20180425CTIA Reply Comments.pdf

Benjamin J. Aron
Matt DeTura
CTI,A
1400 l6th Street NW, Suite 600
Washington,Dc 20036
[phone]
[e-mail]
[e-mail]
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of the 2017 Review of the
Idaho Universal Service Fund.
CASE NO. GNR.T.I7-05
REPLY COMMENTS OF CTIA
CTIA files the following reply comments before the ldaho Public Utilities Commission
("Commission") in response to the StaffSummary and Report (the "Staff Report") filed by
Commission Staff("Staff') on April 4,2018, pursuant to the Commission's Memorandum of
February 7,2018 in this docket. CTIA appreciates the opportunity to provide comment on Staffs
conclusions regarding the Idaho Universal Service Fund ("IUSF" or "Fund").
THE STAFF REPORT CORRECTLY RESTS AUTHORITY TO MAKE AIYY
CHANGES TO THE IUSF MECHANISMS ON THE LEGISLATURE
CTIA appreciates Staffs thorough review of stakeholders' comments regarding the
IUSF's sustainability and contributions base. CTIA agrees with Staffs main conclusions:
namely, that the IUSF is not currently sustainable,l and that any changes to the IUSF assessment
and distribution mechanisms must first be accomplished by the Idaho Legislature
("Legislature").2
I StaffReport, at 3 ("The parties agree that the IUSF is unsustainable without major changes to the statute and
funding methodology.").
2 StaffReport, at 2 ("The assessment and distribution methodologies [for the IUSF] are written into the statute, and
the Commission has no express discretion to amend or revise the program outside of legislative action.").
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Reply Comments of CTIA
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The Staff Report suggests three potential options for next steps for the IUSF, all of which
would require legislative revisions to the controlling statutes:
- Option /: Leave the IUSF as is but add a cap and adjust distributions accordingly;
- Option 2: Approach the Legislature about updating and revising the statute to add
assessments on, and expand disbursements to include, all qualifying providers; or
- Option 3: Leave disbursements from the IUSF at their current level, but fund the
IUSF out of general tax revenues, as the State of Washington does.
CTIA reiterates its belief, as expressed earlier in this proceeding, that the best option for
achieving Idaho's universal service goals is funding the IUSF out of the state's general tax
revenues.3 The use of general tax revenues to fund universal service programs is more
appropriate, given the general benefit of such programs,4 and more economically efficient
because the mechanism to extend the availability of telecommunications services will not
suppress demand for those same services.s AT&T's comments also agreed with this position.6
However, this shift does not necessarily call for IUSF disbursements at their current
level, as suggested in Option 3 of the Staff Report. This assumes that the current Fund size is the
appropriate one for the state's universal service goals, which is a conclusion that should be
assessed and potentially adjusted as the Commission and Legislature determine a viable course
of action for the future of the Fund. The Commission and Legislature should seek ways to
minimize the economic burden of the IUSF on consumers by ensuring that the Fund is kept to
the minimum size necessary to achieve universal service goals, and periodically review the Fund
3 Letter of CTIA, Re: Case No. GNR-T-17-05 In the Matter of the 2017 Review of the ldaho (Jniversal Service Fund
(January 3 l, 201 8) ("CTIA Letter"), at 2.
a See CTIA Letter, p.2, fn. 6.
s See CTIA Letter, p.2, fn.7.
6 Staff Report, at 4.
Reply Comments of CTIA 2
size to that end. Further, when the Commission and Legislature consider the future of the IUSF,
they should take into account that Idaho ILECs receive from the federal USF tens of millions of
dollars in universal service support annually, including nearly forty million dollars from the
federal USF in 2016.7 And with telephone penetration in Idaho (96.4%)8 nearly identical to
neighboring Montana (963%)e,the Commission and the Legislature should scrutinize the need
for IUSF support, because Montana has achieved essentially the same telephone penetration rate
without providing any state universal service support.
II.UNLESS SURCHARGES ON THIRD.PARTY SALE OF PREPAID SERYICE
ARE COLLECTED AT THE POINT OX'SALE, DISCRIMINATION WILL
OCCUR
The Staff Report noted CenturyLink's position that'onot mandating an end-user surcharge
would eliminate the need for the legislature to establish a point-of-sale process for pre-paid
wireless providers."l0 In other words, Centurylink believes that it is acceptable for post-paid
wireless providers to be given the option to pass the IUSF surcharge through to end users, while
pre-paid wireless providers, for whom such a pass-through is often impossible due to the nature
of their business model, cannot. CTIA disagrees.
To start, that position is facially inconsistent with CenturyLink's position that all
providers be required to pay into the IUSF on a non-discriminatory and competitively neutral
basis.ll Allowing some providers to pass through the surcharge while it is impossible for others
to do so is both discriminatory and not competitively neutral. Centurylink's position, if adopted
? See Universal Service Fund Monitoring Report - 2017 , CC Docket No. 96, 45, WC Docket Nos. 02-6, 02-60,06-
122,10-90, ll-42,13-184, l4-158, at Table 3.5 High Cost Support Fund Claims - States: 2016 (showing Idaho
ILECs received $39,886,000 in High Cost Support in 2016) (available at
https://transition.fcc.gov/Daily Releases/Daily_Business/2018/db04l3/DOC-350207A l.pdf).
