ADELSTEIN PROMISES TO FIGHT USF PRIMARY LINE RESTRICTION
Rural telephone company executives at a convention in Washington applauded loudly Mon. when FCC Comr. Adelstein promised he would fight to defeat a proposal to limit universal service funding to one “primary” line. “I hope it’s dead on arrival at the FCC,” Adelstein said of the proposal by the Federal-State Joint Board on Universal Service. Limits on universal service funding would put consumers in rural areas “at a disadvantage,” he told the National Telecom Co-op Assn. (NTCA). Such limits would “undercut investment in rural America,” he said.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
Adelstein said the joint board described the primary line proposal as a way to ease pressure on the Universal Service Fund (USF). More money is sought from the USF as competing carriers join rural telcos in going after funding. Adelstein said a better way to rein in the growth of universal service funding would be to reform the system by: (1) Tightening the process used to determine whether competitors are eligible for USF money. The process involves a review, generally by state regulators, of whether companies should be designated eligible telecom carriers (ETCs). (2) Funding new entrants based on their own costs, not rural ILEC costs as now is the case. “It can’t be legal that some carriers get funding that is not based on their own costs,” he said. “It was an abdication of our responsibilities for us to punt on this issue.” (3) Limiting funding to only one carrier in areas that have very high costs. There are areas “where funding competitive carriers doesn’t make sense,” he said, adding he wished the joint board had dealt with proposals to limit the number of ETCs in rural areas based on how much it costs to provide service. For example, one of the proposals called for funding only one ETC in places where it cost $30 or more per line to provide service, he said. Regulators should “find a way to wall off the highest cost areas and not allow competition,” he said.
He warned rural carriers that VoIP will be as disruptive to rural carriers as to others but “it is the future,” offers many benefits and just “needs to be done right.” The important thing for rural America is that VoIP providers are required to contribute to universal service, which is the mainstay of rural telephony, he said. In answer to a question from the audience, he said VoIP “may hasten the day” when universal service funds can be used for advanced services such as broadband. “You can’t have VoIP if you don’t have broadband,” he said.
On another issue, he said the ETC decisions occasionally made by the FCC in place of the states are seen as opportunities to set criteria that can be used as guidelines by state regulators. The number of ETC decisions made by the FCC are a fraction of those decided by states, “which is why it’s important we use them as models,” he said. The most recent case was one giving ETC status to Virginia Cellular. The agency required Virginia Cellular to provide equal access and offer the same type and quality of service throughout a geographic area in order to get USF funding. Adelstein said he was “disappointed” the joint board didn’t recommend requiring ETCs to offer equal access, one of NTCA’s goals, but he didn’t think equal access was “the panacea some think it is.” Consumers “almost never ask for it,” he said.
Before Adelstein’s speech, Scott Reiter, NTCA senior telecom specialist, offered a somber picture of the effect of the intercarrier compensation compromise under study by larger carriers. The plan, a form of bill and keep, would basically eliminate access charges, a significant part of rural carriers’ funding, he told an audience of more than 300 people who barely made a sound during the presentation. “It’s got a big financial impact on you,” Reiter said: “We're coming to a fork in the road for rural America. Get it right and reap the benefits of the information age [through advanced services]. Get it wrong and a real digital divide will emerge. Who’s going to invest in a network without an opportunity for financial return?… Financial uncertainty is chilling investment.” Adelstein later said he was concerned that some rural carriers had pulled out of the industry talks but promised the FCC would listen to their views: “Even if you are left out from industry bargaining, there should always be a seat for you at the FCC.”
About 500 rural ILEC officials attending the meeting planned to meet with members of Congress today (Tues.) to advance their views on telecom issues. “There is so much uncertainty,” involving both universal service and access charges, which together represent some 70% of rural telco funding, said Bill Rohde, gen. mgr. of Mark Twain Rural Telephone in Hurdland, Mo.