Entries in USF (16)


Finally - Genachowski’s Big Announcement on USF/ICC Reform

Chairman Urges Americans to “Seize this Opportunity” for Universal Broadband

I can only imagine that hundreds, if not thousands, of rural telecom folks were eagerly (and nervously) sitting in front of their computers at 10:30 AM EST this morning in anticipation of FCC Chairman Julius Genachowski’s big announcement about USF/ICC reform. Unfortunately, the FCC’s live video feed left a lot to be desired. Genachowski did not divulge many precise details of the plan, which will be voted on by the Commission on October 27, but he gave a fairly thorough taste of the reforms. Earlier this week, he announced that the FCC’s plan would not be a “rubber stamp” of the price cap ILECs' ABC Plan, and it definitely does not sound like it is. There was really no mention of the RLEC Plan in today’s announcement (unless I missed it due to “technical problems” with the FCC live feed).

Genachowski opened by reiterating statements about the current USF/ICC system that have been said time and again since the National Broadband Plan was released: the current system is inefficient, wasteful, broken, unfair to consumers, creates competitive distortions that “companies have exploited in devious ways,” and causes uncertainty and legal disputes. Genachowski did give some credit to the old system at least, saying “It’s hard to imagine America being as successful without the telephone system,” which became ubiquitous due in part to the success of the current USF system. Well, we are living in a broadband world now, and the old system just won’t cut it.

Genachowski touted the benefits of broadband- job creation, private investment, emergency lifeline, a “connection to a world of knowledge” for students, and “a platform for entrepreneurs in rural America to start and grow small businesses.” He emphasized that broadband is a necessity, not a luxury, which is “not just a theory, it’s a fact;” and “the cost of digital exclusion [grows] higher every day.”

So what about the reforms? One of the key elements will be establishing the Connect America Fund to ensure universal broadband availability in unserved areas. The CAF will potentially help deliver broadband to 18m people in 5 years. There will be a Mobility Fund, but Genachowski did not say how much money would be dedicated specifically to mobility—I’m sure the rural wireless stakeholders are very curious about this. He did say that “the Mobility Fund will provide significant ongoing support for rural mobile broadband.”

CAF support will not replace private investment, and it will be targeted exclusively at areas without an unsubsidized competitor. CAF support will be distributed via “competitive processes,” which means reverse auctions, and it “will be conditioned upon complying with rigorous obligations to serve the public and meet the goals of universal service.” It sounds like the FCC wants to hit the ground running with reverse auctions in the first phase of CAF in 2012, but it was unclear on how the auctions would be structured or if (and when) they would apply to non-price-cap areas.

As for rate-of-return companies, Genachowski said that the plan will ensure “appropriate incentives to invest efficiently and receive predictable support.” No word on whether the rate of return would be reduced to 10%, but he did mention that there would be new accountability requirements and “benchmarks to ensure reimbursable expenditures are reasonable.”

The FCC appears to be taking a very hard line on ICC reform. The plan will supposedly reduce hidden subsidies paid by consumers, eliminate arbitrage opportunities, and “close loopholes” that allow phantom traffic and traffic pumping schemes. The “Recovery Mechanism” for lost access charges will be “tightly controlled,” and only some companies will be permitted to access these funds. Which companies, I wonder?

The role of states in the new CAF has been hotly debated in the last few weeks, with ABC Plan participants wanting to preempt states, and states wanting to maintain their role. Genachowski said that states will continue to have a “vital and meaningful role,” and COLR obligations will not be eliminated.

Genachowski concluded the announcement by insisting that “the plan will extend broadband to millions of Americans;” “spur private investment, create jobs and drive our nation’s competitiveness;” and create “massive consumer benefits.” He added that “every day without reforms is a day millions of Americans suffer increased harms…and millions of dollars are spent wastefully.”

I am anxiously awaiting the release of the draft rules to fill in the gaps on the issues that Genachowski did not explain very clearly. What did you think of Genachowski’s speech? Will RLECs get a good deal, or is it time to panic? Genachowski said, “companies that invest and manage their businesses prudently will have the support they need to continue extending broadband, and will be on a path to a more incentive-based framework in the future.” To me, this sounds like a stern warning for some, and a reassuring message to the companies who have been investing “prudently” all along.

A transcript of Genachowski’s speech is available here.


