FCC DEFERS UNIVERSAL SERVICE REQUIREMENT FOR WIRELESS ETCs

The FCC deferred the issue to another proceeding under way at the Federal-State Joint Board on Universal Service that isn’t expected to result in Commission action until next year. The Joint Board generally makes recommendations for action by the FCC. Known as the “portability proceeding,” it will look at the broader issues relating to eligibility for universal service support, including the rules for designating a carrier as an eligible telecommunications carrier (ETC) and calculating support for competitive ETCs. Equal access, which rural ILECs already are required to offer, mandates nondiscriminatory access for long distance companies, for instance by not requiring the dialing of extra digits to reach some long distance companies but not others.

The deferral may be only a temporary reprieve for wireless ETCs because the FCC has indicated it plans to “tighten the funding flow” of universal service support in next year’s proceeding, Legg Mason said in a research report Tues.: “We nevertheless continue to believe that the 5- commissioner FCC, when it addresses the broader eligibility and cost issues, will take steps that will at least slow the growth in USF funding going to the CETCs [competitive ETCs].” New competitors now receive only about $100 million, a small part of the high-cost support that’s distributed each year, “but the amount is growing rapidly,” Legg Mason analysts said.

At least 2 commissioners indicated in separate statements issued Mon. that they would favor applying an equal access requirement on ETCs and 2 others said they found cost concerns raised by rural ILECs “persuasive.” Chmn. Powell appeared to be the only one adamant about not applying an equal access requirement on ETCs: “I have grave doubts about imposing such a requirement and believe that doing so may well run afoul of the statutory scheme.” Comr. Copps pointed out that he had voted when he was a member of the Joint Board to include equal access in the list and Comr. Martin also supported adding equal access to the list: “Equal access provides a direct, tangible consumer benefit that allows individuals to decide which long distance plan, if any, is most appropriate for their needs… An equal access obligation is also fully consistent with the Commission’s existing policy of competitive and technological neutrality amongst service providers.” Martin issued a partial dissent, saying he disagreed with the decision to postpone action: “In my view, the record in this proceeding provides the Commission with sufficient data to decide whether equal access meets the statutory requirements to be designated as a supported service.”

Comrs. Abernathy and Adelstein, in a joint statement because both serve on the Joint Board, didn’t take a definite stand on equal access other than to support deferring it to the other proceeding. However, they signaled possible support for another key issue -- giving CETCs support based on their own costs, rather than the costs of the ILECs with which they compete. Wireless CETC costs are lower than ILEC costs, meaning such a move would reduce their support. Said the 2 commissioners: “We believe that commenters have raised valid concerns about the ‘identical support’ rule and many of their arguments intersect with positions advanced in support of an equal access requirement. For example, several parties persuasively argue that competitive ETCs should receive funding based on their own costs, rather than the incumbent LEC’s costs. If the Joint Board were to recommend and the Commission were to adopt such a proposal, that would address several of the arguments advanced in favor of adding equal access to the list of supported services.”

OPASTCO Pres. John Rose said his organization agreed with Martin that the record was sufficient to take action on the equal access issue now. He said the FCC “didn’t have to punt to the Joint Board” but since it did OPASTCO would urge the Joint Board and the FCC to take a cost-based route in determining how much support competitors should get. Rose said he also was heartened by another comment by Abernathy and Adelstein that emphasized the need to assure the viability of rural ILECs. They said the FCC “must ensure that companies that have traditionally invested in infrastructure to serve rural and high-cost areas are not subject to a framework that unintentionally undercuts their ability to perform their critical universal service function.” Abernathy and Adelstein also said they were concerned that the state-run ETC designation process “has been conducted in an inconsistent and sometimes insufficiently rigorous manner.” OPASTCO has pushed for FCC guidelines for the process.

CTIA was “very pleased” that the FCC deferred action because the equal access question was better addressed in the broader context of how competitive ETCs were treated, CTIA Regulatory Policy Vp Diane Cornell said. She said CTIA didn’t believe the issue really was about equal access -- consumers hadn’t been complaining about access to long distance carriers -- but rather it was a competitive battle launched by incumbents. It makes no more sense to consider equal access as a wireless ETC requirement than it does to require wireline carriers to provide mobility, she said. Western Wireless Federal Govt. Affairs Dir. Mark Rubin called the FCC action “a big win for rural consumers” and agreed that it made sense to consider the issue as part of the ETC proceeding: “We share the Commission’s desire to have as many of these questions answered as expeditiously as possible. But, we continue to recognize the perils associated with reaching the wrong decisions too hastily.”

Advanced Services Not Added

By deciding to stick to the current list of eligible services, the FCC also denied calls for adding advanced services, a move that Copps said was a disappointment: “I am disappointed with the majority’s conclusion that advanced services are not essential for educational, public health or public safety purposes at this time. I am even more troubled by the conclusion that adding advanced services to the list of supported services would be contrary to the public interest.” Martin said he would have preferred that the agency had opened an inquiry to gather more data on how the universal service support mechanism “could assist the deployment of advanced services, or at least the removal of barriers to such deployment, particularly in rural, remote and high cost areas.” Abernathy and Adelstein’s statement said the decision not to add advanced services “should in no way cast doubt on the importance of such services to rural America.” Congress has made it clear that “universal service is an evolving level of telecommunications services” but right now “a substantial majority of residential consumers have not yet subscribed to advanced services,” the 2 commissioners wrote.