To Stack, or Not to Stack

A growing number of government programs support broadband deployment. Some programs allow service providers to combine, or “stack,” subsidies in a project’s funding; others have prohibitions against stacking subsidies built into the program rules. Recently this has come up in the debate on the Federal Communications Commission’s new Rural Digital Opportunity Fund (RDOF). This is the question: Should stacking be allowed, or should it be discouraged? Just how does a provider stack subsidies? One example occurs when a CAF II recipient also receives a state subsidy to build a broadband network in the same geographic region. On the one hand, this looks like double-dipping. The provider is paid twice to do the same project. On the other hand, is the first subsidy sufficient to produce the desired results in that area at a satisfactory rate of return? In many cases, it is not. In the interest of making the best use of public funds, it certainly makes sense that we would not want to pay twice for the same construction. On the other hand, things may not get built if service providers can’t get enough help to make the numbers work. If service providers want to build fiber to the most rural areas of this country, they likely will need either bigger upper limits on broadband subsidies, or the ability to obtain funds from multiple services to make the economic model work.

[Trevor Jones is vice president of marketing, sales and customer service for OTELCO, which owns independent telephone companies in seven states and partners with several community networks in Massachusetts]