State USF Reform Impact Studies Predict RLEC “Death Spiral”

At Least 4 Rural States in Big Trouble if USF Reform Goes Wrong for RLECs

Anxiety about the impending decision on USF/ICC reform is definitely reaching a boiling point, if the long list of ex parte filings in the last couple of weeks is any indication. In addition to industry pleas and gripes for or against particular plans, two more states have weighed in on the potential impact of reducing or eliminating high cost USF support for RLECs. Universities from Colorado and Missouri conducted economic model analysis to determine the impact of USF reform on state jobs, income and taxes, similar to previous studies performed by universities in New Mexico and Kansas (The ILEC Advisor: New Mexico Study Depicts Life Without USF; September 27, 2011)

The state USF and National Broadband Plan impact studies do not take a position on any proposed course of action; rather they analyze what might happen in the state’s economy if RLECs lose their current level of high cost USF support. It should be noted that the studies only look at the impact of reducing or eliminating USF, not ICC as well. The results of losing USF alone are pretty dire, and I can’t imagine any of these states would be better off after further RLEC revenue reductions due to dramatic drops in ICC. For states where access revenue makes up about 30% of total RLEC revenue, you could probably just double the losses shown in these studies, which were mostly calculated assuming that RLECs receive (and stand to lose) about 30% of their revenue from USF.

Like the New Mexico study, the study conducted by Missouri State University’s Bureau of Economic Research calculates potential losses based on the assumption that the state’s 35 RLECs would lose all of their USF support. According to the authors, “It is highly probable that many of the ILECs in Missouri will not be able to survive such a transition in the long run and would go bankrupt.” Furthermore, “Even if the ILECs would survive they would decrease their investment in new infrastructure and equipment by approximately 40%,” which may negatively impact the quality, availability and affordability of telephone and broadband service. The combination of more expensive and less available broadband and the possibility that customers would have to drop services are “two things the FCC has stated it does not want.”

The Missouri study explains two possible options that RLECs would have if USF were eliminated. The first option is to increase rates, but “for every 10% increase in price that the ILECs use to offset the decrease in universal service funds, they will lose 7.6% of their customers” to either wireless substitution or no telecommunications service at all. The authors explain that “this creates a death spiral. In order to regain revenues, prices are raised, customers lost, creating pressure to raise prices again, which will again result in more customer losses. The result could be that a significant number of the ILECs, unable to make up the lost revenue, will cease operations all together.” The second option would be to drastically cut costs, including firing employees and reducing investment, which would contribute to unemployment and slow down broadband deployment.

The Colorado State University study took the analysis a little further. This study modeled different scenarios—eliminating USF, reducing USF by 30%, raising rates to help recover lost USF, and not raising rates, where the cost of losing USF support would be “borne entirely by providers.” The Colorado study reiterated the findings in the Missouri study, and concluded, “With such dramatic losses providers would likely follow one of two courses, each with important ramifications for Colorado’s rural communities.” The two courses are going out of business or surviving but with a much lower level of service. Another “death spiral” would likely occur in Colorado: “Some rural providers indicated that it would be difficult for them to raise prices without losing substantial numbers of customers. There was some indication that the impact of losing customers would be the provider going out of business.”

The four studies published so far used similar input-output models to illustrate the impact of eliminating or reducing USF on jobs, income and local/state taxes. The results are summarized in the table below. Although some of the studies project losses over a period of 5-10 years, I felt that the immediate impact results (estimates for 2012) were most accurate and revealing, given the assumptions in the studies. Some of the longer-range projections appeared fuzzy to me, as the studies did not consider possible USF replacements, like CAF or new revenue sources. The Missouri study also added the cumulative losses over 5 years, which led me to believe that their longer-term results were over-estimated.

We won’t know for sure until the final rules are revealed (expected this week, with a vote at the Oct. 27 FCC Open Meeting) exactly what percentage of USF support RLECs stand to lose (or how quickly they will lose it), but it might be an interesting exercise for companies to run the numbers and see what the impact of reducing or eliminating USF would be for their specific communities in terms of direct and indirect job, income and tax losses. How do you plan to offset USF revenue losses in order to avoid a “death spiral?” Obviously, generating more revenue is the solution; but what specific operating strategies and new business opportunities have enough momentum to overcome such significant losses and ensure future growth and profitability?

The Missouri and Colorado studies are available at SaveRuralBroadband.org.


