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New York, Pennsylvania want FCC to hand over unused rural broadband funds

By   /   January 5, 2017  /   News  /   No Comments

After a heavy hitter of the telecom industry declined to accept funds from the Federal Communications Commission designed to help fuel rural broadband expansion, some states are asking the regulatory body to give the money to them.

New York and Pennsylvania have announced their intentions to go after the funds from the Connect America program, worried that providers in other states could nab the money through a competitive bidding process.

Bethany Schmidt/Nebraska Watchdog

NO THANKS: Verizon declined to accept money from FCC’s Connect America program to expand rural broadband. Now, some states are going after the funds.

New York wants to combine the $170 million that Verizon turned down and add it to the $500 million the state has allotted to a program to grow rural broadband there.

Pennsylvania wants the $23 million that Verizon didn’t accept there to go to other providers in the Keystone State to grow high-speed internet. Both the Pennsylvania Public Utility Commission and U.S. Sen. Bob Casey, D-Pa., are asking the FCC to ensure the money stays in state.

“Losing all or part of this funding would be unfair to Pennsylvania residents in rural and high-cost areas and contrary to the FCC’s goal of ensuring broadband access for all,” Casey wrote in a Dec. 22 letter to FCC Chairman Tom Wheeler.

The Democratic chairman will leave office when President-elect Donald Trump takes office Jan. 20.

Although he’s told Republican lawmakers he won’t take significant action for the remainder of his tenure, Wheeler could push through an order related to New York’s petition because of the generally bipartisan support for rural broadband expansion.

Wheeler’s FCC has touted plans to auction off those unused Connect America funds, which would likely spread the money initially slotted for New York and Pennsylvania to other states, but the FCC didn’t plan to act on the proposal for a few years.

Sen. Charles Schumer, D-N.Y., the incoming Senate minority leader, said last spring, when Verizon turned down the money, that the FCC should just pass it on to the state.

“The federal government should invest — not divest — in upstate internet connections,” he said. “That is why I am urging the FCC to immediately reverse course on this senseless proposal that takes money away from upstate New York.”

Verizon hasn’t said publicly why it declined to participate in the program, which requires companies to meet a variety of targets — including faster internet speeds — in return for accepting the money. Verizon spokesman told the Associated Press that the company complies with a Pennsylvania state law that requires phone companies to provide service to any customer who requests it, though AP noted the state doesn’t require speeds as fast as Connect America.

Tom Struble, policy counsel for TechFreedom, told Watchdog.org that since deploying new networks is quite expensive and they must often operate for years or decades for a provider to recover up-front deployment costs, “Verizon must surely feel it’s unlikely to recover the money it would need to invest to cover the remaining gap between available [Connect America] funds and the total cost of deployment.”

Struble noted that New York and Pennsylvania are pursuing public-private partnerships at the state and local levels to boost deployment without resorting to government-owned networks, which could better enable rural projects to succeed.

“Their hearts seem to be in the right place,” he said.

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Johnny Kampis is National Watchdog Reporter for Watchdog.org. Johnny previously worked in the newspaper industry and as a freelance writer, and has been published in The New York Times, Time.com, FoxNews.com and the Atlanta Journal-Constitution. A former semi-professional poker player, he is writing a book documenting the poker scene at the 2016 World Series of Poker, a decade after the peak of the poker boom. Johnny is also a member of Investigative Reporters and Editors.