Sen. Smith (R-Ore.) wrote to FCC Chmn. Powell to clarify comments...

(S- 1380) that would redirect some of the high-cost, nonrural fund, which mainly goes to Bells and large ILECs that serve rural areas (CD Oct 31 p1). That bill, along with a similar one in the House by Rep. Terry (R-Neb.), are commonly known as the “Qwest bills” since more of the funding would go to that carrier’s 14 Western states. Smith had said he believed the program was “unfair” since most funding went to 3 states, Miss., Ala., and W.Va. But Powell raised several doubts about the need for the legislation and pointed out that it was only a small part of the total USF fund ($234 million of an approximate $3 billion fund.) In the letter, Smith said that fund, while small, actually would serve at least 70% of all rural customers. “In most states, these customers -- the majority of rural Americans -- see no benefit from this program,” Smith said. In response to Powell’s comments that many carriers sold rural exchanges, Smith said the bill would focus exclusively on high-cost wire centers. “If a carrier sold its high-cost exchanges, it would not be eligible for funding for those exchanges,” he said. “This approach is simple and fair. The FCC’s current methodology is neither.” Smith also said the bill did include a cap on the overall size of the fund, a provision that Powell said would have to be in the bill or it would create very large increases in the fund.