Wireless Carriers Fragmented on USF Reform

CTIA summed up the argument for wireless having a seat at the table. “Consumers demand mobility and broadband, the group said, calling voice “merely one application that can be offered over broadband and mobile networks.” In numbers and value to users, mobile connections far outstrip wireline access lines, and mobile networks provide “enormous benefits in convenience and public safety,” it said.

But wireless carriers come at the issue from many angles. Verizon and Verizon Wireless, filing together, opposed high-cost support for wireless, saying it would “only further strain the fund.” Verizon also wants a cap and an end to the identical support rule. AT&T supported an advanced mobility fund, but backed Verizon on identical support. (See separate report in this issue.)

Sprint Nextel will submit a proposal for USF reform, it said. Proposals in the NPRMs “risk jeopardizing the goals of universal service,” it said. While incumbent local exchange carriers receive $3 billion in high-cost funding annually, “the Joint Board recommendation does not include a comprehensive review to determine whether these subsidies are well spent or are in fact necessary to promote universal service,” Sprint Nextel said.

Sprint challenged the idea of a mobility fund that would eliminate existing competitive eligible telecom carrier support in favor of the new fund. The joint board made the proposal “without offering any supporting evidence that such a shift would advance the goal of affordable, reliable wireless service throughout the United States,” the company said. “Additionally, administering a new Mobility fund at the state level adds cost and complexity with no apparent benefit.”

Eliminating the identical support rule, as the joint board wants,” is not competitively neutral, is economically irrational, and requires a showing of ‘cost’ that is so burdensome as to effectively eliminate federal high-cost support for CETCs,” Sprint said. A reverse auction is not a “practical solution” for determining high-cost support and raises many questions, it said. “These questions will continue to generate considerable debate, and it would take substantial time to resolve them,” the carrier said.

Alltel, among the most active wireless carriers on USF, demanded comprehensive reform basing a new program on wireless and broadband funds. Such funds would be completely neutral, treating both as “inter-modal substitutes” not complementary services. “It is no accident that the numbers of conventional ILEC telephone lines are declining rapidly while wireless subscribership continues to grow rapidly,” Alltel said. “Wireless is increasingly considered to be a complete substitute for wireline voice services as more consumers ‘cut the cord.'”

Eliminating the identical support rule is a “non- starter,” Alltel said. “The pervasive problems with the current system cannot be solved just by deleting one rule in isolation without responsibly determining what system will replace it,” it said. Reverse auctions, which it proposed last year, could have a role “but must not be used to select a single ETC or to restrict consumers’ choices among services and service providers,” it said.

“The Commission must not waste this opportunity by limiting its efforts to tinkering around the margins of the existing outdated program, which was created on the basis of the last century’s voice-grade services and monopoly market structure,” Alltel said. “It is too late for half-measures.” But it also argued that support for wireless is not the problem: “To the contrary, the funds disbursed to facilitate the expansion, deployment and maintenance of rural wireless services have generated some of the greatest success stories.”

T-Mobile, with 350,000 customers in Puerto Rico following its Suncom acquisition, worries about how one aspect of proposed reform would affect those customers. “The Commission’s proposal to bar CETCs from almost 60 percent of the high-cost funds available to incumbents -- the interstate access support, interstate common line support (ICLS) and local switching support funds -- would effectively deny high-cost support to any Puerto Rico CETCs, which now qualify only for ICLS funding,” the company said.

That proposal also exceeds FCC authority, T-Mobile said. “Congress, the courts, and the Commission have affirmed repeatedly that the distribution of universal service support must be competitively neutral,” the carrier argued. Unlike Sprint, T-Mobile sees a reverse auction as workable. “Properly structured reverse auctions will preserve the high-cost funds while supporting competition and technological neutrality in underserved high-cost areas,” T-Mobile said.

The Rural Telecommunications Group endorsed killing the identical support rule, but found little else to like. The mobility fund would “discriminate against one class of carrier.” Reverse auctions, RTG said, are “ill-advised and will result in consumers in high cost areas receiving second-hand telecommunications services.”

The Rural Cellular Association and Alliance of Rural CMRS Carriers said the reform proposals would “do more harm than good” and should be rejected. “The Commission has failed to seize the moment by pursuing long-promised comprehensive reforms that would adapt high-cost support to marketplace and technological realities,” the groups said.

Small carrier GCI said the proposals in the NPRM offer neither a “comprehensive” nor a “long-term” fix. “All three NPRMs undertake ‘Ready, Fire, Aim’ changes without fundamentally defining the objectives and outputs that the Commission and Joint Board seek to achieve through high cost support,” GCI said.

Wireless carrier SouthernLINK said the joint board plans to create three separate funds “violate the principles of competitive and technological neutrality and, thus, must be rejected.” The group opposes a reverse auction. Instead, the FCC should reshape the program by determining which services are typically available in urban areas and then define two service packages, with and without carrier of last resort and open access obligations. “Any type of provider (i.e., wireline, wireless, ILEC, CLEC, cable company) would be able to bid upon either… package so long as the provider is capable of providing the services defined in the package and can meet the applicable service standards,” SouthernLINK said. A minimum number of each would have to be available across the country.