New Mexico Study Depicts Life without USF

“Substantial” Economic Impact of Eliminating USF: Job, Income and Tax Loss in NM

The New Mexico Exchange Carriers Group (NMECG) released an economic impact study to illustrate how jobs, income and tax revenue in the state would be harmed by drastic changes to the Universal Service Fund. Earlier this summer, a similar study was conducted in Kansas, which also concluded that eliminating USF support for RLECs would have a ripple effect of negative consequences in the state. The NMECG study, conducted by New Mexico State University’s Arrowhead Center, found that eliminating $35.4m in USF would ultimately result in the loss of 3,146 jobs, $200.3m in personal income and $13.6m in tax revenue over a ten year period (2012-2021). According to NMECG, “the estimated impacts are substantial,” and would most significantly hurt rural areas of the state.

NMECG provided some background and demographic information about its 11 RLEC members—these companies have 31,542 access lines covering 80,281 square miles. The NM RLECs have deployed 5,000 miles of fiber, employ 518 people and pay $23.5m in wages annually. 90% of their lines are broadband-capable, and they cover an average of 1.8 access lines per square mile. NMECG comments that “significant rural to urban migration has been a pattern in New Mexico (and nationally) since the early part of the 20th century,” and “New Mexico’s non-metropolitan counties generally exhibit a stagnant or declining population base with low income and high poverty rates.” Population density across the state ranges from 0.5 people per square mile in Catron County to 567 people per square mile in Bernalillo County. Unemployment overall in New Mexico, at 8.4%, is lower than the national rate, but some rural counties have very high unemployment (18.7% in Luna County and 15.7% in Mora County).

The study utilized economic impact analysis “to measure the net change in economic activity in a given geographic area that results from an exogenous change in economic activity,” in this case, the elimination of USF support to 11 RLECs. NMECG explains, “The main idea behind economic impact analysis is that one more (less) dollar spent in a local or regional economy results in greater than one dollar in economic activity in the area.” The authors used an input-output model, REMI PI+, “designed to capture the effects of a change in one industry on other industries and households.”

The $34.5m in USF support makes up about 32% of the NM RLEC’s revenue, and “the estimation approach taken in this report reduces the USF revenue source by the reported amount beginning in calendar year 2012.” NMECG anticipates that 99 telecommunications industry and 261 private sector jobs would be lost in the first year alone. In the first five-year period (2012-2016), a total of 452 telecommunications and 1,315 private sector jobs would be eliminated. By the second five-year period (2017-2021), the rate of job loss would be slightly less as a result of “industry adjustment to the loss of USF funds.” At the end of the ten year period, NMECG estimates that 805 telecommunications jobs would be lost at a rate of about 80 jobs per year, and 2,400 other private sector jobs would be lost.

I think it is interesting to note that the NM RLECs only employ 518 people, but the study estimates that 805 telecommunications industry jobs would be lost over 10 years. They do not explain if this means that literally every NM RLEC job will vanish (and then some), or if the “telecommunications jobs” at risk in the state extend to non-RLEC jobs in manufacturing, construction, customer support, wireless retail, etc. The study also does not explain if, or how, these lost jobs could be replaced within the state’s broader telecommunications technology and information communications industry. Furthermore, the study presumes that USF funds would be eliminated completely, without any replacement mechanism for lost access revenue or CAF funding for broadband. Although the RLEC industry is anticipating reductions to USF support, it is quite a stretch to assume that all USF funding will disappear abruptly in the next year, and not be replaced at all over the next 10 years. Perhaps the NMECG was just trying to prepare for the worst possible outcome of USF reform?

Regardless of the input used in this economic model, it is still important to understand how USF supports more than just telephone lines in high cost areas, and the NMECG study definitely depicts a dire situation in the state if USF were to vanish. A similar June 2011 study by Wichita State University, Kansas Rural Local Exchange Carriers: Assessing the Impact of the National Broadband Plan concluded that the FCC’s proposed modifications to USF would result in annual funding reductions of $28.7m between 2012 and 2016 for a total of a $143.5m decrease in USF for 35 RLECs. The Kansas study explains, “The proposed loss of over $143m of USF will require Kansas RLECs to dramatically change their operations and likely cause defaults on loan obligations owed to the federal government and other lending institutions.” The Kansas RLECs would lose an estimated 140 jobs and $29m in wages, and the total state impact would be 367 jobs and over $51m in wages by 2016.

The results of this study also signal that it might not be a bad idea for RLECs to start looking for other sources of revenue to make up for that 30% + chunk derived from USF and ICC. Even if USF is not eliminated completely, reductions are almost guaranteed especially in the access revenue component if access rates are reduced to a uniform $0.0007 rate, which is likely. Even with the best possible outcome in the new USF rules, RLECs should expect to have to make cutbacks in the next few years.  Planning, preparation and a forward-looking mentality definitely wouldn’t hurt at this point.

