Thanks to Carol Walsh for sending me a recent article from The Economist (Sweet Land of Subsidy). It’s a look at changes in the USF, the need for subsidies to reach rural corners with broadband and chance that USF is going to help do that.

I think the final paragraph with be of greatest interest to readers here so are probably better well versed on the need for subsidies and broadband…

So far, so promising, but the devil, as always, is in the detail—and many of the details are missing. Stuart Polikoff, vice-president of regulatory policy for OPASTCO, a trade group representing around 460 rural telecom companies, fears his clients will end up losing money when the FCC redirects intercarrier-compensation rates (fees one carrier pays to another on whose lines a portion of a call is carried). Dave Osborn, who heads the Valley Telephone Cooperative, which provides high-speed broadband to 4,600 people spread across 7,300 square miles of south Texas, predicts that change will deprive him of $1.5m a year. The large telecoms companies stand to gain: the FCC says they can reach 83% of the 18m Americans without service. Then there is the question of use: one survey found that nearly half of non-internet users in America saw no need for it. That is a problem that infrastructure alone cannot solve.

I’m going to take adoption off the table for this post, because in the areas they describe, greater adoption is not going to help make the business case. The question becomes – will the subsidies go to the right people who will maintain broadband connectivity in rural areas?

On the one hand, you have to think that the bigger providers can compensate the loss off serving lower population density areas with urban counterparts. On the other hand, the local provider usually has a greater investment in the rural community. Who is the better bet?

As always with broadband articles in mainstream press, the comments are as interesting as the article. A few folks not so interested in supporting rural areas. A few folks with very specific perspective (one seems to promote LightSquared, one includes a link to their wireless service and some question the adoption issue.