RURAL ILEC, CLEC, WIRELESS GROUPS AGREE ON UNIVERSAL SERVICE

“Most significantly, by reducing the strain on the fund created by the FCC’s current support portability rules, the plan makes it unnecessary to impose a primary line limitation on support,” the 3 rural groups said. The Joint Board had recommended that high cost support should be limited to “a single connection that provides access to the public telephone network,” saying that while it “may not ensure sufficient funding of every ETC,” it “would provide sufficient support for universal service.” But OPASTCO, RICA and RTG said the primary line scheme would “penalize rural consumers, preventing them from receiving high-quality, affordable wireline and wireless services… and would create an administrative nightmare.”

OPASTCO, RICA and TRG also said there was “no basis for the FCC’s identical support rule,” which they said provided the same universal service support to CETCs as it did to ILECs. “Because of the different nature of the services they offer and the technologies they employ, wireline and wireless carriers have differing costs,” the associations said. They said their proposal moved toward a cost-based system for determining support for CETCs and provided wireless carriers with “a safe harbor percentage of the ILEC’s per-line support amount. The percentages are derived from a comparison of wireline and wireless investment data, and recognize that small rural wireless carriers generally require more support than the largest wireless carriers who serve primarily urban areas.” They said any CETC that believed it needed additional support could perform a cost study and report its actual costs.

In other comments, many agreed the FCC should reject the primary lines restrictions contained in the Recommended Decision. USTA urged the Commission to affirm that “all lines should be supported, not just primary lines,” to preserve the universal service. BellSouth said restricting support to primary lines would “not only have a harmful effect on consumers and carriers but also pose insurmountable administrative charges.” It said the Commission’s proposal to establish a core set of minimal qualifications for carriers seeking ETC status was “a more effective and less harmful way to manage fund growth by ensuring that only capable, qualified and committed carriers are granted the right to receive high-cost support.”

Leading the wireless industry, CTIA said the Board’s “primary line” proposals were “nothing more than shortsighted attempts to limit competition and consumer choice while leaving incumbent LECs largely whole.” It said it supported, however, the Rural Task Force’s recommendation that the FCC “freeze per- line high-cost support available in a service area upon competitive ETC designation as a more commonsense, nondiscriminatory way of curbing growth in the high-cost fund.” Sprint warned the Commission restricting high-cost support to “primary lines” would be “extremely difficult and costly to implement. There is no principled way to determine whether a consumer’s wireline or wireless phone is ‘primary.'” Western Wireless said the Joint Board didn’t consider the “many public interest benefits that greater access to telecommunications services provides to rural areas, which far outweigh the nominal additional cost of supporting CETCs.” It said wireless was increasingly selected by consumers as “the best means of meeting their communications needs,” and the FCC should reject the primary-line restriction to promote wireless service in rural America.

Sprint said it supported imposing “reasonable limits” on the USF growth, but the Joint Board’s focus on fund growth due to competitive entrants -- which it said received only 7% of high-cost funds -- was “misplaced.” Sprint urged the Commission to look at alternative ways to limit fund growth, such as: (1) Adopt the Board’s recommendation to “impose a cap on high-cost support disbursement per line when a competitive ETC is present.” (2) “Consider developing a system of high-cost support based on forward-looking economic costs.” (3) “Devise incentives for states to ensure that ILECs recover a reasonable (larger) portion of their costs from their own local exchange customers, thereby reducing the need for explicit support.”

The National Exchange Carrier Assn. (NECA) expressed concern that limiting universal support to one primary connection per customer could raise rural LECs access charges and end user rates, and impede their ability to collect accurate high cost loop data. It said such a proposal would also make universal service support “insufficient.” “If only one primary connection were to be subsidized, other necessary connections such as fax and Internet lines could loose support,” it said: “Additionally, rural businesses with multiple lines would suffer a competitive disadvantage if only their primary connection would receive universal service support.”

