The Federal-State Joint Board on Universal Service asked for comm...
The Federal-State Joint Board on Universal Service asked for comments on issues referred by the FCC in June (CD June 29 p5). The Joint Board said the FCC asked it to consider whether: (1) Universal service support for rural…
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carriers should be based on embedded or forward-looking costs. For example, the joint board said, the agency asked whether “basing support on forward-looking economic costs or on embedded costs better ensures the availability of telecommunications services in rural areas that are comparable to those in urban areas” and whether “basing support on forward-looking economic costs remain integral to providing appropriate incentives for investment, innovation and entry into the marketplace?” (2) The definition of “rural telephone company” for high-cost universal service support purposes should be changed. (3) Multiple study areas within a state can be consolidated. (4) Rules that determine the amount of universal service support for transferred telephone exchanges should be retained or modified. The FCC in 2001 decided to continue using a modified embedded cost support mechanism for rural carriers for 5 years, ending June 2006, while it considered a more permanent mechanism. Nonrural companies are required to base universal service support on forward-looking costs. Mont. PSC Comr. Bob Rowe, who’s joint board chmn., said the board plans to hold an en banc hearing as part of the proceeding. Although the board plans to look at the cost basis for support to rural carriers, Rowe said, “I would not support imposing on smaller companies costing methodologies… that do not in my opinion always work terribly well even when applied to large companies.” He said he has “substantial and long-standing concern about the reliability of the hybrid cost proxy model even as currently applied to large companies.” As he did when the FCC referred the issue to the joint board in June, FCC Comr. Martin said he’s concerned “by the decision to revisit whether the Commission should adopt a universal service support mechanism for rural carriers based on hypothetical forward-looking economic costs.” Martin said he questioned the use of forward-looking costs “as the basis for distributing universal service support for non-rural telephone companies and would have even greater concerns if such an approach would be used to distribute support to rural companies.” He said he thought the agency could “better achieve sufficient universal service support and comparability of rates if we base our universal service support on actual rather than forward looking costs.” Repeating a concern he expressed at the time of the FCC referral, Comr. Adelstein said the use of forward-looking cost models to calculate support for rural telephone companies “gives me great pause.” Said Comr. Abernathy: “Although a prior Commission embraced a forward-looking cost methodology for all carriers, we are launching this renewed inquiry to take a fresh look at the wisdom and feasibility of abandoning the embedded cost mechanism used to support rural telephone companies.” Comments are due Oct. 15, replies Dec. 14.