The NMECG study, The Potential Economic Impact of the National Broadband Plan on the New Mexico Exchange Carriers Group, is available here.


Transitioning to CAF: RLEC Plan Steps and Impact

NTCA Outlines RLEC Plan’s Steps, NECA Calculates Preliminary Impact on RLECs' Slice of USF Pie

Last week, rural telecom association NTCA and the National Exchange Carriers' Association (NECA) held ex parte meetings with members of the FCC to provide additional details about the associations’ RLEC Plan for USF/ICC Reform—NECA submitted a chart illustrating how legacy USF support for RLECs may transition to the Connect America Fund (CAF) coupled with a Restructure Mechanism (RM); and NTCA presented a condensed summary of the steps in the RLEC Plan.

As shown below, NECA’s Preliminary RLEC CAF + RM Computation chart starts at $2b and accounts for modest growth of $50m per year up to “a total annual budget of $2.3b” by the sixth year.  By the eighth year, Legacy USF support is reduced by more than half, with CAF + RM support replacing the legacy funds without increasing the overall size of the fund by more than $300m.  According to NECA, “incremental funding will be necessary to enable access restructuring, promote further broadband build-out (but only to the extent supported by increases in USF/CAF funding above current levels for any individual company), and provide a reasonable opportunity to recover the costs associated with existing investments in broadband-capable plant.”

NECA’s calculations were produced “using industry-wide assumptions and growth rates, together with preliminary inputs and factors.”  NECA also provided a summary of their calculations and assumptions, and a description of the RM.  NECA explains, “The RM is designed to recover revenue losses as a result of capping interstate originating and terminating switched access rates at the start of access reform as well as revenue losses caused by reducing terminating access rates to targeted levels in three phases,” where the targeted level is ultimately the $0.0007 per minute terminating end office rate.

To calculate the RM, NECA explains, “The total revenue shortfall is the sum of the intrastate and interstate revenue shortfalls…The RM is calculated by offsetting the combined revenue shortfalls by increases in subscriber line charge (SLC) revenue.”  If residential rates in a study area are below the $25 local rate benchmark, the monthly residential SLC can be increased by 75 cents per year until the benchmark is met.  NECA further explains, “if additional SLC revenues in a given step exceed the intrastate RM, the SLC revenue in excess of the intrastate RM is then used to offset the interstate component of the RM;” and “earnings in excess of a 10% RoR for that year will be used to offset the intrastate component of the RM for that year after the SLC revenue offset has been taken into account.” 

Also helpful for understanding the potential road ahead for USF is NTCA’s summary of the steps in the RLEC Plan.  The four steps explained in NTCA’s August 26 ex parte filing are as follows:

Step 1: “Implement short-term ICC reform measures that confirm intercarrier compensation is due for all traffic originating from or terminating to the PSTN regardless of technology; VoIP pays established interstate access rates for all interexchange traffic and reciprocal compensation for local.”  The FCC should also address phantom traffic and access stimulation in this step.

Step 2: Short-term USF reform, beginning January, 1, 2012, including “a limitation on recovery of prospective RLEC capital expenditures,” and “cap recovery of corporate operations expenses by applying the current HCLS corporate operations expense cap formula to all federal high cost support mechanisms.”

Step 3: This step would initiate the process of capping interstate access rates with an 8-step “realignment program,” that includes unifying RLEC intrastate terminating access rates at interstate levels; reducing RLEC terminating local switching rates to $.005 per minute; and finally “unless the FCC determines otherwise, terminating local switching rates would be reduced to $.0007 per minute in 3 equal installments for RLECs.”  Step 3 would also see the implementation of the $25 rate benchmark (as described above in the summary of the NECA calculations).  NTCA emphasizes that “ICC rate reduction will be deferred in any year in which, for any reason, there is insufficient high-cost support and/or restructure mechanism funding available.”

Step 4: The final step in the RLEC Plan is to “implement an RLEC-specific CAF mechanism designed to re-focus existing RLEC USF support on broadband.”  As illustrated by the NECA chart above, legacy funding would decline as CAF funding is phased in.  NTCA explains that RLEC CAF support is determined “by subtracting the product of an urban broadband transmission cost benchmark times broadband lines in service, from actual RLEC network broadband transmission costs.”

