Wireless carriers question proposal to cap USF

More than a dozen small- and medium-sized cellphone carriers raised concerns with key Senate lawmakers about a federal-state panel’s recommendation on federal subsidies. The suggestions, made last month, were to temporarily cap federal subsidies for rural wireless deployment as part of a broader effort to reform the mushrooming universal service fund.
“A cap on support for wireless competitive eligible telecommunications carriers in high-cost, rural and insular areas would violate the clear principle that Congress set forth in Section 254 that rural consumers are entitled to communications services and prices that are comparable to those available in urban areas,” stated Alltel Corp., U.S. Cellular Corp., SouthernLINC Wireless, Centennial Communications Corp., Smith Bagley Inc. and ten other carriers in a letter to Senate Commerce Committee Chairman Daniel Inouye (D-Hawaii) and Vice Chairman Ted Stevens (R-Alaska).
The mobile-phone operators added: “A CETC-only cap will impede the deployment of wireless services for personal and public safety, limit consumers’ choices, harm constituents who seek to obtain and maintain jobs but lack wireline service, and hinder rural America’s ability to compete in the global economy.”
Though characterized as a temporary cap, wireless carriers and others point out that the USF subsidy ceiling could become permanent as a practical and regulatory matter.
At today’s Senate Commerce Committee hearing, several members-Democrats and Republicans alike-said they were troubled by the cap. At the same time, other lawmakers in Congress support the USF wireless cap. The Coalition to Keep America Connected, a group supported by wireline telecom carriers, has mounted a major campaign to cap federal support for rural wireless buildout.
Wireless vs wireline
The USF has grown to about $7.4 billion. Federal Communications Commission Chairman Kevin Martin has hammered on government support of CETCs as a big reason for the fund’s explosive growth, even though rural telephone companies collectively continue to receive billions of dollars from the fund even as they are losing subscribers.
Indeed, in their letter to Inouye and Stevens, the mobile-phone carriers pointed out that wireline carriers have drawn $25 million from the universal service fund since 1999 compared with less than $3 million for wireless operators.
The Federal-State Joint Board on Universal Service also concluded the fund’s high-cost component should have an annual ceiling of $4.5 billion, with mobile wireless services eligible for $1 billion and the remaining dollars allocated to broadband ($300 million) and providers of last resort ($3.2 billion). The joint board also found in favor of reverse auctions, a distribution mechanism backed by FCC Chairman Martin, that award rural universal service support to the lowest-bidding telecom carrier. Moreover, the panel decided to halt identical support to wireline and wireless high-cost universal support recipients, owing to the fact that it costs landline telephone companies more to provide service to rural citizens and businesses than it does for mobile-phone carriers to do the same task.