State AG Jumps on Verizon ETC Status Complaint

Cortez Masto’s office is reviewing the petition, the AG spokeswoman said. Nevada’s PUC is conducting its own review and will soon issue a timetable for dealing with the petition. A spokeswoman for the Nevada commission declined comment, citing PUC policy. Staff in Nevada have asked the FCC to say that Verizon was never eligible for USF money. In several states, Alltel had been designated an eligible telecommunications carrier for high-cost support. Verizon bought Alltel for $28.1 billion in January 2009 (CD Jan 12/09 p9). One of the conditions of the merger was that Verizon forego some $300 million in high-cost USF support within five years.

Under the merger conditions, Verizon agreed to phase out its high-cost support by 20 percent per year, the Nevada staff petition said. The process began in 2009, it said. The phase out has affected the statewide annual cap, effectively reducing it each year for the applicable amount paid to Verizon, Nevada staff said. With the FCC having imposed an interim cap on the amount of high-cost universal service support for competitive eligible telecommunications carriers, Nevada was receiving about $6.3 million annually. Verizon had already received some two years of support by using Alltel’s ETC designation, which means that Nevada stands to lose about 40 percent of its allotted cap, staff said.

Nevada staff was responding to complaints brought by competitive ETCs. The allegations against Verizon “are no more than an attempt at a second -- or third -- bite at the apple to overturn” such commission actions as the Corr Wireless order (CD Sept 7 p1), Verizon said in its filing. In that order, the commission ruled that CETCs are not entitled to shares of the hundreds of millions of Universal Service Fund dollars surrendered by Verizon and Sprint in separate merger conditions. “Having failed to achieve this USF windfall … they are now mounting collateral attacks on these orders by questioning the Verizon Wireless entities’ CETC status at the commission,” Verizon said in its ex parte, which was filed late Thursday.

If Verizon’s foes are successful, it may well upset the commission’s efforts to repurpose the Universal Service Fund for broadband deployment, Verizon said in its ex parte notice. It’s important that the commission direct the Universal Service Administrative Company to deny the rivals’ appeal “because, until it does so, the complainant ETCs will continue to press their case before multiple state commissions in the hope of obtaining rulings that deny Verizon Wireless support,” Verizon said in its Thursday ex parte. Officials said the company is preparing to file with the Nevada commission.

U.S. Cellular has filed a similar complaint in Wisconsin, claiming that the state is losing some $3.1 million annually as a result of Verizon’s decision to count legacy Verizon lines as eligible for high-cost support. Barring regulatory intervention, the state will lose some $4.1 million in 2012 and around $5.2 million in 2013, U.S. Cellular claimed. The Wisconsin Public Service Commission should suspend Verizon’ eligibility to draw support from the fund and direct Verizon to revise its line counts for all applicable time periods, U.S. Cellular said. It also asked the commission to notify USAC that Verizon hasn’t been designated as an ETC in Wisconsin, among other things.

Gary Evenson, head of the Wisconsin PSC’s telecom division, said his agency received the complaint but it’s too early in the process to draw any conclusions. Verizon will have a chance to reply and the commission will then decide whether to open a case, he said. In Wisconsin, Verizon didn’t ask for high-cost support under Alltel’s license