8 Id. at 52,Table 6.6.
e Id.
ro Staff Report, at 5.
11 1d. 1staffs summary of CenturyLink's position: "The IUSF should not disadvantage or disadvantage any provider
or technology in the collection of the IUSF surcharge or distribution of IUSF payments.")
Reply Comments of CTIA J
by the Commission, would also conflict with federal statute, which only allows a state to adopt
USF regulations if all eligible telecommunications carriers contribute "on ar equitable and
nondiscriminatory basis. " I 2
For states that assess wireless providers for state USFs, point-of-sale collection is the
appropriate way to assess pre-paid wireless. It allows a level playing field for pre-paid wireless
providers by allowing the surcharge to be collected directly from consumers when they purchase
service through third-party retailers instead of from the prepaid providers themselves, and avoids
putting pre-paid wireless providers at a competitive disadvantage. Alternatively, if such sales are
not subject to surcharge, all other IUSF contributors suffer discrimination.
CTIA does agree with Centurylink that a guiding principle of any IUSF reforms should
be ensuring that the Fund is supported on a competitively neutral and non-discriminatory basis.
Given the Staff Report's conclusion that all options for IUSF reform require the Legislature to
amend the controlling statutes anyway, if surcharges ultimately are applied to wireless carriers'
telecommunications revenues, the Commission should urge the Legislature to adopt point-of-sale
IUSF collection for pre-paid sales by third-party retailers, because discrimination will occur
unless surcharges are collected at the point-of-sale. (CTIA notes, however, that adopting its
suggestion to move the IUSF to general tax revenues would solve this issue neatly.)
[I.. A FORWARD.LOOKING IUSF SHOULD NOT BURDEN NEW
TECHNOLOGIES WITH INCREASED OBLIGATION TO SUPPORT OLD
ONES
While CTIA reiterates that the ideal method to fund the IUSF is through general tax
revenues, if the Commission and Legislature choose not to do so, CTIA believes any IUSF
12 47 u.s.c. $254(0.
4Reply Comments of CTIA
reforms should embrace the principle that parity in contributions should be matched by parity in
distributions.
CenturyLink has called for all wireless and Voice over Intemet Protocol ("VoIP")
providers to pay into the IUSF without the accompanying conclusion that such providers should
be eligible for disbursements as well.13 CenturyLink's plan would merely shift the burden of
subsidizing declining wireline revenues - revenues that are in decline as a result of increased
telecommunications competition - to wireless consumers.
Any changes to the IUSF contribution base should acknowledge that consumers,
including those in high-cost areas, have evolving preferences for telecommunications services,
and voice services for high-cost consumers might be provided most effrciently by new
technologies such as wireless, VoIP, or satellite. The Commission should not tether the IUSF to
legacy technology, especially if consumers who have moved away from those technologies are
going to bear the burden of supporting the IUSF. The Idaho Telecom Alliance's comments
aligned with this principle as well.ra
Any changes to the IUSF should also adhere to a number of other sound policy
principles:
o The IUSF should provide for appropriate accountability measures, including
ensuring that support is not used to "overbuild" where an unsubsidized
competitor is already serving a community.
o Recipients of IUSF funding should only receive state funding that is non-
duplicative of federal funding, so that carriers are not "double-dipping" in areas
13 See StaffReport at 5-6.
14 Staff Report, at l0 ("...perhaps the Commission should consider: (1) a broader, technologically neutral IUSF
with the growth of the contribution base, ITA is open to expanding the potential recipients of funding.").
5Reply Comments of CTIA
that already receive federal support. This is consistent with comments from the
Idaho Cable Broadband Association. ls
o Consistent with AT&T's comments, the IUSF surcharge should be set to the
minimum level necessary to meet Idaho's universal service goals, and not used to
subsidize competitive losses, which would distort the telecommunications
marketplace in Idaho. 16
IV. CONCLUSION
CTIA looks forward to working with the Idaho Commission, Legislature, and
stakeholders to reform the IUSF so that it meets the state's universal service goals while
minimizing the burden on consumers. To that end, CTIA believes that the Commission should
advocate that the legislature fund universal service goals from general tax revenues and reform
the IUSF consistent with the policy principles stated herein.
Respectfu lly submitted,
By:
J
April25, 2018
rs Staff Report, at9 ("The ICBA agrees with the recommendation in the Commission's report that 'all federal
funding in Idaho should be exhausted and then a reassessment ofareas that still need broadband services could then
be targeted.")
16 Staff Report, at3-4 ("AT&T would like to see measurable objectives for the IUSF and then identiff the smallest
IUSF needed to achieve those objectives.").
6Reply Comments of CTIA
PROOF OF SERVICE
I HEREBY CERTIFY that I have this 25& day of April2018, served the foregoing Reply
Comments of CTIA in Case No. GNR-T -17 -05 upon all parties of record in this proceeding by
e-mail a copy thereof to the following:
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7Reply Comments of CTIA