20181004CTIA Response.pdf

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October 4,2018
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Sean Costello
Deputy Attorney General
Idaho Public Utilities Commission
472W Washinglon Street
Boise, lD 83702
Dear Deputy Attorney General Costello,
CTIA submits this letter in response to Deputy Attomey General Sean Costello's
September 7,2018 Memorandum in Idaho Public Utilities Commission ("Commission")
Case No. GNR-T-17-05. Via the Memorandum, Commission staff invited interested
parties to submit legislative proposals for Idaho Universal Service Fund ("IUSF") reform
for consideration at an informal October 17,2018 settlement meeting. As explained
below, CTIA and its members appreciate stafPs invitation, but decline to submit specific
legislative language at this time for the reasons described below.
CTIA disagrees with the premise that there is any need for changes to the funding
mechanism for the IUSF in order to maintain the solvency of the fund. The IUSF has an
annual budget target of approximately $1.9M inclusive of disbursements to carriers,
expenses, and surplus funding requirements. The IUSF currently is funded though
surcharges of $0.25 per residential line, $0.44 per business line, and $0.009 per
MTS/WATS minute. These are modest surcharges. While the IUSF Administrator
reported steady declines in access lines and WATS/IVITS minutes subject to surcharge,
IUSF surcharge revenue has actually increased.l Given the modest levels of the current
surcharges there is considerable room to increase surcharge levels to offset the
diminishing IUSF contribution base.
I According to Daniel Klein's August 9,2018 Decision Memorandum in Case No. GNR-T-18-06,
"[s]urcharge revenue for the [USF fiscal year from July 1 , 20 I 7 through June 30, 20 I 8] increased by
approximately $407 ,397 and MTS/WATS surcharge revenue increased by approximately $ 190,564." See
Decision Memo at 2.
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If the IUSF is facing any problem, it would appear to be with predictability, not
sustainability. To that end, the IUSF Administrator indicated that "it is difficult to
accurately calculate the funding requirements necessary to maintain adequate funding
balances throughout the fiscal year."2 However, despite the IUSF Administrator's claim
that funding balances are difficult to predict throughout the year, it was able to use a five-
year line/minute loss trend to present the Commission with several funding model
options.3
The foregoing illustrates that there is both ample room for surcharge increases and
sufficient data for reasonable predictive adjustments to maintain a stable fund.
If the Commission is intent on recommending legislative changes to the
Legislature, the Commission can look to its western and eastern neighbors for potential
solutions. In Washinglon, the universal service fund is supported by taxpayer funds
exclusively.a The use of general revenues to fund universal service is more appropriate
given the general benefit of such programs,s and also more economically efficient
because the effort to extend the availability of communications services does not suppress
demand for those same services.6 In Montana, the Public Service Commission has
statutory authority to fund a Montana universal service fund, but it has declined to do so
for decades. Despite the absence of a universal service fund in Montana, Idaho and
Montana have essentially equivalent telephone penetration percentages.T Thus, should
the Commission determine that it desires to make a legislative proposal, CTIA suggests
that the Commission consider recommending either Washington's example of funding
2 Decision Memorandum from Daniel Klein, at 3 (August 9 2018).
3 Id. at5-6
a Rev. Code Wash. $$ 80.36.650(2); 80.360.690.
5 CTIA Response to House of Representatives White Paper on Universal Service Policy (2014) at l-4,
https://www.ctia.orgy'docs/default-source/Legislative-Activitv/ctia-usf-response-to-house-white-paper-
09l9l4.pdf?sfwsn:O.
6 See, e.g., Robert W. Crandall and Leonard Waverman, WHo PAys roR UNIvrRSAL SERVICE? WHEN
Tpr-rpnoNs SuesDtes Bscow TRANSrARENI, Brookings Inst. Press (2000) at 169.
7 See Universal Service Fund Monitoring Report -2017, CC Docket No. 96-45, WC Docket Nos. 02-6,
02-60,06-122, 10-90, 1l-42, 13-184, at Table 6.6 Voice Penetration by State, 2011-2016 (available at
https://www.fcc.gov/sites/default/files/2017 universal service-monitorine report.pdO (showing a0.loh
difference in telephone penetration in Montana and Idaho n2016; in other years (201 I and2012)
Montana's percentage exceeded ldaho' s).
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universal service through general revenues or Montana's model of trusting the
sufficiency of federal universal service support and declining to provide additional state
funding.
Finally, if there is a sentiment to fund broadband, as may be addressed by other
commenters, then the legislature should choose to do so (1) independently and without
the urging of the Idaho PUC, as broadband services would fall outside of the
commission's jurisdiction and (2) without relying on the IUSF, which is only authorized
to fund local exchange service and MTS. As discussed above, such a program is better
funded through general revenues.
Sincerely
Benjamin J
Director, State Regulatory Affairs
CTIA
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