WASHINGTON-Before disadvantaged and rural customers can take advantage of existing and emerging telecommunications services, the Federal Communications Commission and its adjunct Federal/State joint board have to decide how to revamp longstanding universal-service requirements to include wireless providers as possible local exchange carriers.
As a prelude to examining the mountains of universal-service comments received April 12, the joint board heard viewpoints on the subject from 27 panelists during a marathon meeting that same day. While focusing on ways to get schools, libraries and hospitals attached not only to the Internet but in some cases to the phone system itself, panelists also pointed out that there still are pockets of the U.S. population that remain unserved by any communications means. The questions of who should provide service, at what price, who pays into the universal service fund and who can draw from it continue to be in play.
While wireless- and satellite-based services are on the threshold of giving incumbent LECs a run for their money, how the FCC handles pending interconnection, mutual compensation and interoperability matters will impact when these alternate players become a strong-enough force to drive prices-and universal service subsidies-down.
Charles Townsend, chief executive officer of Atlantic Cellular in Rhode Island, told the joint board that the best way to offer service to rural and remote areas is to put those service areas up for a “reverse auction-the low bid wins.” AirTouch Communications Inc., in its comments, supports this theory. According to Townsend, the average rural telco charges $1,800 per new installed line; cellular carriers can cut that to $700, and personal communications services licensees say they can go even lower. Successful bidders also would be able to draw out of the universal service fund to make up for high-cost-area service charges.
Townsend’s idea was challenged by board member Martha Hogerty, who also serves in the Office of the Public Counsel in Missouri. “Bidding*…*is predicated on the lowest common denominator of what subscribers will tolerate. It also relies on a statement of work that must be monitored by the state commission. Less service equals more profit.”
Overall, universal-service comments submitted by the wireless industry support the idea of CMRS providers paying into a federal-not a state-fund with the caveat that they be allowed to have access to those subsidies on an equal footing with established LECs. Wireless carriers also want the assurance that, if they are chosen to be a local-loop provider, they will not have to revert to state-rather than federal-authority. Some commenters also want permission to pass universal-service charges on to subscribers via a line item on the monthly bill.
Many commenters backed a voucher system paid directly to low-income, rural or remote subscribers that would allow them to choose what carrier and what services on which they wanted to spend their allowance.
Another key to establishing a level playing field is the elimination of interconnection and access fees wireless carriers pay to LECs. “The joint board and the commission should recognize, as the LECs have admitted, that CMRS providers already subsidize basic local service through the charges they pay to LECs for interconnection,” wrote Vanguard Cellular Systems Inc. “CMRS providers should contribute to universal service only after the interconnection rates are reformed*…*Even using the unsupported costs estimates of the U.S. Telephone Association, CMRS providers pay LECs at least $450 million in charges in excess of the LEC cost for interconnection each year.”
Due to the interstate nature of wireless carriers, Vanguard also agreed that CMRS carriers should pay into a federal fund only to avoid the risk of paying multistate fees. “Vanguard’s Huntington-Ashland system could discover that one state bases its contributions on the number of subscribers, the second state bases contributions on revenues and the third uses gross assets which would correlate to the location of facilities,” it wrote.
Western Wireless currently provides local loop service to certain remote areas in Nevada. The company is reimbursed for high-cost-area service by Nevada Bell. It also plans to answer a request for proposals that Hawaii plans to float this month regarding bids to serve remote areas in part of that state. In its comments, Western Wireless submitted the following formula on which universal subsidies should be based: universal service subsidy = bid price – average price.
“If a carrier’s bid price is $150 per household per month to serve consumers within a specified rural or high-cost area and the average price for comparable service to households in urban areas of the state is $20, then the universal service subsidy would be $130 per household per month,” it explained. “The carrier with the lowest bid price and who is the best qualified service provider based upon internal, external and miscellaneous criteria would be the designated universal service provider.”
Three-sixty Communications, the recent Sprint Corp. cellular spinoff, also provides local loop services in some U.S. markets, and it has been an active participant in school and public-safety link-up programs, including ClassLink, SafeTalk and Homework Hotline. Because of these accomplishments, “there is no reason to exclude CMRS providers as eligible carriers,” it wrote. The carrier also supports contributions based on a percentage of gross interstate revenues.
American Mobile Satellite Corp. pointed out that mobile satellite service may be the only communications conduit some remote users would have, and that costs for MSS subscriber equipment-“often the least expensive alternative for providing basic telephone service to remote households”-could be recoverable from the universal service fund.
The Personal Communications Industry Association would like most paging carriers licensees exempted from paying into the fund, saying, “Messaging licensees as a group*…*will have at most a highly limited opportunity to seek to become eligible providers of universal service … Messaging licensees already are the providers of lowest-priced telecommunications services, and it is appropriate for the commission to consider the effect of universal funding obligations on the price of such services.” Metricom Inc., a spread-spectrum data provider, wants all Part 15 licensees exempted.
To serve disadvantaged urban or rural subscribers, Brite Voice Systems Inc. proposes a system of voice mailboxes that could be provided via toll-free numbers. “The cost of owning a mailbox is typically one-third to one-fifth that of owning a phone on a monthly basis,” it wrote. The service provider also advocates a system of prepaid calling services.
