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More Money Coming for Technology in Rural States?

New Hampshire Sen. Kelly Ayotte has proposed legislation to help rural states get a larger percentage of the Universal Service Fund.

by / January 20, 2014
U.S. Sen. Kelly Ayotte, R-N.H. credit: flickr/gageskidmore

Rural communities desperate for money to invest in technology upgrades and expanded broadband access could have a new best friend in New Hampshire Sen. Kelly Ayotte.

Ayotte introduced legislation last month that would return 75 percent of all funds collected through the Universal Service Fund (USF) – created by the FCC in 1997 to support telecommunications services in public areas such as libraries and schools – back to rural states.

Currently a percentage of the USF is distributed back to states using a complex formula. The USF Equitable Distribution Act, S. 1766, would change the distribution formula and require that any state designated “rural” under the act would be given back 75 percent of their USF contributions. The Act defines “rural state” as having less than 200 people per square mile.

According to a press release from Ayotte’s office, New Hampshire only receives 37 percent of what it pays into the USF, donating $37.9 million to the fund in 2011, receiving $14.2 million back.

“A portion of Granite Staters' telephone bills goes to the Universal Service Fund, and there's no reason why we should be shortchanged by a program that's supposed to help deploy critical communications services to every area of the state,” Ayotte said in a statement. “The legislation I introduced would reform the Universal Service Fund to ensure that more of the money New Hampshire citizens contribute to the fund is invested in our state instead of subsidizing other states."

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Liz Johnson, Ayotte’s press secretary, refuted the notion that states not classified as “rural” under the bill might have a bigger need for USF money due to population size. In an email to Government Technology, Johnson said states that have more people are not necessarily more expensive to provide universal broadband deployment, as it is cheaper for providers to reach customers in urban and suburban areas.

Former FCC Chief of Staff Blair Levin, now a communications and society fellow for the Aspen Institute, an education and policy studies organization, questioned what type of problem Ayotte was trying to solve. Levin told Government Technology that if Ayotte was trying to solve just the problem of New Hampshire being shortchanged, he understands the motivation behind the bill. But he’s not supportive of the national repercussions the measure could have.

“If we switch to thinking that every state should get at least ‘X’ percent back of what they put in, that has the appearance of fairness and in that sense is a very sympathetic argument,” Levin said. “But if you look at its long-term impact … I think ultimately it moves it to a very different kind of program.”

When asked how Ayotte arrived at the 75 percent figure in the USF Equitable Distribution Act, Johnson said the percentage acknowledges unique deployment challenges numerous states have, such as the mountainous terrain in Alaska. She added that ideally, New Hampshire should receive a dollar-for-dollar return on its investment to the USF.

Levin felt Ayotte’s bill narrowly focuses on an understandable, but “ultimately not productive” view that every rural state should get a minimum percentage of what it contributes to USF back. Levin argued that would be unfair on principle to nonrural states.

“If the point of politics and what we’re doing is simply appropriations committee kind of politics, which is ‘I want mine, Jack,’ I get it and understand it,” Levin said. “But that’s now how Universal Service has been. And if you get everybody thinking that way, the program will disappear. And rural America will be a lot worse off.”


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Brian Heaton

Brian Heaton was a writer for Government Technology magazine from 2011 to mid-2015.

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