FEDERAL COMMUNICATIONS COMMISSION 
WASHINGTON 
OFFICE OF 
THE CHAIRMAN 
The Honorable J oni Ernst 
United States Senate 
111 Russell Senate Office Building 
Washington, D.C. 20510 
Dear Senator Ernst: 
July 6, 2017 
Thank you for your letter regarding the importance of delivering to all Americans­
including those in high-cost rural areas-affordable access to high-speed Internet access. As you 
know, I grew up in Parsons, Kansas and have traveled during my time at the Commission to 
locations as varied as Barrow, Alaska, and Laurens, Iowa, and Carthage, Mississippi . I have 
seen with my own eyes what access to affordable high-speed Internet access can do for a 
community-for its schools, its libraries, and its hospitals and for those Americans struggling to 
stay afloat. 
Four years ago, I called on the Commission to tackle the issue of affordable broadband in 
rural America head on. The problem back then was that the Universal Service Fund predicated 
support on providing voice service. This meant bundled telephone/broadband offers could get 
support while standalone broadband could not. The perverse result was that carriers were 
incented to take universal service support and offer telephone/broadband bundles (even if 
consumers could not afford them) while not offering standalone broadband. The business case 
for stand-alone broadband didn't exist for some rural telephone companies-not because 
consumers didn't want it, but because our arcane rules penalized companies for offering it. 
· I wish I could tell you that the FCC has fixed this problem. But as your letter rightly 
points out, we have not. Despite the Commission's efforts in the 2016 Rate-ofReturn Reform 
Order, I still hear from small carriers that offering stand-alone broadband would put them 
underwater-that the rates they have to charge exceed the rates for bundled services because of 
the different regulatory treatment. This is unfortunate but unsurprising. As I said at the time, the 
Order needlessly complicated our rate-of-return system and in many ways made it harder, not 
easie1:, for small providers to serve rural, America. 
To provide somerelief, my colleagues in recent months have urged me to work through a 
punch list of lingering issues from the Order. I have accordingly directed staff to work through 
that list. In April, the Commission amended a rule that would have disallowed capital expenses 
to any project exceeding a Commission-set threshold by even a dollar; now providers can 
complete efficient projects so. long as they are willing to absorb any costs above the threshold. 
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In 
May, I circulated an order to address problems with two calculations made in the Order-one 
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges 
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain 
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duplicative reporting requirements imposed on rural providers. I look forward to continue 
working with my colleagues on these issues. 
Although I' hope these changes will help, you may be right that something more 
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing 
broadband deployment in rural America, we cannot ignore that problem-for time is not on the 
side of rural Americans. 
r appreciate your views on this matter. They will 'be included in the record of this 
proceeding and considered as part of the Commission's review. Please let me know ifl can be 
of any fuJiher assistance. 
Sincerely, 
-~ V· ~~ 
Ajit V. Pai