cations, CenturyLink, and Windstream. In return for this money, carriers are required to build broadband facilities statewide, throughout their territories. The Response of Rural Carriers to Universal Service Fund and Intercarrier Compensation Proposed Reforms The reforms proposed by the Federal Communications Commission (FCC) might adversely impact the more than 1,100 small rural carriers that depend on universal service fees and Intercarrier Compensation (ICC) for a large percentage of their annual revenue. ICC alone accounts for an average of approximately 30 percent of annual revenue, according to the National Exchange Carriers Association (NECA). NECA prepares interstate access tariffs and administers pools of access fees for small carriers in high-cost, mainly rural areas. Rural carriers agree that there are inefficiencies in both the Universal Service Fund (USF) and ICC. They support regulations to curb traffic pumping schemes, and they also support subsidies for broadband. However, they feel that there should be a lon- ger transition between supports for public switched telephone services and supporting only broadband services. Although the FCC's February 2011 Notice of Proposed Rule Making (NPRM) mentions supporting middle-mile networks, it is concerned that these subsidies will not be sufficient to adequately support broadband and mobile networks. Middle-mile networks transport traffic from a local phone company's territory to the Internet. Lack of robust, affordable connections to middle-mile networks is a key factor inhibiting broadband capacity. See Chapter 4, "Carrier Networks," for more information on mid- dle-mile networks. Regulatory Issues Rural carriers would also like to keep rate of return regulations SO that they will have sufficient funding to repay loans for capital upgrades. They fear that they will not be able to adequately maintain and upgrade their networks. They are also concerned that without subsidies based on rate of return, their broadband prices will not be afford- able for their