RTFC Submits Comments to FCC on Broadband Financing

January 14, 2010

RTFC Capital Connections | Vol. 22, No. 1

RTFC submitted comments to the Federal Communications Commission (FCC) last week in response to a request for comments on addressing challenges to broadband deployment financing. As part of its effort to draft a National Broadband Plan, the commission said it is considering a range of potential funding vehicles in order to answer Congress’ call for an analysis of the most effective and efficient mechanism for ensuring broadband access to all Americans.

“In order to stimulate private financing of the transition to a rural broadband network, there must be support mechanisms in place to assure long-term financial feasibility of broadband providers,” RTFC said. As part of this, “it is essential that there be universal service support for broadband as well as continuation of, or a mechanism to replace, the current access charge system.”

RTFC also urged that assets purchased with federal broadband grant funds (see “First Broadband Stimulus Funds Awarded,” pg. 4) be allowed to be pledged to lenders as collateral for loans. Certain grant applicants have come to RTFC for financing of the required equity portion of a project, RTFC said, but RTFC has been unable to lend to these applicants because assets acquired with the broadband grant funds cannot be pledged to a private lender. “Pledging of all assets is absolutely essential if private lenders are to participate in these projects, because it is the entire system that is necessary to provide service and generate revenues.”

Additionally, RTFC urged that federal funds not be used to finance competition in rural areas. “To get broadband to the most remote rural residents is undoubtedly a challenge that will take investment capital and assured revenue streams. Adding one or more competitors to a market that can marginally sustain one service provider is not the way to successfully achieve universal broadband deployment.”

Select the Quick Link on RTFC’s Web site, www.rtfc.coop, to read the comments in their entirety.

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