Universal service vital to rural parts of the country

It’s national law that rural and urban America should have access to "reasonably comparable" telecommunications service and rates. "Universal Service" has helped make it possible for rural Montana communities to survive and even grow – from Eureka to Wise River, to Broadus, to Glasgow, to Cut Bank.

By Bob Rowe – IR Your Turn

http://helenair.com/articles/2004/10/02/opinions/a04100104_03.txt

Recent press coverage of Western Wireless’s (known in Montana as Cellular One) interest in Montana Public Service Commission cases and candidates has focused attention on a program that really makes a difference to Montana, and one that faces tough challenges nationally — universal telecommunications service to rural America. I’m not running for re-election to the PSC, and I’ll stay out of the political aspect of Western Wireless’s activity. I will describe what universal service is, what the issues are, what needs to be done nationally, and what the Montana PSC is now doing.

Universal Service includes programs that provide support for rural telemedicine, Internet connections to libraries and schools, Lifeline assistance for low income citizens, and support to high cost rural areas, such as much of Montana, Alaska, and other rugged, sparsely populated parts of the United States. This "high cost fund" is the traditional cornerstone of the national universal service program. At present, universal service is supported by an assessment on all interstate telecommunications revenue (traditionally, long distance), a source of money that has been shrinking, and is also more and more difficult to identify separately from other telecommunications revenue.

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Last year, Montana received $67 million for "high cost fund support," $3.7 million for connecting schools and libraries to the Internet; $2 million for low income connectivity; and, $109,000 for rural telemedicine. As a result, monthly phone bills in rural Montana are much, much lower than they would otherwise be: For example, over $80 a month lower in Eureka, $75 lower along the Highline, $65 lower in small towns like Sunburst and Hot Springs. Just as important, the service Montanans receive is much better quality than would otherwise be the case. Without Universal Service, many Montanans would not have phone service, wired or wireless. Along with other phone customers, Montanans pay to support these programs.

Universal Service is overseen by the Federal Communications Commission (FCC), based on recommendations from the Universal Service Joint Board, of which I am a member. Under the federal Telecommunications Act of 1996, state public service commissions "must" certify the traditional wireline companies (for example Southern Montana Telephone Company) that meet set requirements as "Eligible Telecommunications Carriers" (ETCs), making them eligible to receive federal high cost fund support, based on their cost of providing service. State commissions can also certify other telephone companies (such as Western Wireless) as "competitive eligible telecommunications carriers," (CETCs) when the state PSC finds it to be in the public interest and when other conditions are met. Congress did not specify all the conditions, leaving some of the details up to the FCC and the Joint Board, and to state PSCs. Western Wireless currently has an application to be designated a CETC before the Montana PSC.

Currently, CETCs receive support per phone line identical to the support received by the traditional wireline company that serves a particular area, regardless of what it costs the competitive company to provide that service. In the last several years, concern has grown nationally that while the traditional support base for universal service (interstate revenue) is shrinking, the size of the fund has grown, in significant part because of the liberal certification by state PSCs of wireless carriers as eligible for support. At worst, this has even been compared to a "broken ATM machine," where states are encouraged to grant CETC certificates easily "because it’s federal money." Actually, of course, the money comes from customers.

Last year, Senator Burns (who chairs the Commerce Committee Communications Subcommittee) and Senator Byron Dorgan of North Dakota (with participation by Senators Stevens and Rockefeller) convened two "Universal Service Summits" that made real progress identifying possible legislative solutions to various universal service issues, especially developing a sustainable support base for the program. That work may help move legislation ahead more quickly next year. Senator Burns, Senator Baucus, and Representative Rehberg have all been strong backers of universal service, and of necessary improvements.

More recently, the Universal Service Joint Board issued a formal recommendation to the FCC designed to help control the growth of the universal service fund. I dissented from parts of the recommendation that I thought postponed important decisions or could hurt rural America. I supported the Joint Board’s recommendations to substantially toughen the state certification processes.

What’s the solution when the demand for support is going up and the base from which support is drawn is going down? Here’s a short list:

1. Congress or the FCC needs to design a funding mechanism that makes sense when old distinctions between services are going away. The Universal Service Summits developed several good ideas.

2. The bar should be set reasonably high in order to receive support. Customers should receive real value for the money we all pay to support universal service.

3. Universal service support to companies should be based on their own documented costs. Wireless carriers are the only significant group of companies now receiving support for which no cost basis (either economic costs or accounting costs) now exists. The Joint Board is wrestling once again with this subject.

The Montana Public Service Commission does not regulate the rates, service quality, or customer service of wireless companies, as it does for investor-owned wireline companies. (Some state legislatures have instructed their PSCs to regulate wireless customer service.) The Montana PSC’s involvement with wireless companies mainly concerns the terms of interconnection between wireless and wireline companies, "local number portability" between wireline and wireless companies, and certification of wireless companies as CETCs eligible for universal service. The PSC makes these decisions based on formal "contested cases," much like courtroom trials, not based on what is said in the newspapers.

As a party in the CETC cases, the Montana Consumer Counsel has opposed certifying competitive ETCs without accountability concerning rates, service quality and other matters. Western Wireless, and other wireless applicants, have argued that they meet a reasonable standard. The Montana PSC must decide what requirements are appropriate, within the constraints of federal and state law. It will do exactly that.

Universal service is too important to be jeopardized through spending that doesn’t advance the purposes Congress set out when it created the program. In a sense, national policy is now catching up with the approach the Montana PSC has generally been following for some time — making certain telecommunications customers receive something of value for the money they pay to support these important programs.

Bob Rowe is chairman of the Montana Public Service Commission.