20040130Joint Motion to Take Official Notice.pdf

Conley E. Ward (ISB No. 1683)
GIVENS PURSLEY LLP
601 W. Bannock Street
O. Box 2720
Boise, ID 83701-2720
Telephone No. [phone]
Fax No. [phone]
Attorneys for Idaho Telephone Association
f?ECEIVED
fX1
::- J! r:: t!Jc,.
2004 J.4N CJ Pli 2: : 5
;,.: ';
U TILl TiES COI'11 SION
Morgan W. Richards (ISB No. 1913)
MOFFATT, THOMAS, BARRETT, ROCK & FIELDS
101 S. Capitol Boulevard, 10th Floor
O. Box 829
Boise, ID 83701-0829
Telephone No. [phone]
Fax No. [phone]
Attorneys for Citizens Telecommunications
Company of Idaho
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
IAT COMMUNICATIONS , INC., d/b/a
NTCHIDAHO, INe. OR CLEAR TALK, FOR
DESIGNATION AS AN ELIGIBLE
TELECO MMUNI CA TI ONS CARRIER.
Case No. GNR-03-
IN THE MATTER OF THE APPLICATION
OF NPCR, INC., d/b/a NEXTEL PARTNERS
SEEKING DESIGNATION AS AN
ELIGIBLE TELECOMMUNICATIONS
CARRIER.
Case No. GNR-03-
JOINT MOTION TO TAKE
OFFICIAL NOTICE
The Idaho Telephone Association ("IT A") and Citizens Telecommunications Company
of Idaho ("Citizens ) request that the Commission take official notice of the attached
Memorandum Opinion and Order issued by the Federal Communications Commission ("FCC"
in Docket No. 96-, and in support thereof state as follows:
JOINT MOTION TO TAKE JUDICIAL NOTICE - Page 1 of 4
S:ICLIENTSI1233Il70IITA Motion to Take Judicial Notice.DOC ORiGiNAL
Rule 263.01(a)(2) of the Commission s Rules of Procedure provides that the
Commission may take official notice of the orders of "any other regulatory
agency, state or federal."
Evidentiary hearings in this matter concluded on December 11 2003 , and the
parties' Briefs were submitted on January 23 , 2004. The FCC did not release its
Order until January 22 2004, too late to be included in the parties' briefs.
The FCC Order is relevant to the Commission s deliberations because it
announces a new legal "framework" for the analysis and consideration ofETC
petitions.
No party will be prejudiced by the granting of this Motion.
WHEREFORE, IT A and Citizens respectfully request that the Commission enter its
order:
Taking official notice ofthe FCC Order; and
Directing that the FCC Order be marked as an exhibit and included in the record
as a late-file exhibit.
Oral argument is not requested on this Motion.
RESPECTFULLY SUBMITTED this 51)day of January 2004.
Conley . Ward
GIVENS PURSLEY LLP
Attorneys for Idaho Telephone Association
~%-
J. W, L h~~
Morgan W. chards
MOFFATT, THOMAS, BARRETT, ROCK & FIELDS
Attorneys for Citizens Telecommunications of Idaho
JOINT MOTION TO TAKE JUDICIAL NOTICE - Page 2 of
S:ICLIENTSI12331170IITA Motion to Take Judicial Notice.DOC
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 3D ay of January 2004, I caused to be
served a true and correct copy of the foregoing document by the method indicated below
and addressed to the following:
Jean Jewell
Idaho Public Utilities Commission
472 W. Washington Street
O. Box 83720
Boise, ID 83720-0074
( ) U.S. Mail
(X) Hand Delivered
( ) Overnight Mail
( ) Facsimile
Molly O'Leary
RICHARDSON & O'LEARY
99 E. State Street, Ste. 200
Eagle, ID 83616
(X) U.S. Mail
( )
Hand Delivered
( ) Overnight Mail
( ) Facsimile
Sean P. Farrell
IA T Communications, Inc.
NTCH-Idaho Inc., d/b/a Clear Talk
703 Pier Avenue, Suite B
PMB 813
Hermosa Beach, CA 90254
(X) U.S. Mail
( )
Hand Delivered
( ) Overnight Mail
( ) Facsimile
Dean 1. Miller
MCDEVITT & MILLER
420 W. Bannock Street
O. Box 2564
Boise, ID 83701-2564
(X) U. S. Mail
( )
Hand Delivered
( ) Overnight Mail
( ) Facsimile
Philip R. Schenkenberg
2200 First National Bank Building
332 Minnesota Street
Saint Paul, MN 55101
(X) U.S. Mail
( )
Hand Delivered
( ) Overnight Mail
( ) Facsimile
Morgan W. Richards
Moffatt, Thomas, Barrett, Rock & Fields
101 S. Capitol Blvd., 10th Floor
O. Box 829
Boise, ID 83701-0829
(X) U.S. Mail
( )
Hand Delivered
( ) Overnight Mail
( ) Facsimile
JOINT MOTION TO TAKE JUDICIAL NOTICE - Page 3 of 4
S:ICLIENTSI12331170IITA Motion to Take Judicial Notice.DOC
Lance A. Tade, Manager
State Government Affairs
Citizens Telecommunications Company of Idaho
4 Triad Center, Ste. 200
Salt Lake City, UT 84180
Robert M. Nielsen
548 E Street
O. Box 706
Rupert, ID 83350
Charles H. Creason, Jr.
