One word in the Notice of Proposed Rulemaking (NPRM) for the Federal Communications Commission’s (FCC) National Broadband Plan has some officials worried.

A key goal of the plan is to provide fast broadband access to rural areas that need it. Officials at the Iowa Telecommunications Association (ITA) fear that the one word – which appears eight times in the 289-page document – will create an unintended irony for some Iowa telephone companies and their customers.

The word: consolidation. “Which is another way of saying, ‘We know it’s going to put people out of business,’” said ITA President Dave Duncan. “Based on your own assumptions, you think you’re going to try to force us out of business by changing the rules? That’s not right.”

Consolidation, the ITA believes, relies on the assumption that some areas will be served by larger companies that haven’t served them in the past, creating a situation where some people won’t have access to the service they currently have.

Historically, Duncan said, large companies in Iowa haven’t wanted to offer broadband in high-cost areas. Because of that, he said, many of the nearly 150 independent companies the ITA represents have utilized the FCC’s Universal Service Fund to build up their networks, and in recent years evolve their wireless networks.

A large point of contention is what will happen with the current Universal Service Fund and intercarrier compensation fees, which account for a large portion of ITA members’ revenues. It’s unclear how money will be redistributed, but the ITA’s worry is that things will not end favorably for the companies it represents.

“There seems to be a feeling within the FCC that many of our companies have already built out broadband networks, so in their minds we’re fine,” said Joe Hrdlicka, the ITA’s director of government relations. “While we have built out networks, we’re still paying for those networks that we’ve invested in. It’s not something you pay for overnight.”

The ITA fears the plan will inadvertently create what has been termed a rural/urban divide.

Other views

Jonathan Banks, senior vice president for law and policy with the U.S. Telecom Association (USTelecom), can see the pros and cons. USTelecom represents a number of companies, including AT&T Inc., CenturyLink Inc. and Windstream Corp., along with more than 100 rural companies.

“There are a lot of issues around this intercarrier compensation and how to move the old Universal Service Fund … changing that to be a broadband fund,” Banks said. “I think everybody agrees that is a good idea; it’s just how you transition from one to the other that raises a lot of issues for telecom companies.”

He said it was hard to put people on one side of the issue or the other based on company size, because currently a lot of companies face a rural/rural divide, where some places are getting adequate money from the current fund, and others aren’t.

“There are genuinely high-cost areas that wouldn’t be served unless there’s some kind of Universal Service Fund support,” Banks said. “We’re just trying to make sure that the support matches the obligations to serve people.”

As for consolidation, Banks noted that Iowa has a much higher number of small telephone companies than most states, and said he believes consolidation will continue to happen whether the plan in its current form passes or not.

“Iowa has over 100 small companies. Most states have six,” he said.

AT&T is supportive of the plan, said Beth Canuteson, AT&T regional vice president for Iowa.

The company is in the midst of a proposed acquisition of T-Mobile that it expects will help ramp up its fourth-generation (4G) wireless broadband coverage in Iowa.

“We know what broadband speeds do for a rural community,” Canuteson said. “It gives kids a reason to come back to their hometown. They can operate their business online, and they are able to do that because they have high-speed Internet where they live.”

Another company that operates in Iowa, U.S. Cellular Corp., has concerns similar to the ITA.

The company said in a statement to the Business Record: “We agree with the goals of the plan to encourage broadband deployment throughout America, but we have some concerns about how that will occur and over what time frame.”

Like companies the ITA represents, U.S. Cellular is unsure if money it received from the Universal Service Fund to build out its network in Iowa will still be there as it tries to maintain the network. The company is also concerned that the plan will make funding available to only one carrier in rural areas.

Making their voices heard

USTelecom’s Banks said small companies should fight to make sure there is enough support to keep high-cost areas funded.

That’s exactly what the ITA is doing on behalf of its companies. The association, along with other organizations, held a rally at the state Capitol last month to protest the plan as it is currently written. It also has submitted comments to the FCC about the NPRM, and will have officials in Washington, D.C., this month to meet face-to-face with FCC officials. While there, they will push an alternative plan by the National Exchange Carrier Association.

“Our greatest fear is if they have already written the final rules,” the ITA’s Duncan said.

The ITA recognizes the need for reform, and Hrdlicka noted that there is a rural/rural divide in some areas in Iowa, meaning some areas are covered better than others. But the association wants to make sure that in trying to help some rural areas, the plan doesn’t neglect the companies that have already built their networks.

The ITA touts that 99.37 percent of Iowans have access to fixed or mobile broadband service. Hrdlicka believes that having so many independent telephone companies is one reason Iowa is in good shape.

“Our issue is we don’t want companies that have deployed broadband service in rural areas to be penalized, because their financing is dependent on a model where their network service was going to be funded throughout a certain number of years however they chose to finance it,” he said.