If the RLEC Plan is implemented, NTCA recommends that the FCC review and modify the plan as needed after 3-5 years.  NTCA also presents several “overarching principles” that the FCC should keep in mind as the final rules are drafted; such as not imposing a hard cap on high cost support, allowing the RLEC portion of the fund modified growth of $300m by the sixth year, removing the high cost fund budget after 2017, allocating $300m for mobile broadband service, and targeting $2.2b for areas served by price cap carriers consistent with the Consensus Framework proposals.

In this final comment cycle, the RLEC Plan has gained considerable support from statewide telecom associations and a number of individual RLEC commenters, but not all RLECs are completely on board. With reply comments due this week, it will be interesting to see how the Consensus Framework parties react to the questions and critiques posed in the comments. Although not all RLECs advocate the same reform plan, the RLECs who have participated in this proceeding have presented a tremendous amount of evidence and commentary to illustrate how harmful the FCC's initial USF/ICC Reform NPRM proposals would be for these companies and for the rural Americans they serve. It is now up to the FCC to ensure that RLECs have reasonable opportunities for existing broadband investment and lost access revenue recovery, and ample opportunities to continue bringing the benefits of broadband to high-cost rural areas.

NECA’s chart and calculation explanation is available here, and NTCA’s ex parte filing is available here.


Are You in "Club 2018?"

Telecom 2018 Workshop Participants Debate the End of the PSTN

About a month ago, the Technical Advisory Council (TAC) made a bold recommendation to the FCC: set a specific end date for the PSTN. This recommendation was largely based on a National Center for Health Statistics study that estimated only 6% of Americans would use landlines by 2018. This recommendation set off a flurry of debate, and it also brought the Telecom 2018 Workshop to Washington DC on July 28, 2011. This workshop was the first of probably many events dedicated to discussing issues related to phasing out the PSTN, and I was happy to have had the opportunity to attend. As one of the hosts said at the end of the conference, I will one day be able to tell my children that “I was there” when the industry started planning the end of the 130+ year telephone network.

The workshop really tested the waters to see what different stakeholder groups thought about setting a specific end date for the PSTN—the perspectives ranged across the board from reluctant to highly optimistic. The panelists and presenters came from all corners of the industry too—some of the companies represented were AT&T, Public Knowledge, John Staurulakis, Inc., Google, Acme Packet, Verizon, CEA, Telecordia and TIA. There were individuals from a variety of legal and consulting firms, and there was even surprise appearance by National Broadband Plan Director Blair Levin. The event was organized by Daniel Berninger, president of GoCiper Software, and co-moderated by John Abel from Team Lightbulb.

Two industry leaders gave opening remarks at the day-long event: Richard Wiley, partner at Wily Rein, former FCC Commissioner and leader in the lengthy transition to digital TV; and Tom Evslin, a member of TAC and a leading voice in the 2018 end-date recommendation. Wiley talked about the decades of efforts and evolution to finally accomplish the DTV transition, which he considered a success. According to Wiley, the elements of success in the DTV transition included reliance on the engineering community, open and transparent peer review, rigorous testing, opportunities for all participants to come together, the efforts of the Grand Alliance, and that the evolution was not dictated by the government. I considered all of these elements to be especially insightful for the road ahead in the telecom industry, especially reliance on the engineering community and not expecting or allowing the government to dictate the entire transition.

Wiley also explained that it is important to develop clear objectives, and it is especially important for consumers to understand what is going on by providing information with limited potential for misunderstanding. Wiley made an interesting comment that the eventual transition to an all-IP communications network may result in greater competition and choice, which will create “less need for pervasive government oversight,” and possibly eliminate the “demarcation lines” that currently segment the telecom industry.

Evslin discussed the lifecycle of the PSTN, noting that it peaked during the dial-up Internet era when people were rapidly adding second lines, but then it started to decline when DSL became popular. He strongly believes that the PSTN is nearing the end of its useful life, and he also stated that the more valuable POTS consumers have largely abandoned the service already. Evslin touched on the intertwined issues of reforming USF and ending the PSTN, and he argued that the PSTN is basically being kept alive by government programs. He said that USF was a good program but it has now failed, and the PSTN subsidies are hogging resources that should be going for broadband deployment. Evslin believes that January 1, 2018 should be the official end-date for the PSTN—he thinks that 6 years is a sufficient transition period and each extra year will just diverts resources that should go to IP networks. Evslin envisions an all-IP future where “all phones can be smart,” and the every-day office desk phone could have some really interesting capabilities, like the wireless smartphones we all use now.

