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• The FCC in November adopted a set of reforms aimed at bringing the $8 billion Universal Service Fund into the digital age. Its goal is to get broadband to all of rural America by 2020, helping states such as South Dakota, where 44 percent of the rural population is without high speed Internet, said FCC Chairman Julius Genachowski.
• Genachowski said the Universal Service Fund, created in 1997, had become inefficient and wasteful, and it was leaving very large parts of rural America behind. Its replacement, Connect America Fund, is an attempt to bring things up to speed.
• "It was a reform that was many years in the making," he said. "It was widely recognized for quite some time that the old USF program and only focusing on telephone service was out of date."
• But Chris Nelson, chairman of the South Dakota Public Utilities Commission, said rural telephone companies in the state that had been expanding their Internet service through new fiber optic lines are scrapping future projects because they don't know how much the feds will help pay for the service.
• "Rural phone companies are completing their broadband infrastructure expenditures this year but are making very, very few plans for next year and literally nothing the year beyond that because of the uncertainty the order has caused," Nelson said.
• Why the uncertainty? Companies are subsidized based on a complicated formula that considers how many customers are served in how large an area. Critics say that the changed formula means companies can't predict up front how much money they'll get back, and are therefore hesitant to invest.
• The Obama administration has identified universal broadband as critical to driving economic development, producing jobs and expanding the reach of cutting-edge medicine and educational opportunities.
(Continued on page 43)
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