WASHINGTON-The Federal Communications Commission proposed rules to change the way the agency determines the universal-service support paid to larger carriers serving rural customers, including wireless carriers that serve customers who live in a large incumbent’s territory.
This is the third time the commission has tried to figure out universal-service fund disbursements. The U.S. Court of Appeals for the 10th Circuit rejected the FCC’s two previous attempts.
In addition to better defining the terms “sufficient” and “reasonably comparable,” the FCC will decide whether to assess support based on rates or costs.
Qwest Communications International Inc. was the major opponent to the FCC’s previous attempts.
The universal-service system was set up in the 1930s to bring telecommunications services to high-cost areas by using long-distance revenues. Complications arose when the Bell monopoly was broken up in the 1980s. Today’s system uses a formula based on an economic cost model. If the incumbent carrier’s costs are below a certain benchmark in a state, then all carriers serving customers in that state are eligible to receive support. Qwest has lost money under this system, while BellSouth Corp. has gained funding. Qwest also lobbied on Capitol Hill to change the way the amount of support is decided.
The other side of the coin-how much to charge consumers to pay for the subsidies-is also a major debate. Universal-service contributions can only be assessed on long-distance revenues. With many consumers using mobile phones and Internet telephony to make long-distance calls, less money is going into the system.
FCC Chairman Kevin Martin favors assessing a universal-service contribution on every telephone number, but many people oppose the idea. One group against the measure said it has sent nearly 600,000 e-mails and letters to the FCC.
The Keep USF Fair Coalition says that changing from the current system, which assesses contributions based on long-distance and international revenues to one which assesses a flat rate on every telephone number would “tax” 43 million Americans as much as $700 million. Since wireless carriers have a difficult time dividing long-distance and local revenues, they typically estimate the long-distance portion at about 28.5 percent of total revenues. The Keep USF Fair Coalition favors the Fair Share Plan, which would assess contributions on all long-distance telecommunications including Voice over Internet Protocol.
Meanwhile, rural carriers reminded Capitol Hill Dec. 5 that VoIP is not possible without the underlying telecommunications network, which is only made possible because of cost recovery mechanisms that allow the incumbent local phone company to charge the VoIP provider. Rural local exchange carriers have long championed not only universal service, but continued assessment of access charges-both of which they term as cost recovery. RCR
