STANTON SEES JOINT BOARD AS DIVIDED ON UNIVERSAL SERVICE
The Federal-State Joint Board on Universal Service appears to be “very much divided” in its effort to seek improvements in the Universal Service Fund (USF)and, as a result, probably will present the FCC with some “conflicting views,” Western Wireless CEO John Stanton said Tues. in an interview with Communications Daily. Even in areas where there’s a majority view in the Joint Board’s recommendations, there probably will be an “active minority” view, perhaps leading to divisions at the FCC as well, Stanton predicted.
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The only real solution to USF problems caused by dwindling funds and competitive stresses is “a thorough, comprehensive review of the whole system” -- universal service, access charges and the rate-of-return regulation used by PUCs to oversee some rural ILECs, he said. “The system is fundamentally flawed” and unable to keep up with the pressures for change caused by VoIP and other technologies, he said. However, “it will only change in the context of a crisis” and Congress ultimately will have to be involved, Stanton said. “I believe a crisis is on the horizon,” he said, caused by new technologies such as VoIP that are capturing revenue that traditionally has been tapped for USF contributions, plus similar revenue losses from “downward pressure on long distance rates” and the contraction of the CLEC industry.
Rural ILECs have blamed Western Wireless and other competitive ETCs for some of the funding pressures on the USF. Asked how much USF money Western Wireless used in the states where it had eligible telecom carrier (ETC) status, Stanton said only 5% of its domestic revenue came from universal service funding, compared with the “enormous amount” of USF funding that supported some rural ILECs. He said Western Wireless had ETC status in 14 states and one Indian reservation, and was seeking certification in 9 more states. Stanton said it used universal service money to expand its service in rural areas.
Asked about voluntary service commitments by some competitive wireless companies to assure they obtained certification, Stanton said his company wasn’t against commitments but believed there should be consistency among states and applied to all carriers, competitive and rural ILEC alike: “We're happy to talk about consistent requirements. We're happy to commit to service quality levels. We're willing to talk about requirements, but we would like them to be fair.”
Stanton said some proposals before the Joint Board were “code” for efforts to stop wireless ETCs from gaining funding. For example, a proposal that has been debated among Joint Board members to set public interest requirements for competitive ETCs is “code for ‘exclude wireless,'” he said. FCC Comr. Adelstein is among supporters of the proposal to set public interest hurdles for ETC funding, for example by setting benchmarks for how many competitors should get funding in a given area (CD Dec 5 p3). Actually, a proposal to limit universal service funding to primary lines was once such an effort, but now also is opposed by rural ILECs because it would bar them from using USF funds for broadband development, he said. The idea still is being debated among Joint Board members, he said: “Maybe they think since both [competitive ETCs and rural ILECs] dislike it, it’s the right way to go.” The primary line limit “is like putting a Band- Aid on a broken arm,” he said.
Asked whether Western Wireless’s efforts to gain a foothold in rural areas had been difficult, Stanton said “it has been a struggle [but] technology will win out” because one “can’t stop progress.”
Meanwhile, rural ILEC associations, joined by NECA, urged the FCC to reject a Western Wireless petition asking for elimination of rate-of-return regulation. The proposal already is under consideration in other proceedings, the group argued. “A new rulemaking to consider matters that are already under consideration elsewhere would be contrary to basic principals of administrative law and would be a waste of the Commission’s time and resources,” the group said. In a separate filing, CenturyTel said “rate-of-return regulation best serves the needs of many parts of rural America” although the FCC ought to encourage alternative regulation “for the limited number of rural carriers that could operate successfully” that way. CenturyTel, which operates rural telephone companies in 22 states, said “irrational exuberance in certifying [competitive] ETCs, and not support for rate- of-return ILECs, poses the greatest threat to universal service funding mechanisms.”
Nextel said it endorsed the Western Wireless petition because Nextel “supports initiatives that seek to decrease inflation of the Universal Service Fund and make the USF program economically rational.” The Western Wireless proposal is “just one of the approaches the Commission can take in addressing continuing demands on fund growth,” Nextel said: “Western Wireless’s petition delves down to the root of the issue rather than reflexively blaming competition and competitive service providers for destabilizing the USF.”