.bodytext {float: left; } .floatimg-left-hort { float:left; margin-top:10px; margin-right: 10px; width:300px; clear:left;} .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 10px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 10px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 10px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} In what it calls an effort to close the last gaps in the digital divide, Qwest Communications International Inc. has begun lobbying the Federal Communications Commission to subsidize rural deployment of broadband by changing how the agency spends some of the $4 billion it collects in user fees.

The company wants the FCC to rein in subsidies it gives wireless telephone companies for providing service in sparsely populated areas and redirect that money to rural broadband deployment.

A study released last year by the Iowa Utility Board found that for the first time, rural communities are getting connected at a faster rate than the state’s non-rural communities. The most recent study found that 95.3 percent of rural communities have high-speed Internet access, compared with 84.3 percent of non-rural communities.

” “There are places in the country where it isn’t economically feasible to provide broadband. If this can be remedied, I see no reason why we shouldn’t do it.”
– Steve Davis senior vice president for public policy, Qwest Communications International Inc.

About $1 billion of the Universal Service Fund money collected from all phone bills nationally goes toward underwriting wireless phone service in areas that companies don’t consider to be economically feasible business locations. The subsidy is given based on the number of wireless phones each company puts in use in underserved areas, said Steve Davis, senior vice president for public policy at Qwest.

There is a significant debate about the future of the fund, which was created decades ago to subsidize the spread of residential telephone service. More recently, it has been used by wireless carriers to build networks to spread cellular service across the country.

Rather than subsidizing wireless carriers for every device they support in a given area, the Qwest proposal would dole out subsidies on a per-household basis. Because around half of all mobile-phone users are now on some form of family plan, that change would reduce the current handouts by about half, Davis said, or around $500 million a year. Qwest proposes that money be given to state governments as grants to support broadband deployment as soon as 2008.

Altering the subsidy program would require no legislation. The FCC could make the change as a regulatory decision.

Qwest expects the idea to gather support given that the wireless subsidy program has grown out of proportion to what was intended and that rural broadband deployment is a government priority, Davis said.

“There are places in the country where it just isn’t economically feasible to provide broadband,” he said. “If this can be remedied, I see no reason why we shouldn’t do it.”

The wireless carriers are less enthusiastic.

Joe Farren, assistant vice president of public affairs for the Cellular Telephone Industry Association, said Qwest’s proposal is “self-serving” and just an attempt to “push consumers away from what they want and toward services that Qwest provides.”

“Wireless communication is how people connect with the world around them,” Farren said. “People in rural areas have just as much right to that technology as people in the suburbs and the cities.”

Farren said Qwest’s plan would force wireless providers out of rural areas under the false pretense of providing high-speed Internet access to those same areas.

“We’ve proposed reforming the USF in a wholesale manner,” he said. “Qwest’s approach is feeble at best.”

Davis said the proposal simply treats all technologies equally, unlike the current system, which gives wireless providers an unfair advantage.

“The difference is that under the Qwest proposal, companies will have to compete for a one-time subsidy, rather than automatically be granted monthly stipends for life. Obviously, this prospect concerns some more than others,” he said.

Rob Hillesland, an information specialist for the Iowa Utilities Board, said his agency has no position currently on Qwest’s proposal, as it is waiting to receive more details before commenting.

Ed Pardini, senior vice president for the North Central Division of Mediacom Communications Corp., said his company has no problem with the way the USF is funded, only in how it is allocated. He said the government is making loans available to companies to enter a market, which is simply subsidizing competition.

“We take pride in the fact that we’ve provided high-speed Internet to every rural area where we have service,” he said. “There is little or no digital divide in our service.”

Pardini said because there is a strong market in rural areas for high-speed Internet, companies will go there even without a subsidy.

Pardini said his company has even started expanding offerings into the wireless market.

The Universal Service fund already subsidizes high-speed Internet access — which would include cable modem, digital subscriber line (DSL), fixed wireless and other technologies that transmit information many times faster than a dial-up link — for schools, libraries and rural health care facilities, but not rural households and small businesses.

Qwest’s plan would funnel money to state utility boards to expand high-speed Internet access to areas where it is not available. The plan calls for a bidding process in which companies would complete for a subsidy to provide service to an area.

“It would be a fair way to offer service to these areas,” Davis said. “And any provider, be they wireless, cable or otherwise, would have the opportunity to bid and get the subsidy.”

Farren said he hopes the FCC will “see this plan for what it is.”

“A bid by Qwest to push wireless companies out of business because they can no longer compete,” he said. “It really is that simple.”