WESTERN STATE POLITICIANS SUPPORTING TERRY, SMITH USF REFORM

Neb. PSC Chmn. Anne Boyle (D) and the Western Governors Assn. (WGA) are among several Western entities pushing for the USF reforms in bills by Rep. Terry (R-Neb.) (HR-1582) and Sen. Smith (R-Ore.) (S-1380). The WGA has adopted a resolution supporting the legislation and Boyle told us she had been working the phones to create support from other PUC members around the country. The bills would change the distribution method for the USF’s “nonrural high cost” fund, which distributes $240 million each year to Bells and other large ILECs to help provide rural service -- 7% of the total USF fund.

However, critics contend that few states receive the fund, as Miss. and Ala. receive the lion’s share while 41 other states get nothing. Under the current distribution model, only Wyo. and Mont. in the West receive any funding. The legislation would figure the fund distribution by wire center instead of under the current formula that determines funding levels on a statewide basis.

Boyle says it was an issue of fairness, and many PUC members were surprised to hear about the apparent inequity of the fund. She’s been trying to raise support from PUC members in Mich., Cal., Ia., Mich., N.D., Tex. and Wash. “They're all surprised this is out there,” she said. Boyle said she was trying to attract more recognition to the issue and the legislation. “I would like to spend all my time working on this,” she said. However, she acknowledged there were many more pressing issues for PUCs and that there was not the focus she would like.

Mich. Gov. Jennifer Granholm (D), in addition to the WGA, expressed her support in a letter to Rep. Stupak (D- Mich.), a co-sponsor of HR-1582. Mich. isn’t a Qwest state and Boyle and other supporters stress that the bill is not just a “Qwest bill,” but would benefit many carriers. Boyle said Alltel would benefit in Neb., in addition to Qwest. HR- 1582 has 60 co-sponsors, with a majority from Qwest states. S-1380 has 17 co-sponsors, also with most in Qwest states.

Supporters have formed a Coalition for Equitable & Affordable Rural Services, the CLEAR Coalition. Members include WGA, Granholm, National Grange, 14 union locals of the CWA, the Congressional Western Caucus, the Latino Coalition, the Hispanic Business Roundtable and the PUCs of Neb., N.D., and Wash.

But a BellSouth (BS) spokesman said the fund was used to support rural customers, not states with large rural areas. “The fact is there are more rural customers of large phone companies in these states,” he said. “It’s not about how much rural real estate is in those states. It’s about rural customers, and the fund is targeted toward customers, not states.”

The BellSouth spokesman said the company was pushing for a more comprehensive solution to USF problems, but said the funding, not distribution, part of USF needed the attention. “This is not going to solve the USF problem,” he said of the bill. Boyle acknowledged more needed to be done with USF, but said that was one area where Congress could act today. “This might not be addressed for years” if Congress waits for a comprehensive USF bill, she said. BS said it supported reforming which telecom services contributed to USF, specifically citing the need for making IP telephony and cable modem services responsible to the USF.

Several other parties issue appear to be neutral on the legislation. Sources said OPASTCO, NTCA, USTA and the other Bell companies had taken no position. SBC said: “We join the call for Universal Service Fund reform and encourage Congress to take a comprehensive look at the entire U.S. support system.” House Commerce Committee Chmn. Tauzin (R- La.) has said he supports legislation that’s comprehensive.