Rural Groups Submit Universal Service Plan

Three groups representing rural telecommunications providers have submitted a proposal to the FCC recommending competitive eligible telecommunications carriers (CETCs) receive a portion of universal service funds based on the number of customers they support.

Companies with 100,000 subscribers or fewer that are designated by state or federal regulators as CETCs would be entitled to the greatest amount of money compared to other wireless carriers under the proposal’s safe harbor provisions. They would receive 80 percent of the support per line local exchange carriers receive.

CETCs that have more than 100,000 customers but no national network also would be eligible for money. National wireless carriers like AT&T Wireless and Cingular would not be eligible for high-cost support under the safe harbor provisions.

However, wireless carriers large and small could do a cost study to show regulators they are entitled to a greater amount of support than under the safe harbor provisions based on their costs, says Stuart Polikoff, director of government relations with the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), one of the groups that submitted the proposal to the FCC.

Polikoff emphasizes the proposal is designed as an interim solution until the FCC addresses the basis under which CETCs should receive support.

CETCs today receive support based on an incumbent’s cost, not their own, under a system rural phone companies grouse is unfair because it does not accurately represent a competitor’s costs.

The Universal Service Fund is under mounting pressure as scores of telecommunications companies seek CETC status. Based on third-quarter figures, CETCs will receive $536.9 million in support on an annual basis, up from $251 million last year, according to OPASTCO.

OPASTCO, the Rural Independent Competitive Alliance (RICA) and the Rural Telecommunications Group (RTG) submitted the plan to the commission in response to a recommendation by the Federal-State Joint Board on Universal Service.

The joint board, chaired by FCC Commissioner Kathleen Abernathy, has proposed limiting universal service support to a single “primary” line. Phone companies currently receive support on all the lines they serve.

Rural groups criticize the joint board’s proposal, saying phone companies building networks in rural areas would not be able to anticipate universal service support because consumers would be asked to select their primary line provider.

“There would be no predictability in the support levels a carrier would receive,” Polikoff says.

Furthermore, rural phone groups say administering the program would be a nightmare and they question the extent to which big carriers, like Nextel, need the support compared to smaller rural phone companies.

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