TOPEKA, Kan. — Do government subsidies go where they should – to areas of Kansas where little to no Broadband service exists?
The Kansas Universal Service Fund is a nearly 20-year old program created to help deliver better telecommunication services to rural areas. Since its inception, nearly $1 Billion of consumer fees have been collected by the state and have been dispersed to eligible telecommunication providers to help equalize the pricing of telephone service in rural parts of the state.
Not long ago, the state legislature attempted to put a cap on the fund and not force Kansas’ taxpayers to pick up the tab for a reduction in money coming from Washington.
HB2131 would change that.
The cable telecommunications industry came to the Kansas Legislature this year with a plea to consider how effectively the money collected by the state from Kansas consumers for the KUSF program is currently being used, according to John J. Federico, president of the Kansas Cable Telecommunications Association.
“We share the opinion of many, that the millions of dollars collected each year from consumer fees are best used where there is currently inadequate telecommunication services in rural areas of the state, rather than as direct or indirect subsidies in communities that already have competition.
As an industry, we are disappointed that more was not done to ensure that subsidies for better telecommunication services will be used in the areas of the state that would benefit most.
We will continue to work with the Legislature and rural telephone companies across the state to find the fairest, and most efficient use of these dollars,” he said.
The bill would allow rural telephone providers to potentially work the system and maximize federal subsidies by increasing phone rates and not be subject to reduction in the Universal Service fund support.
The combination of increased phone rates along with the FUSF subsidy would under current legislation reduce the amount of KUSF subsidy necessary.
HB 2131 changes existing legislation by permitting the Rate of Return (rural) carriers to maintain their existing level of support versus having it reduced as it would do today.
“We fully support the use of KUSF dollars, dollars paid by Kansans, to reach unserved areas in the hard to reach parts of our state,” said Gary Shorman, president and CEO of Eagle Communications. “But many of these rural providers are using their resources to expand outside of their service areas and overlapping areas already served by other private, non-subsidized providers. We believe it is wrong to waste money overbuilding when the KUSF dollars should be focused on unserved customers in unserved areas.”
“As a 100% employee owned, Kansas company, our customers contribute to FUSF and KUSF funds. It is important that KUSF dollars are used correctly to reach those who do not have service,” said Shorman.
However, to many in the telecommunications business, the bill perpetuates the one-sided system of government subsidies that do not solve a problem, aren’t being used to enhance telecommunication services in unserved or underserved areas of the state, and damage competition among providers.
“After almost 20 years the KUSF system needs updating and reform. Raising the cap and throwing more money at it will only encourage the inefficiencies while continuing to leave areas of Kansas without competitive and quality telecommunication services,” said Shorman.
The bill may also be premature, since the Federal Communications Commission has not finalized the restructure of Federal Universal Service Fund support.
“At what point, and after how many more dollars expended to these carriers are we going to recognize that the current KUSF plan/formula is not delivering what is truly needed in Kansas, which is reliable broadband service in every part of the state,” said Kansas Cable Telecommunications Association Board Chair Kurt David.
“Kansas citizens, taxpayers are paying into this fund via their monthly phone bills Yet they are not getting the results that we need in this state.”
A typical Eagle Customer’s combined FUSF and KUSF can add nearly $3.00 to their monthly phone bill. That’s increasing the rate of phone service by 5.6%.
The legislation proposed would allow for rural telephone carriers to have access to additional KUSF funds resulting from changes at the Federal level.
“Nearly all of us, in a variety of businesses, social services, and governmental agencies themselves have become subject to reduced funding and additional tax burdens,” said David.
“We are all being asked to do more with less, consolidate, become more efficient and adaptive, and encouraged to be less dependent on the government to solve our problems.”