WASHINGTON-The chairman of the Federal Communications Commission last week rejected the notion that new rules designed to reduce the amount consumers pay for long-distance service transfers a portion of the obligation for universal service to wireless carriers.
“I do not necessarily accept your premise that wireless carriers will have to pay more. What we have done is we have taken some of the universal-service funding and made it explicit. That doesn’t mean that wireless carriers will have to pay more,” said FCC Chairman William Kennard.
This was disputed by another commissioner, who said wireless carriers would end up paying for a subsidy that they cannot obtain.
“All carriers that provide interstate services will fund the access subsidy, and the costs of the subsidy will be spread nationwide. Thus, a wireless carrier in California (which is not eligible to receive any support from the $650 million fund) will now find itself footing the bill to subsidize local exchange carriers nationwide,” said FCC Commissioner Harold Furchtgott-Roth.
Wireless carriers have said in the past that if the costs of the universal-service fund were shifted from the long-distance industry to the telecommunications industry as a whole, they would end up paying more.
The Personal Communications Industry Association reacted with much of the same. “Wireless contributions to the federal universal-service fund should not be used to maintain artificially low wireline telephone rates. The universal-service `problem’ is a relic of the historical monopoly wireline regime. Wireless is not a part of the problem and shouldn’t be counted on as a `blank check’ solution,” said Angela Giancarlo, PCIA director of federal regulatory affairs.
In a televised press conference, the FCC said it was placing an assessment on all carriers’ interstate revenues to help fund service to customers in high-cost and rural areas.
The FCC’s new rules closely track a proposal submitted by the Coalition for Affordable Local and Long Distance Services in March. The proposal from the CALLS Coalition created a $650 million universal-service fund while reducing the amount long-distance carriers pay to LECs to carry their calls. Members of the CALLS proposal include AT&T Corp., Bell Atlantic Corp., GTE Corp., SBC Communications Inc. and Sprint Corp.
Court rejects Celpage
The FCC’s action came one day after the U.S. Supreme Court rejected Celpage Inc.’s argument that it should not have to pay into the universal-service fund because universal-service assessments are a tax not authorized by Congress.
“Celpage’s long and often lonely battle against this tax is at an end for now, but I doubt that the war is over,” said Frederick Joyce, Celpage’s outside counsel.
The court did not issue a ruling, but rather let stand a decision from the U.S. Court of Appeals for the 5th Circuit. Joyce could not speculate as to why the Supreme Court did not act, but he did note that the court will hear argument in a similar case involving clean air regulations.
“Timing is everything with the Supreme Court. This just wasn’t our time,” said Joyce.
The court has not indicated whether it will hear argument on two other challenges to the FCC’s universal-service rules.
On a related front, PCIA last week urged the FCC to give states guidance on how to determine if wireless carriers can be granted eligible telecommunications carrier status. ETC status is necessary for carriers to receive universal-service support subsidies.
“The FCC has already recognized that wireless carriers can provide fair and practical universal service as efficiently as [competitive LECs] and [incumbent LECs], and, in some cases, are being denied the benefits of wireless competitive alternatives because unduly burdensome state ETC requirements stand as artificial barriers to new entrant participation in the federal universal-service program. It is important that the FCC clearly determine that a wireless carrier is as capable as any wireline carrier of providing universal service to areas of the country that are supported by federal mechanisms,” said PCIA in a letter to the FCC last Wednesday.
The FCC is expected this week to adopt rules regarding wireless carriers serving tribal lands. A major issue in this debate has been some states’ reluctance to grant ETC status to wireless carriers.
The Telecommunications Act of 1996 says states must grant ETC status to competitive carriers in areas served by large LECs but are not required to do so in areas served by rural telephone companies.
