OPASTCO, WTA Back Revised Martin Overhaul Plan

“The plan, as modified, is beneficial to rural subscribers and allows a stable revenue flow for at least five years for small incumbent companies that serve rural America,” said Kelly Worthington, WTA executive vice president. It’s “critical” that the FCC adopt the modified plan at the agency’s Nov. 4 meeting, said OPASTCO Chairman Keith Oliver in an interview. Because of the election, an FCC delay could result in the agency not acting on a comprehensive revamp for several months, he said. Oliver was “pleased and impressed with FCC Chairman Martin’s genuine concern that the reform plan not unintentionally harm rural America,” he said.

Beyond the concessions, OPASTCO and WTA said Martin’s plan contained several other “rural friendly” provisions, including “positively addressing phantom traffic and eliminating the identical support rule.” The groups also liked the plan’s designation of rural ROR carriers as the default broadband carrier of last resort, they said.

Not all small rural carriers are happy. The NTCA agrees with the substance of the groups’ modifications, but it’s “negligent” for OPASTCO and WTA to endorse a plan they haven’t fully read, said Dan Mitchell, NTCA legal vice president, in an interview. He suspects that Martin, “desperate” to get support on his plan, is using OPASTCO and WTA as “pawns,” Mitchell said. NTCA is the “true representative” of rural rate-of-return independent carriers, he added. OPASTCO and WTA’s views may be influenced by member TDS, which owns U.S. Cellular, the sixth largest cellphone company in the U.S.

OPASTCO and WTA have not read Martin’s draft order, which isn’t publicly available, said Randy Tyree, OPASTCO director of legislative and industry affairs. But it’s “not unusual” for the FCC to keep draft orders private, and the rural groups felt a responsibility to try to work with Martin. Calling him, OPASTCO or WTA names isn’t “constructive,” he said. And TDS is a “very knowledgeable” OPASTCO and WTA member that had a right to be at the table, he said.

Martin made several concessions for rural rate-of-return carriers, OPASTCO and WTA said. Under the modified plan, rural ROR carriers automatically qualify for USF interstate common line support “without any other conditions applying, particularly those related to the way a carrier is regulated in the state jurisdiction,” the groups said in an ex parte filed Wednesday. The support would have two parts. The first, effective for the entire 10-year transition, recovers all revenue loss not recoverable through increased subscriber line charges, they said. The second, effective for five years, recovers revenue lost due to carriers’ access line loss and declining minutes of use, they said. The latter component would be capped at $100 million in year one and $500 million in year five, with $100 million added to the cap each year.

Also in the modified Martin plan, rural carriers won’t be financially responsible for transporting local calls beyond boundaries of their local service areas. And, though the plan still requires rural carriers to build out broadband to 100 percent of their territory, the plan allows carriers to use satellites to serve their highest cost areas. Carriers would only be able to use satellites for a maximum 2 percent of their total loops within a study area, and only for loops where cost exceeds 1.5 times the study area average loop cost, Oliver said. Finally, USF support for rural rate- of-return carriers will be based on 2008 costs, rather than 2006 as Martin initially proposed, Oliver said. The change protects rural carriers who made large broadband investments in 2007 and 2008, he said.