U.S. Cellular is hoping that President-elect Donald Trump’s administration will ramp up spending through the Universal Service Fund in an effort to improve access to telecom services. That could give the carrier a significant edge over its larger rivals.
The operator is looking for the incoming administration to increase spending through the Universal Service Fund (USF), a system of telecom fees and subsidies managed by the FCC aimed at promoting universal access to communications and broadband services. The fund particularly targets rural users and organizations including schools, libraries and hospitals.
“Over the last couple years we have been in a defensive strategy around USF funds,” U.S. Cellular CEO Ken Meyers said during an investors conference Wednesday. “We make about $96 million a year today in federal support, and that’s dropped by about 40 percent from its peak, which was about $160 million a few years ago. It’s been frozen there under the current administration, and the current administration wanted to drive that further down. It had been frozen; we’d kind of been in a holding strategy there.”
The size of USF’s funding has nearly doubled since 2000 – rising from $1.2 billion 16 years ago to $2.2 billion in the fourth quarter of 2014 – but the agency faces a $210 million annual funding shortfall, according to a group of rural broadband providers. NTCA – The Rural Broadband Association sent a letter earlier this week to the National Governors Association asking the group to highlight broadband as a key item in their communications with Trump’s transition team.
Whether a Trump administration will actually increase investment in telecom for rural users and underserved organizations has yet to be determined, of course. But U.S. Cellular said it has forged some strong allies in the Beltway that could pay dividends under a new president.
“I think with all the talk about infrastructure projects… and the need to connect America that there may be opportunities that instead of being defensive around that revenue stream, we can actually be more aggressive in our positioning about what role wireless can pay in helping to connect America,” Meyers said. “We’ve built strong relationships with many key members of the different congressional bodies that oversee this…. That’s a whole different piece of the revenue story that we haven’t talked about a lot over the last few years as we’ve been defensive trying to protect what’s there (in the USF). Perhaps with different people we’ve got a better growth opportunity.”