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40 Congresscritters signed a letter demanding Julius Genachowski raise the 4 megabit minimum rate for U.S. broadband. Bravo for them.

    “The plan sets us on a course toward a greater digital divide between urban and rural areas. As it is currently written, the NBP proposes a 4 megabits per second rate (Mbps) as the goal for rural areas, while dictating a 100 Mbps threshold for more urban areas.  Such a low threshold for rural residents and businesses is not enough broadband capacity for the next several years, let alone the future demands of our increasingly digital economy.”

     Fine sentiments even if this this particular letter is mostly a front for lobbyist make-believe. The letter was inspired by rural telcos as part of their campaign to maintain unreal levels of subsidies. I didn't see any of these Congressmen and Congresswomen working on the broadband plan to improve rural broadband. Instead of providing suggestions for actually building better networks, their path to "improved broadband" is a smokescreen for giveaways under intercarrier compensation and USF.

      I'm a strong supporter of universal service and believe the best way to protect it is to eliminate the waste in the system. There's a real need for about $5B/year in subsidies to offset high rural costs, but the government is paying $20B/year. Everyone deplores it, but the politics of ending the ripoffs have been hard. The primary business of several multi-billion dollar companies is shoveling money in the front door from the regulator and out the back door to investors. Their CEOs go to Wall Street and brag "Our profits are twice as high as the Bells!" (Exaggerated.)

    Given that the Bells are among the most profitable companies on Earth, the RLEC cash flows are remarkable. When Kevin Martin heard what the companies were telling Wall Street, he hit the ceiling. Ultimately, his last major act was going to be saving several $billion in USF and ICC that was going straight to the company's dividends.

Michael Copps and Jonathan Adelstein blocked it at the last minute and left it for Julius and Blair to deal with. That was a bad mistake - if they had supported Kevin, the Republicans would have to share the political cost of doing the right thing.

     Behind the scenes, the big telcos and cablecos are also using the call for broadband to get a subsidy they don't need. Verizon and AT&T stand to collect between $10B and $30B if the publicly discussed plans move forward unthinkingly. That became clear as the plan developed. No one in government thinks it right to throw money at some of the most profitable companies in the world, but their announced strategies will have that effect.

     Bell lobbyists were proudly talking about $2B+ per year in increased subsidies they were sure they are getting. The details in the plan and the NPRM were so vague I'm not sure that's the real result, but it looks likely. When I realized how this was going, I pressed Blair Levin and Carol Mattey to follow the money and determine the practical impact of the changes they propose. That's a massive job even if you have all the data - exactly what the plan was equipped to do. I didn't have much hope, but I thought that if they did the calculations and saw "cui bono" they might re-think some of the proposals.

      As far as I know, no one at the FCC has done that calculation. For any given proposal, how much more (or less) goes to the small telcos? How much to the mid-sized ones? How much to the Bells and cablecos?

      Most important, how much are consumers being ripped off by high USF and ICC charges?