nearly  $9   billion  to  extend  networks.  Yet, USF expenditures –  about $110  billion (in 2013 dollars) since 1998, of which $ 64  billion went for telephone carrier subsidies  --  extending  voice services to, at most,   one-half of one percent of U.S. households.  This generous estimate of  about 600,000 residences  implies  a  cost -per-home of  $106,000 ,  just  counting  the  federal carrier  subsidies. Entrenched  interests  make  the  program exceedingly difficult to change. These interests include hundreds of rural telephone companies, inefficiently small and opportunistically expensive because funds are paid out  according to  cost -plus  criteria .  Some carriers receive more than $10,000  per line per year   to support voice service. Yet,  FCC  data  show  that  mobile  voice  service  is   available  to  99.9  percent  of  households  and wireless broadband service   to   over   99.5% of the U.S. population, including 97.8 percent of rural residences.    In addition, satellite systems  supply voice  and data services to households virtually everywhere people live in the United States, using networks built without subsidies.   Even with subsidized  lines,  subscribers  typically  pay  $400  a  year  or  more  just  for  voice  service . While some USF dollars help low -income subscribers pay their bills, 80% of poor households receive no  subsidies  and  yet  pay  the  USF  tax.   Studies,  including  several  by  the  Government Accountability  Office  (GAO),  have  repeatedly  revealed  USF  waste,  fraud  and  abuse. The Federal Communications Commission (FCC) issued a 751-page Order  in late 2011 purporting to deal  with  part  of  the  situation,  but  rather  than  fixing  fundamental  problems  the  FCC  Order extend s subsidies from voice to broadband and mandat es   increases in  payments to carriers.  Even when  attempting  to  rein  in  costs,  the  Order   applies Band-Aids  where   tourniquets  are  needed.  Emblematic  of  the  new  rules  is  a  measure  to  limit  subsidies  to  rural  carriers  to  $3,000 per line per year.  This laughably spacious ceiling  –  in a day  when satellite voice -and-broadband service is   offered  to  virtually  every  U.S.  household  for $600 a year   -- will  fail  to  remedy  the  endemic waste  in  the  USF.    Instead,  it  targets   the  “headline  risk”  policy  makers  now  face  when grotesquely  profligate  industry  payments  are  made  public.   Most  critically ,  the  FCC  provides  a new rationale for subsidies –  substituting “broadband” for “voice” –  breathing re new ed   political life  into  a  failed  government  initiative  that  taxes  urban  phone  users,  most  heavily  poor households  who  use  wireless  phones  and  make  long -distance  (including  international)  calls,  in order to subsidize phone companies and property owners in rural markets.  Indeed, the reform’s first effects were to increase   the High Cost Fund by about $400 million.   Upon  examination, the fig  leaf  of  “public  interest”  for  this  transfer  wilts.  Any  plausible   cost -benefit  test  reveals  that economic welfare would increase were the entire $9 billion per year USF program eliminated.

Counter-view

[i}n a statement provided to Telecompetitor, the FCC  suggested that Hazlett’s and Wallsten’s numbers are outdated. An FCC spokesman noted that in 2011 — a year after the period the authors studied — the commission took “unprecedented steps to end waste, fraud and abuse,” including capping subsidies at a maximum of $250 per line per month and limiting corporate overhead expenses.

My previous post at http://ictsforall.blogspot.in/search/label/Connect%20America%20Fund and comments thereof may also be seen.

USA's National Broadband plan-The Connect America Fund

A part of United States’ 2009 recovery and reinvestment effort was the development of a $7.2 billion National Broadband Plan. According to this Plan,

Government can influence the broadband ecosystem in four ways: 

1. Design policies to ensure robust competition and, as a result maximize consumer welfare, innovation and investment.

2. Ensure efficient allocation and management of assets government controls or influences, such as spectrum, poles, and rights-of-way, to encourage network upgrades and competitive entry.

3. Reform current universal service mechanisms to support deployment of broadband and voice in high-cost areas; and ensure that low-income Americans can afford broadband; and in addition, support efforts to boost adoption and utilization.

4. Reform laws, policies, standards and incentives to maximize the benefits of broadband in sectors government influences significantly, such as public education, health care and government operations

To provide universal access to broadband a Connect America Fund was to be created ‘to support the provision of affordable broadband and voice with at least 4 Mbps actual download speeds and shift up to $15.5 billion over the next decade from the existing Universal Service Fund (USF) program to support broadband.’

A recent news item in this regard can be seen a thttp://www.bna.com/fcc-finalizes-effort-n17179874752/

The idea is to incentivise operators to serve areas where availability of broadband at benchmark speeds is currently lacking.

USA’s US programme is perhaps the oldest in the world. Perhaps because of this long history it appears to be rather large, unwieldy and demanding in terms of   effort  toward regulation, administration,  monitoring and  implementation.