The Montana Public Service Commission directed nearly $110 million to rural broadband access. As part of the Eligible Telecommunication Carrier annual recertification, more than 20 telecommunications carriers were recertified to continue receiving federal “high cost” subsidy and other forms of federal rural broadband funding.
“There’s a market failure for services like this. This provides broadband service in areas where it otherwise would not exist,” said Commission Vice Chairman Travis Kavulla, who chaired the meeting. The market reveals that the cost of providing the service exceeds the ability or willingness of consumers to pay.
When approved by the PSC, telecommunications service providers in Montana become eligible for certain programs that help provide broadband service to rural areas. Those programs are supported by a mechanism known as the Universal Service Fund, which is funded by a tax on interstate telephone service.
The two most prominent forms of telecommunications subsidy are High Cost Support and the Lifeline program. High cost support provides a subsidy to telecommunications carriers which provide broadband services in areas where it would otherwise be prohibitively expensive. The Lifeline program offers a discount for telephone and broadband service for some low income customers.
The PSC’s vote directs approximately $108 million to the supported carriers. While the program began as a way to support voice telephony in rural areas, in recent years spending has tended to support deployment of fiber-optic cable, which also provides broadband internet service to rural Montana.
Commissioner Roger Koopman said, “I disagree that there’s a market failure. We need to be a little more imaginative about what freedom and free people can accomplish.”
The vote was 4-0, with Commissioner Koopman abstaining.
As part of the Commission’s vote to re-certify the subsidized carriers, the Commission commenced an investigation of Northern Telephone Co-operative, headquartered in Sunburst, Mont., which will require the company’s management to respond to allegations about whether the co-op made inappropriate non-arm’s-length and no-bid deals and paid for spousal travel with funds that may have included these subsidies. “I am sure the vast majority of this money is appropriately spent, but when an allegation of this nature reaches the Commission, we take it very seriously,” said Kavulla.