Rural Telecom Associations Clarify Positions, Seek Input on USF-ICC Reform

The rural telecom industry is waiting to hear details of a Universal Service Fund and inter-carrier compensation reform proposal expected soon from the U.S. Telecom Association and several of the larger U.S. carriers, including AT&T and Verizon.

In the meantime three rural telco associations have sent a letter to their membership outlining key points of the expected proposal and inviting members to offer their input on whether the associations should voice their support for those key points.

“Our expectation is that any consensus would be identified to the FCC and to others in the industry through a joint letter of those who support the consensus,” wrote representatives of the NTCA, OPASTCO, and the Western Telecommunications Alliance in the letter to their members. The representatives added, however, that they “would not sign onto any ‘USTA plan.’ Nor would any of the USTA companies sign onto the plan we filed previously.”

The decision about how to proceed next will not be made by staff for NTCA, OPASTCO and WTA, the associations said in the letter. Instead, the letter states, “This will be a decision made by the relevant boards and committees, in close consultation with their respective members.”

It’s not clear whether the letter from the associations was written in response to an email campaign started by several rural telcos urging the rural industry not to support the USTA plan or whether those telcos started their campaign after reading the letter from the associations. But the first scenario appears more likely, as some of the letter’s wording seems to essentially be a rebuttal to the points made by the dissenting telcos.

For example, those companies expressed concerns that supporting the ideas proposed by the USTA might alienate state regulators because some USTA recommendations could pre-empt states’ authority. The rural telco group representatives note in their letter that “We would not under any circumstances sign onto a filing or otherwise advocate that these reforms could be implemented without state involvement.”

The rural association representatives also outlined three other potential reforms they said were part of a “give and take” process involving the rural telco associations and the larger carriers, including:

• Rate of return: The rural associations noted that to help meet a “budget target” during the first six years following reform, small rural carriers would have to accept a reduction from the current 11.25% rate of return to 10%. The letter noted, however, that this is substantially better than the 8.5% or 9% rates some others have proposed.
• Terminating ICC reform: The letter confirms reports that the large telcos want to see terminating access charges reduced to $.0007, a lower rate than others had hoped. It notes, however, that “if the restructure mechanism is compensatory and funded as has been discussed, this may be of less concern for some.”
• Originating ICC issues: While noting that it is “unfortunate” that consensus could not be reached on including originating access as part of the reforms, the letter states that the rural telco groups “have included steps in the proposal to ensure that originating access can continue to be charged and also have pressed for protections to ensure that rural carriers will not be required to haul traffic to locations beyond their study areas and existing meet-points. “

The rural groups also attempted to address concerns about changes the FCC might make to reform plans after receiving an industry consensus proposal. “We have already let the FCC and Congress know that this is a substantial concern of ours in discussing any consensus plan, and that if something were to change that makes a plan to which we agreed unacceptable to small rural carriers, NTCA, OPASTCO and WTA would be first in line to fight those changes and the framework as a whole,” the letter says.

In a statement provided to Telecompetitor, NTCA chief executive officer Shirley Bloomfield reiterated the NTCA’s commitment to ensuring that USF and ICC reforms are “done right” for rural consumers and that “small telcos who serve them are positioned over both the short- and long-term to offer high-quality, affordable services.”

Apparently referring to the dissenting telcos, Bloomfield said, “Unfortunately, a vocal few have rushed ahead to pursue individual agendas, spread rumors about what the industry’s options may be, and/or publish estimated numbers without adequate fact-checking.”

At the end of the day, she said, it is essential that members “make a decision on reform advocacy that is based on the substantive merits of the options before them and a thorough assessment of the facts.” She added that, “We have delivered to our members a balanced analysis of their options that takes into account the need for sustainable support mechanisms and the political and economic realities on the ground.”