Telecompetitor

Several rural wireless carriers and the Rural Cellular Association have asked a federal court to review the FCC interim universal service fund (USF) cap ruling affecting eligible telecommunications carriers (ETCs). The cap temporarily prevents ETCs from dipping into the USF. ETCs are a relatively new phenomenon, and before the cap, their “eligibility” allowed them to receive comparable USF subsidies to the wireline carriers serving their same market. Advocates of this policy argue that it expands wireless service to communities that normally wouldn’t have it. Opponents of this policy say it provides a windfall to wireless carriers and artificially props up competition. There are valid arguments on both sides, but one thing is clear. The growth of these subsidies is rising exponentially. RCR Wireless reports that these funds have grown from $1.5 million in 2000 to more than $1 billion in 2007, with the majority of those funds going to wireless ETCs. The issue is a complex one, with no easy answers. Whatever the outcome, the competitive implications within these markets will be far reaching.