CARRIERS OPPOSE USF SUPPORT FOR WIRELESS RESELLER

In comments filed at the FCC July 26, BellSouth said agreeing to the request would “establish bad precedent” by creating inefficient and artificial competition, placing undue pressure on the size of the universal service fund and adversely affecting consumers. Verizon agreed: “It is not in the public interest to grant ETC status to TracFone or any other pure resellers, especially given the current strain on the high cost fund… The purpose of universal service support is to ensure that there is sufficient investment in infrastructure in high-cost areas so that customers can receive access to quality telecommunications services at rates that are reasonably comparable to rates charged in urban areas. Providing universal service subsidies to non- facilities based providers does nothing to further those goals.”

Dobson Cellular, a facilities-based wireless carrier, said “the relief sought by TracFone would be inconsistent with core universal service principles and the Commission’s recent orders… TracFone has no network, and therefore provides nothing to consumers that the high cost fund should support.” Virgin Mobile said it “recognizes TracFone’s frustration with the present universal service fund system that discriminates against wireless carriers in general, and prepaid wireless operators in particular.” But Virgin said it “does not believe that designation of TracFone as an [ETC] would ameliorate the present inequities.” The company said “the statutory restriction of ETC status to facilities-based providers remains necessary to stabilize USF contribution obligations for all carriers.” Virgin Mobile is a joint venture between Virgin Group and Sprint, which provides the wireless backbone.

Frontier Communications argued that: “As a reseller with no control over service quality or cellular coverage, TracFone will not increase its service territory, improve its service quality, or decrease its prices if it is certified [to receive USF]. The only result from designating TracFone as an ETC would be to increase its profits, while denying potential USF funding to facilities-based carriers.” TDS Telecom said TracFone’s petition asks the FCC “to expand dramatically the class of telecommunications service providers eligible for universal service funding” at a time when the FCC and the Federal-State Joint Board on Universal Service are seeking ways to limit the USF’s growth: “The prepaid service for which TracFone seeks support does not meet the universal service eligibility requirements because it does not provide consumers with a persistent, basic connection to the public switched telephone network, including emergency services.”

But the N.Y. Public Interest Research Group said “all consumer-friendly wireless telephone providers” should be eligible to receive USF support. The universal service program “should connect consumers to the best and most flexible services for their needs,” the group said: “One of the realities of the cellular marketplace is that providers can and will exist while owning and operating little, if any, traditional telecommunications facilities. For this reason, having the requirement that wireless providers actually own facilities seems anachronistic.” The Sustainable Markets Foundation said designation of wireless resellers to receive USF support would “provide more affordable service to low- income consumers in New York State as well as to consumers who live in rural areas of New York where the cost of providing service is high.” TracFone offers prepaid wireless service which “has become an alternative to regular in-home phone service for many low-income consumers, including migrant workers,” the foundation said. “It has also become an alternative to regular phone service for consumers who may not stay at one residence long enough to justify service connnection fees or consumers with poor credit ratings who would otherwise have trouble obtaining phone service.”

TracFone has also asked for ETC status in Fla. and Va. The FCC this week invited comments on those petitions by Aug. 23, replies Sept. 7.