WASHINGTON-A recent federal appeals court decision might make it even more difficult for wireless companies, such as Western Wireless Corp., to obtain subsidies from the universal-service fund.
The U.S. Court of Appeals for the 10th Circuit July 31 reversed rules created by the Federal Communications Commission to determine the size of the federal universal-service fund. While this portion of the universal-service fund only was meant to subsidize carriers serving mostly urban customers, some carriers serving rural areas also could receive money from it.
Qwest Communications International Inc., which acquired U S West Inc. in 2000, said the FCC had not set up a system that assured sufficient subsidies since the FCC relied on states to come up with the bulk of the funding. The appeals court agreed and told the commission to find a better system to determine funding.
“The FCC may not simply assume that the states will act on their own to preserve and advance universal service. It remains obligated to create some inducement: a `carrot’ or a `stick,’ for example, or simply a binding cooperative agreement with the states. … The FCC wishes to take credit for the states’ actions in achieving reasonable comparability, but to do so it must also undertake the responsibility to ensure that the states act. On remand, the FCC is required to develop mechanisms to induce adequate state action,” wrote Judge Paul J. Kelly Jr.
The appeals court ruling is “probably a good thing for carriers who are only worried about paying into the fund, but could be a problem for carriers, like Western Wireless, who hope to take out of the fund,” said David Sieradzki, Western’s outside counsel.
Sieradzki said the delay caused by the ruling plus the inherent assumption that the states will have to go through their own individual processes to reform universal-service subsidies means carriers like Western that are hoping to be subsidized for serving rural America, will have to wait that much longer. And the longer carriers wait, the longer the incumbent local exchange carrier is able to continue to collect implicit subsidies that were supposed to be eliminated when the telecom act of 1996 was implemented.
Meanwhile, Western’s quest for universal-service subsidies on the Pine Ridge Reservation in South Dakota is still pending at the FCC. With three new commissioners, the two opposing sides have been busily seeing each of the new commissioners and their staffs. Western continues to hope the FCC will assert jurisdiction over the Pine Ridge Reservation and grant it eligible telecommunications carrier status, while the ILECs currently serving the reservation continue to fight that ETC designations are the responsibility of the states. ETC status is necessary for competitive local exchange carriers to receive universal-service subsidies.
