Access to fast, reliable Internet service is no luxury in the Information Age. The Federal Communications Commission recognizes this, having redirected the ratepayer fund once used to bring telephone service to underserved rural areas to provide high-speed online access in areas too remote and sparsely populated to attract profit-seeking telecommunications companies on their own.
The philosophy behind the FCC’s Connect America program is sound, especially given that vital social services such as education and health care are greatly enhanced by high-quality, real-time communication. Telemedi- cine, distance learning, even video chats between farflung family members improve the quality of life for folks living far outside the urban core.
But the FCC’s formula for dispersing funding to the telecommunication companies laying the fiber-optic cable needs refining. Hawaii, Alaska, Puerto Rico, Guam and the U.S. Virgin Islands risk being shortchanged if the federal agency discounts the special challenges companies in those regions face.
The FCC is in the process of finalizing the location-specific funding formula, known as the Connect America Cost Model, or CACM, which will include upward adjustments intended to reflect "unique circumstances and operating conditions in the noncontiguous areas of the United States," which of course includes Hawaii.
Hawaiian Telcom Inc., which is expected to apply for the subsidies, asserts that the FCC has grossly underestimated the cost of providing broadband to the state’s most isolated areas, especially on the neighbor islands, and overestimated the number of potential paying customers in those regions. The latest draft of the CACM, Hawaiian Telcom asserts, overlooks or downplays numerous factors that increase the cost of doing business in general in Hawaii, and the cost of laying fiber-optic cable in particular. Among them: deep ocean channels between the islands where undersea cable must be laid, rugged terrain such as volcanic soil, high shipping and labor costs, and Hawaii-specific environmental regulations.
The company has laid out its objections with the FCC, which had intended to finalize the cost model by the end of this year. Whether the federal government shutdown will delay that timeline remains to be seen. The state Department of Commerce and Consumer Affairs submitted comments to the FCC supporting Hawaiian Telcom’s contentions, and companies and government agencies in the other noncontiguous regions have made arguments specific to their areas.
At stake is a fair share of the $1.8 billion a year the FCC plans to dole out throughout the nation over the course of five years. While access to broadband service is higher in Hawaii than in the U.S. overall, rural residents in the islands are much less likely to have broadband access than Hawaii residents overall. According to the FCC, 17.7 percent of Hawaii’s rural residents —about 6,800 households — lack such access, compared to 1.5 percent of all Hawaii residents.
This technological and informational divide is exactly what the Connect America program was designed to bridge. Subsidies used to attract telecommunication companies to install and maintain broadband networks in difficult-to-serve areas with cloudy prospects for future profits should reflect actual conditions in those regions. Simply put, let’s hope the Connect America Cost Model recognizes the price of paradise.