The first panel of the workshop, moderated by Harold Feld of Public Knowledge was called “Deconstructing the PSTN: What Does it Mean to Turn it Off?” Valerie Wimer from John Staurulakis, Inc. presented the RLEC perspective in this panel, and she emphasized that RLECs utilize the same facilities for broadband as they do for traditional telephony. She also argued that rural carriers have unique challenges in terms of distance and population density, and Title II regulations are—and will continue to be—important for these companies. Representing the CLEC perspective, Thomas Jones from Willkie, Farr & Gallagher argued that we should think of Telecom 2018 as a transition, not as a retirement of the PSTN. He added that forcing the transition to a new technology will not necessarily solve some of the market failures that exist now, and an abrupt end to the PSTN could have negative consequences for price, choice and competition. Colleen Boothby from Levin, Blaszak, Block & Boothby agreed that technical evolution alone does not always change the market structure, and regulations will still be needed even in an all-IP ecosystem. Overall, this panel was fairly skeptical about the benefits of setting an end-date for the PSTN. Feld asked what would happen if we shut off the PSTN tomorrow; Wimer replied that networks would stop and RLECs would default on RUS loans.

The second panel, “Embracing Innovation Across the Ecosystem,” really brought up a lot of questions that must be addressed in the process of transitioning from PSTN to all-IP: interconnection obligations, non-discrimination principles, network neutrality principles (soon-to-be laws, presumably), device markets, privacy, the role of state utility commissions, open standards, and USF/ICC reform are all areas that must be analyzed closely. I was pleased that this panel discussed the importance of reforming USF and ICC in advance of setting an end-date for the PSTN. Panelists Barlow Keener (Keener Law Group) and Rick Whitt (Google) both agreed that there is a clear need to reform USF from “a world that is less and less relevant” to a world where USF subsidizes IP network build-out and network upgrades.

The rest of the day consisted of individual presentations from industry experts on transition solutions and deployment models.  Here are a few of the points that stood out to me:

  • Mark Uncapher from TIA provided data analysis to illustrate that the decline in business voice lines has been much less dramatic than the decline in residential voice lines, which leads to the question:  How will the transition accommodate PSTN-reliant business customers?
  • Don Troshynski from Acme Packet argued that there is “no one solution to fit all” in delivering IP networks, but successful networks will provide a superior user experience, service flexibility, and be secure, trusted and scalable.
  • Link Howeing from Verizon explained that monopolies are not realistic in an all-IP ecosystem because there are multiple facilities-based competitors and different business models, unlike in a monopoly marketplace. He believes that there are real benefits to setting a firm date for ending the PSTN, but the industry should not get too caught up on a deadline and the corresponding regulatory aspects.
  • Jesse Oxman from CEA talked about the success of the DTV transition and the consumer coupon program for converter boxes. He added that the last deadline push-back during the DTV transition was unnecessary and ended up causing panic and confusion. He thinks most of the lessons from DTV will carry over to the transition to all-IP.
  • Bob Frankston from Frankston Innovating made some interesting observations about how bits are not consumable—they are like the alphabet and you cannot say “you used up the letter B, so you can’t use it anymore.” He used an analogy to compare the PSTN to IP networks, where PSTN users are like tenants with monthly fees and rules to follow, but IP users are like owners because bits can be used in any way, by any device, with no marginal costs.
  • William Manning from Booz Allen Hamilton commented on the challenges for rural areas, saying “if you aren’t in an urban or suburban area, you’re toast,” referring to the apparent capacity challenges for rural ISPs.

At the end of the conference, Berninger went around the room and asked everyone if they were in “Club 2018” or not, and what they thought the next moves should be. I responded that I was indeed in “Club 2018,” but only if USF and ICC are reformed in such a way that rural telecom providers are able to continue investing in IP networks.

I believe that the next step in the Telecom 2018 process will be to get the engineering community involved, and continue bringing together diverse stakeholders to hash out the different perspectives. Generally, most of the attendees were in “Club 2018,” and several others also commented that it will be important to get regulatory issues like USF, ICC and net neutrality figured out before we can move forward. One 2018 skeptic argued that broadband adoption must be increased significantly before we can take away a viable means of communication. Overall, this workshop left me with a lot of things to think about regarding the future of communications, the role of rural telecom providers in an all-IP ecosystem, and how an end date for the PSTN may impact USF and ICC reform (and vise versa).

So, are you in Club 2018?