Stand-Alone Broadband: Will Rural Users Still Pay Twice What Urban Users Pay?

The Federal Communications Commission's plan to allow rural rate-of-return carriers to collect Universal Service funding for stand-alone broadband may not achieve its intended goal of substantially reducing the cost of that service, cautioned Michael Romano, senior vice president of industry affairs and business development for NTCA—The Rural Broadband Association, in an interview.

Previously rural customers were paying an average of about $120 monthly for stand-alone broadband, while customers in urban areas were paying about $60 monthly for that service, Romano said. “This reform might help get [the rural price] more toward $100 or $110 per month, but not bring it to where it’s ‘reasonably comparable’ with an urban area,” commented Romano. Yet the goal of the nation’s Universal Service programs is to help ensure that citizens in rural areas pay rates that are “reasonably comparable” with those in urban areas. According to Romano, the reasonably comparable rate that the FCC has set for stand-alone broadband is just above $75. Traditionally the Universal Service program has focused on voice services and as Romano explained “Universal Service funds broadband-capable networks, but support was distributed based on customers’ purchase of voice services.” The upshot is that rural carriers often have had to charge comparatively high prices for broadband service. An FCC reform order adopted in March aims to change that by providing Universal Service support for stand-alone broadband purchased without voice service. Stand-alone broadband was just one element of the order, which had the broader goal of helping to bring higher-speed broadband to rural areas and to help ensure that all Americans have broadband available to them.