ORLANDO--In his first formal presentation to an industry association, FCC Commissioner Robert McDowell gave the following advice to members of the National Telecommunications Cooperative Association at the group’s annual meeting in Orlando, Fla.: Take advantage of the upcoming 700 MHz spectrum auction to arm yourself for the future.

Warning the rural industry that it is “on a collision course with disaster” primarily due to a broken Universal Service Fund structure, McDowell said that while he and others are working to fix the USF and address other important issues such as inter-carrier compensation, competition that will pave the path to the future.

“I believe in free markets and that government should only step in where the free market fails. And in rural America, it did,” McDowell said, adding that it was right that the government stepped in and established systems such as USF.

“But we are at a crossroads. Today the system is broken,” McDowell said. "The system is [designed] to take a lot from the few, but the few are getting fewer,” he said, referring to mergers and acquisitions as well as the exemptions enjoyed by some VoIP providers.

McDowell is a former senior vice president and assistant general counsel at CompTel, an association representing competitive local exchange carriers. As a commissioner at the FCC, McDowell said he voted for expanding the pool of USF contributors, but only on an interim basis.

He said the hope was that expanding the contribution base would lower the contribution factor, but that unexpected developments have negatively affected that formula.

“We can’t keep asking more folks to prop up a failed system,” McDowell said. So the FCC is working on comprehensive reform for the long run. He said goals for reform should include slowing the growth of the fund, broadening the base of contributors, reducing the contribution burden for all if possible, ensuring competitive neutrality and eliminating fraud and abuse--should it occur.

McDowell said that the fund can’t afford to finance broadband connectivity under the current structure. “But there is hope, and it’s happening right now,” he said. “Significantly more Americans are adopting broadband every day.”

He said as of June 30 last year, high-speed access lines increased 26% from 51 million to 64 million, but that the mobile industry showed a much larger increase in broadband access: 2187%

He said we should never stop striving for ubiquitous pipes that are fatter and faster, but that “Wireless broadband is the wave of the future. I strongly encourage you to adapt.”

He cited an NTCA 2006 wireless survey that said half of rural providers are considering offering wireless service. “I strongly encourage all of us to take the plunge now,” McDowell said.

He said it is important to start the proposed 700 Mhz spectrum auction no later than this Fall. He said the commission hopes to have the rules done by the end of March, although he said he tends to be optimistic and impatient in that regard.

“I hope you will be active participants in the 700 MHz auction. America needs you to walk away as successful bidders,” McDowell said. “Don’t fear the coming changes. Adapt to them. Don’t just try to survive; be determined to prevail. You are only limited by your own self-confidence.”