The USF generates approximately $4.5 billion in public money, which is now being used to subsidize broadband Internet service in areas of the country where providing service would be too costly - predominantly rural areas of the country. Although broadband providers have been blamed for not bringing broadband to these areas, the reality is that providing broadband to these remote areas would not be profitable enough to sustain a profitable business model to continue providing service to its customers.

The areas which are currently unserved by broadband providers are primarily in areas where the terrain is challenging to run fiber, or too mountainous for wireless broadband, or simply too sparsely populated for commercial providers to invest in.

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At the same time the FCC is trying to expand broadband access in rural America, smart grid technology and other home control technologies are taking off as consumers look for both savings and energy conservation. Smart Grid technology refers to a class of technology which uses a combination of remote home monitoring and automation.

What are the other benefits of broadband?

The use of FCC Connect America Funding by rural utility providers would simultaneously advance two important policy initiatives - smart grid deployment and broadband access. This is the view of the Utilities Telecom Council, who recently announced a merger with the Rural Broadband Initiative (RBI).

According to UTC President and CEO, Connie Durcsak:

"RBI is a visionary group of rural electric co-operatives who are responding to their member customers’ appeals for access to broadband. Not only will their customers reap the obvious benefits afforded by ready access to high-speed Internet services in the areas of commerce, education, and healthcare, but also as the utilities themselves leverage these broadband networks to deploy smart grid and related applications, their customers will realize compound benefit in the form of improved power quality and outage management as well as reduced energy costs. UTC is proud to join RBI in this mission. Together we will connect the parts of our country that current economic models and policies have left behind.”

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One of the primary missions of the newly formed Rural Broadband Initiative is to lobby the FCC to change the rules to allow electric coops to access existing CAF funds. The group cites the $775 per customer price cap imposed by the FCC, which resulted in many broadband providers declining the funds. According to RBI:

"With existing infrastructure and right-of-ways, proven abilities in making investment decisions on rural infrastructure timelines, and steadfast devotion to their member-owners, both organizations believe that rural electric cooperatives are the perfect organizations to oversee the development of broadband in rural spaces."

The last time the Utilities Telecom Council weighed in on a broadband issue with the FCC was related to pole attachment fees. In 2011, the FCC was calling on utility companies to reduce pole attachment fees to spur broadband deployment in rural areas. The FCC estimated that pole attachment fees amounted to almost 20 percent of the total cost of fiber deployment. As a result, the FCC issued a pole attachment order, which reduced the timeline for attaching fiber and other communications equipment to utility poles, and also leveled the rates paid by all broadband providers.

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At that time, the UTC opposed the ruling on the grounds it offered no benefits to broadband consumers, and posed potential safety risks to the public:

"Utilities support broadband deployment but not at the expense of electric consumers and the safety of critical infrastructure," said William R. Moroney, UTC President and CEO in a release responding to the new order. "Unfortunately, the FCC rules adopted today perpetuate rate subsidies for the cable industry and extend them to carriers that provide broadband services. Ultimately, these subsidies are borne by electric utility customers; and it is far from clear whether broadband consumers will see any discount on their bill. Moreover, the new rules impose additional access requirements that threaten to run roughshod over utility safety and engineering practices."

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The electric coop providers aren't the only ones lobbying for access to the FCC funds. Cable companies are also seeking access to the funds on the grounds that the existing providers have failed to expand access in rural areas, and have connected a relatively small number of consumers to fend off competition from other providers by designating the areas "served."