FCC to shift subsidies for rural phone service to broadband

Rural telephone companies say the federal government is going to disconnect them — permanently.

The Federal Communications Commission plans this summer to begin the conversion of subsidies that now support rural telephone service to support rural broadband service.

Rural telephone companies are worried that losing these subsides will cut their revenue by half to two-thirds, which they say will force layoffs, service cuts and the loss of community benefits such as employing local economic developers.

It was one of the main topics at this week's gathering of the state's rural telephone executives in Wichita.

"It's a big experiment," said Catherine Moyer of Pioneer Communications in Ulysses.

"And a dangerous experiment," agreed Mark Gailey, president of Totah Communications in Ochelata, Okla.

Kansas has 35 rural telephone companies employing hundreds and serving tens of thousands.

Over the past two years, the FCC has announced plans to modernize its 15-year-old effort to spur rural communications by moving from funding telephone service to broadband computer connections. Broadband offers not only a powerful connection to the Internet, but would also provide telephone service via the Internet.

Much of rural Kansas still doesn't have access to broadband. In the country, there are 20 million people who don't have broadband access, according to the FCC.

The agency expects the transition will take place gradually, over a decade. The agency says that it will look for inefficiencies in how and who it subsidizes, such as funding multiple providers in the same area. It will use the money saved to subsidize the expansion of broadband into new areas.

The subsidies consist of the $8 billion Universal Service Fund, which rural telephone companies nationwide draw down to reimburse them for capital and operating costs.

The FCC also plans to eliminate the interconnect fees that large phone companies pay to connect their customers to rural telephone systems.

Existing telephone companies will have a chance to adapt, offer new services and change technologies, the FCC officials say.

But local telephone companies aren't reassured.

They see the rules being changed after they've plowed their money into expensive cable in the ground.

The FCC is looking for new technologies to make the spread of broadband to wide areas with sparse populations affordable.

One such technology, fixed wireless, is something used by Wichita-based Pixius Communications.

John Smith of Pixius said that technology is plenty fast and quite a bit cheaper than installing cable.

The company already services quite a few small towns and the rural areas nearby.

"I think it would be something we should look at and evaluate," he said.