WASHINGTON-Wireless carriers that receive universal-service support should submit to auditing to ensure that the subsidies they receive are being used to upgrade and improve networks in rural America, FCC Commissioner Jonathan Adelstein told reporters following his speech Thursday at the 21st Annual Institute on Telecommunications Policy & Regulation sponsored by the Practicing Law Institute.
The wireline industry and some state regulators have called for more direct auditing for the wireless industry, and Adelstein said he has been told by some wireless carriers (which he did not name) that they would be willing to submit greater data to the Federal Communications Commission to ensure that the subsidies are being used for rural America.
“To the extent that the FCC scrutinizes universal-service subsidies for other types of carriers, CTIA has no objection to the wireless industry being held to the same FCC audits-keeping in mind that we’re not subject to the same rate-of-return regulation as local exchange carriers,” said Travis Larson, spokesman for the Cellular Telecommunications & Internet Association.
During his speech, Adelstein, who also serves on the Federal-State Joint Board on Universal Service, said he would not support proposals to limit universal-service subsidies to primary lines.
“Some are suggesting that a way to control costs is to fund only primary lines. I believe that this would deny consumers the full support Congress intended. Universal service is not about one connection per household; it encompasses that concept, but is not limited by it. The low-income fund ensures at least one connection per household, but the high-cost fund embraces the concept of network development and support so that all Americans have access to comparable service at comparable rates,” said Adelstein. “So I will not support restricting funding to primary lines only. There are other better options for addressing the growth of the fund.”
Much of the support that wireless carriers receive comes from former second lines as consumers cut the cord on these lines.
Adelstein is concerned with the number of carriers-mostly wireless-that have been certified as eligible telecommunications carriers. ETC certification is necessary to receive universal-service subsidies. He seemed to side with small rural carriers that believe that some areas may not be able to sustain more than one carrier so why should regulators allow a competitor to also get a subsidy to serve in a non-competitive market?
“Universal-service funding became necessary in these areas because the costs of service were prohibitively high and without it, many would not have had access to telecommunications service at all. Yet, we now fund more than one carrier in several of these same high-cost areas,” said Adelstein.
Adelstein hopes to create a way to evaluate whether the public interest is truly being served by designating additional ETCs in some rural markets.
Universal-service subsidies should be based on the costs of the provider, not the incumbent, said Adelstein.
“Another way to better control the size of the fund and be true to our congressional mandate is to make sure to provide the right level of support. Currently competitive ETCs receive the same per line amount of funding as the incumbent LEC. If the ILEC is rural, then its universal-service funding is based on its own costs. That means the funds received by the competitive carriers are based on the rural ILECs’ costs, not their own,” said Adelstein. “A large number of CETCs are wireless carriers. Wireline and wireless carriers provide different types of services and operate under different rules and regulations. Their cost structures are not the same. To allow a wireless CETC to receive the same amount of funding as the wireline carrier, without any reference to their cost structures, is artificial, not to mention clearly inconsistent with the Telecommunications Act of 1996.”
How to keep the universal-service fund solvent with the growth of voice over Internet protocol was a key discussion at a FCC public hearing on Dec. 1. Coming on the heels of the hearing, this year’s PLI conference seemed to often veer in that direction.
Recently, a judge in Minnesota said that states cannot regulate VoIP as a telecommunications service because it is an information service so the question of how to regulate VoIP is squarely in the hands of the FCC.
Dorothy Atwood, senior vice president for federal regulatory strategy for SBC Communications Inc., held wireless up as an example of why federal regulation works best. However, wireless has also always been regulated at the state level, countered James Bradford Ramsay, general counsel of the National Association of Regulatory Utility Commissioners. Current law prohibits states from regulating wireless prices but service quality can be regulated at the state level.
The conversation centered mostly around the wireline local competition debate, but wireless was definitely a backdrop because incumbent wireline carriers are using the wireless argument of not wanting 50 different state regulations.
The same can also be said for VoIP, but Ramsay said that VoIP providers have already agreed to the hard regulations- universal service, enhanced 911 and digital wiretap.
Rudy Baca, global strategist of the Precursor Group, said consumers don’t want to change their behavior so the reason that VoIP is starting to take off is that some operators are using phone-like equipment.
“My father, the cowboy, wants the phone to work. He doesn’t care if it is VoIP-ing, wireline-ing or by wireless. He just wants it to work,” said Baca.
