US/ND-4: Re: new survey on allocation of Universal Service subsidies

Re: new survey on allocation of Universal Service subsidies

Rex Buddenberg (budden@nps.navy.mil)
Wed, 18 Sep 96 09:29:43 -0700 

> Richard Buro said:
> 
> > Until the most remote rural group has access, the provisions 
> > for Universal Service will not be realized.  Priority should be given to 
> > unserved populations first, underserved populations second, and then to 
> > suburban and urban areas where services are more widespread.
> 
> How were the original telco's encouraged to reach the remote areas when
> the first legislation was proposed in the '30s?  Is there some way to
> prioritize w/o bankrupting the new "mom & pop" network businesses
> starting off on a shoestring?  

A lot of ISPs are definitely shoestring outfits.  While there will
certainly be a shakeout, they won't all be swallowed up by the
telcos.  Indeed, the reverse may be happen in our increasingly
horizontally integrated information structure -- the telcos
do what they can do best (provide terrestrial connectivity) and
the ISPs do what excell in (provide internet services).

Rural telephone connectivity is indeed an interesting case study
(CNRI has a series of monographs on infrastructure building,
one of which is the telephone system).
	The Bell System focussed mostly on the long distance
problem and got into the local loop more by buying up the
smaller telcos rather than direct investment in infrastructure.
This, of course, left the rural areas out.  A lot of them bootstrapped
themselves by, for example, using the barbed wire fencing for
connectivity ... and several neighbors chipping in for the
switch and other equipment.  There are still a few barbed
wire systems around, but cellphone displaced a number and
AMSC+Big LEOs should get the rest.

The disconnect that I see here is that the technology to reach
rural areas is generally provided by companies that are outside
of the regulatory framework.  Because they do not have natural
monopoly characteristics that would cause the government to
regulate them.  Given the cross-subsidization prohibitions
in the legislation, we can't use the Universal Service subsidies
for the technology that is appropriate to the requirement.
Desire to reach rural areas is not a sufficient reason to bring
these unregulated companies under regulation.  I haven't seen
anyone on this list illustrate how we get from here to there...

Rex Buddenberg