WASHINGTON-The Federal Communications Commission granted Virginia Cellular L.L.C. eligible telecommunications carrier status, and in the process, provided clues about what criteria should be used for ETC designation, which is necessary to receive universal-service subsidies.
“We find that the designation of Virginia Cellular as an ETC in areas served by five of the six rural telephone companies serves the public interest and furthers the goals of universal service,” said four of the five FCC members. “We conclude that the value of increased competition, by itself, is not sufficient to satisfy the public-interest test in rural areas. Instead, in determining whether designation of a competitive ETC in a rural telephone company’s service area is in the public interest, we weigh numerous factors, including the benefits of increased competitive choice, the impact of multiple designations on the universal commitments made regarding quality of telephone service provided by competing providers and the competitive ETC’s ability to provide the supported services throughout the designated service area within a reasonable time frame.”
Apparently, the caveats placed by the majority were not enough to satisfy FCC Commissioner Kevin Martin, who still does not believe universal service should be used to stimulate competition in rural areas.
“During the past two years, I have continued to express my concerns with the FCC’s policy of using universal-service support as a means of creating `competition’ in high-cost areas. As I have stated previously, I am hesitant to subsidize multiple competitors to serve areas in which costs are prohibitively expensive for even one carrier. The commission’s policy may make it difficult for any one carrier to achieve the economies of scale necessary to serve all of the customers in rural areas,” said Martin.
Wireless carriers, which just recently started receiving money from the universal-service fund to wirelessly connect rural America, believe in using USF to stimulate competition.
“Universal-service support has been instrumental to the ability of Western Wireless to serve rural consumers in its role as an ETC in 14 states and the Pine Ridge Indian Reservation. Competition benefits rural consumers, making service available for the first time to some and providing others with new services and better pricing. The key components of a competitive universal service system are: portability, an efficient funding mechanism, funding caps, support for multiple lines and reasonable criteria for ETC designation. In addition, the FCC should seek to level competition between incumbents and competitive providers by working with the U.S. Department of Agriculture to end incumbent protections in funding and by eliminating rate-of-return regulation for rural telephone companies,” said Western Wireless Corp. in comments filed in the “rural” proceeding.
Western Wireless has led the industry in fighting for universal-service support. In November, Western called for eliminating the current rate-of-return system, which sets rates targeted to recover a rural local exchange carrier’s embedded cost. Today the rate of return is current operating costs and current year’s share of past capital expenditures plus 11.25 percent.
Not surprisingly, when the industry commented on the proposal, wireless carriers supported Western’s proposal, and rural carriers opposed it.
