States, Missoula Backers in Deal on Early Adopter Payouts

“This amendment is a significant step in the direction of a more fair and balanced approach to addressing a critical problem the original Missoula Plan failed to address,” the letter said. The plan, sent in July to the FCC (CD July 25 p1), endorses gradual 4-year “rebalancing” to one compensation rate for most calls. Replies on the plan are due at the FCC today (Thurs.).

Anne Boyle, a Neb. PSC member, told us the original plan would have hurt states that had cut rates. “It was so unfair to states that had already gone ahead and done what the telecom act said states should do which is to be responsible for their interstate costs, lower access charges and to try to move away from a very huge dependence on the federal Universal Service Fund,” Boyle said. She’s pleased with the new deal, he said: “It was a grueling process and it took many meetings.”

Me. regulator Kurt Adams told us the plan as filed would have hurt early adopter states. “We had a choice to make,” he said: “We either opposed it or approached the proponents to ask for changes.” Other states may sign on, he said: “The amendments that we offered do more than just help these 5 states. Indeed, they help a lot of states.”

“We have a ticking time bomb on our hands,” a Missoula proponent said: “Once you deploy broadband ubiquitously, and that’s our national goal, access revenue doesn’t exist any more… What we have here and what this amendment this will help facilitate is a more rational transition.”

The Missoula Plan as proposed called for an early adopter fund of at least $200 million to protect consumers in first-mover states. In the plan filed during the summer, proponents committed in a footnote to working with state commissions “to help size the Early Adopter Fund and determine how that fund should work when states have rebalanced access rates through state funds, local rate increase and/or new line items.”

The agreement between Missoula advocates and staffers for the 5 state commissions lays out how the money will be paid. It ties disbursements to federal benchmarking. The filing calculates the impact on each state. “Benchmarking simply means that we looked at, in effect, the local revenues that a consumer pays, the basic local rates. We looked at if there are any state subscriber line charges or state line items that consumers are paying, and we looked at the interstate SLC as well,” a source involved in the talks said: “If there was a state fund, we looked at the state fund as well.”

The high benchmark target is $25 a month. The agreement defines 4 categories for reimbursement. Under one example given in the filing, if the residential revenue per line in a state is $27, and the residential SLC must increase $2.75 to replace lost revenue as access charges are lowered, the $2.75 comes out of the fund. On the other hand, if revenue per line is $24, and the SLC would have to increase $2.75, the fund would offset $1.75 -- the cost above the benchmark.

“Several of the early adopter states have raised issues about the restructure mechanism established by the Missoula Plan to help replace forgone intrastate access revenues through contributions made by end users in all states,” the document filed at the FCC late Tues. said. Early adopter states say the mechanism could mean disproportionate burden on their customers. Early adopter states have eliminated or slashed intrastate access charges, so their carriers may be entitled to fewer or even no RM dollars, they say. And those in early adopter states already bear the burden of funding “an explicit state universal service fund or higher local rates caused by their state’s reduction of access charges.” - - Howard Buskirk