The National Telecom Coop. Assn. (NTCA) strongly opposed limiting support to primary lines: “If rural carriers receive support only for those lines designated as ‘primary’ by the customer, they will not receive sufficient and predictable support that allows for the recovery of future investment to serve all customers or their costs of providing service to non- primary line customers in the high-cost area.”

But Qwest called the single connection proposal “a reasonable solution,” saying by supporting it, the Commission would “ensure that subscribers in high cost areas continue to have affordable access to supported services.” It stressed, however it was “imperative” that the agency implements such approach “in a reasonable and competitively neutral manner.”

AT&T, while supporting many of the Joint Board’s conclusions, said the FCC should go further than the Board did by: (1) Correcting “an anomaly in the rules that illogically ties eligibility for Lifeline and Link-Up support to eligibility for High Cost Support.” AT&T said there was “no legitimate policy reason for such a limitation, which serves only to diminish the choices available to Lifeline consumers and penalize CLECs that are required under state law to provide Lifeline services without being reimbursed for these discounts if they choose to serve only the urban areas of the state.” (2) Adopting “a national benchmark of per-line support, above which the presumption should be that multiple ETCs are not in the public interest.” AT&T also expressed concern that the USF “death spiral” was fed by increasing growth of support for wireless services, which it said provided “second, third or fourth connections to households or businesses.” It said the number of wireless connections receiving universal service support has increased “one hundred-fold” since 2000.

USTA said the FCC must strengthen the process for designating an ETC by imposing “additional mandatory requirements, not permissive guidelines,” which requirements would ensure that ETC applicants undergo “a rigorous public interest test before receiving ETC designation and by requiring that ETC designations are made according to other limiting factors.” For example, it said competition shouldn’t be a determining factor: “New ETCs should serve the entire study area, and all ETCs should make annual certifications about their use of funds and compliance with ETC designation requirements.”

NECA recommended that the FCC adopt and consider strengthening the Joint Board’s recommendations regarding ETC designation and monitoring, for example, by making the proposed guidelines mandatory. Sprint said the Commission should ensure that any new ETC designation guidelines were “competitively neutral.” It said the ETC designation process “must not include improper criteria such as equal access requirements for wireless carriers, wireline-oriented or monopoly-focused consumer protection rules, rate structure regulation through the guise of local exchange requirements, or consideration of macro-policy issues such as per-line funding levels.”

CTIA urged the FCC to consider “more fundamental reforms to the underlying universal service mechanisms,” but warned the agency shouldn’t do that by “simply taking support away from competitors… The Commission must ensure that universal service support continues to be distributed in both a competitively and technologically neutral manner, as required by the Act.” It said it supported the establishment of voluntary ETC designation guidelines, provided they don’t include requirements that are “not appropriate for the competitive CMRS marketplace.” It said it opposed the inclusion of “dominant carrier” requirements, such as equal access, rate regulation, inflexible build-out requirements and overly broad quality of service requirements, on nondominant competitors through the ETC designation process.

SBC supported the proposed strengthening of standards for designated additional ETCs, but said further action was required. It said in the near term, the Commission should “limit high-cost support for CETCs only to services that meet the definition of universal service and that are offered at an affordable rate.” It said the agency should also modify the way it calculates support for CETCs by “limiting such support to the lesser of the difference between the affordable rate for service and CETC’s actual costs or the per-line support available to the ILEC, and thus ensure that CETCs receive no more support than necessary to provide essential services at an affordable rate.”

SBC also urged the Commission to require “all providers of services capable of sending traffic to or receiving traffic from the PSTN,” including cable modem and IP-enabled service providers marketing their services as substitutes for circuit- switched services, to contribute to the USF. In the long term, it said the agency should adopt rules “to induce the states to rationalize intrastate rates by replacing implicit subsidies with explicit support and permitting rates to rise to levels that are self-supporting and affordable.”