President and General Manager
Project Mutual Telephone Cooperative Association
507 G Street
O. Box 366
Rupert, ID 83350
(X) U.S. Mail
( )
Hand Delivered
( ) Overnight Mail
( ) Facsimile
(X) u.S. Mail
( )
Hand Delivered
( ) Overnight Mail
( ) Facsimile
(X) u.S. Mail
( )
Hand Delivered
( ) Overnight Mail
( ) Facsimile
JOINT MOTION TO TAKE JUDICIAL NOTICE - Page 4 of 4
S:ICLIENTSI12331170IITA Motion to Take Judicial Notice.DOC
ATTACHMENT
Federal Communications Commission FCC 03-338
Before the
Federal Communications Commission
Washington, D.c. 20554
In the Matter of
Virginia Cellular, LLC
Petition for Designation as an
Eligible Telecommunications Carrier
In the Commonwealth of Virginia
CC Docket No. 96-
Federal-State Joint Board on
Universal Service
MEMORANDUM OPINION AND ORDER
Adopted: December 31 , 2003 Released: January 22, 2004
By the Commission: Chairman Powell, Commissioners Abernathy, Copps, and Adelstein issuing
separate statements; Commissioner Martin dissenting and issuing a separate statement.
Para.
I. INTRODUCTION ..................................................................................................................II. BACKGROUND .................................................................................................................... 5A. The Act................................................................................................................................B. Commission Requirements for ETC Designation and Redefining the Service Area ......... 7C. Virginia Cellular s Petition...............................................................................................
III. DISCUSSION ................................................................................................................... 12A. Commission Authority to Perform the ETC Designation................................................. 13B. Offering and Advertising the Supported Services ............................................................ 14C. Public Interest Analysis .................................................................................................... 26D. Designated Service Area...................................................................................................E. Redefining Rural Telephone Company Service Areas ..................................................... 40F. Regulatory Oversight ........................................................................................................ 46
IV. ANTI-DRUG ABUSE ACT CERTIFICATION ..............................................................
V. ORDERING CLAUSES .......................................................................................................
APPENDIX A -- VIRGINIA NON-RURAL WIRE CENTERS FOR INCLUSION IN
VIRGINIA CELLULAR'S ETC SERVICE AREA
APPENDIX B -- VIRGINIA RURAL TELEPHONE COMPANY STUDY AREAS FOR
INCLUSION IN VIRGINIA CELLULAR'S ETC SERVICE AREA
APPENDIX C -- VIRGINIA RURAL TELEPHONE COMPANY WIRE CENTERS FOR
INCLUSION IN VIRGINIA CELLULAR'S ETC SERVICE AREA
Federal Communications Commission FCC 03-338
INTRODUCTION
1. In this Order, we grant in part and deny in part, subject to enumerated conditions, the
petition of Virginia Cellular, LLC (Virginia Cellular) to be designated as an eligible
telecommunications carrier (ETC) throughout its licensed service area in the Commonwealth of
Virginia pursuant to section 214(e)(6) of the Communications Act of 1934, as amended (the
Act).! In so doing, we conclude that Virginia Cellular, a commercial mobile radio service
(CMRS) carrier, has satisfied the statutory eligibility requirements of section 214(e)(l).
Specifically, we conclude that Virginia Cellular has demonstrated that it will offer and advertise
the services supported by the federal universal service support mechanisms throughout the
designated service area. We find that the designation of Virginia Cellular as an ETC in two non-
rural study areas serves the public interest.3 We also find that the designation of Virginia
Cellular as an ETC in areas served by five of the six rural telephone companies serves the public
interest and furthers the goals of universal service. As explained below, with regard to the study
area ofNTELOS, we do not find that ETC designation would be in the public interest.
2. Because Virginia Cellular is licensed to serve only part of the study area of three of
six incumbent rural telephone companies affected by this designation, Virginia Cellular has
requested that the Commission redefine the service area of each of these rural telephone
companies for ETC designation purposes, in accordance with section 214(e)(5) of the Act.4 We
agree to the service area redefinition proposed by Virginia Cellular for the service areas of
Shenandoah and MGW, subject to the agreement of the Virginia State Corporation Commission
(Virginia Commission) in accordance with applicable Virginia Commission requirements.5 We
find that the Virginia Commission s first-hand knowledge of the rural areas in question uniquely
qualifies it to examine the redefinition proposal and determine whether it should be approved.
1 Virginia Cellular, LLC Petition for Designation as an Eligible Telecommunications Carrier in the State of Virginia
filed April 26, 2002 (Virginia Cellular Petition).
47 u.S.c. ~ 214(e)(1).
3 Virginia Cellular requests ETC designation in the study areas of the following non-rural telephone companies:
Bell Atlantic and GTE South, Inc. (GTE). Virginia Cellular requests ETC designation in the study areas of the
following rural telephone companies: Shenandoah Telephone Company (Shenandoah), NTELOS Telephone Inc.
(NTELOS, formerly Clifton Forge-Waynesboro Telephone Company), MGW Telephone Company (MGW
formerly Mountain Grove-Williamsville Telephone Company), New Hope Telephone Company (New Hope), North
River Telephone Cooperative (North River), and Highland Telephone Cooperative (Highland). We note that
although the Virginia Cellular Petition requested ETC designation for the study area served by Central Telephone
Company of Virginia, Virginia Cellular subsequently withdrew its request for ETC designation in Central
Telephone s study area. See Supplement to Virginia Cellular, LLC Petition for Designation as an Eligible
Telecommunications Carrier in the State of Virginia, filed April 17, 2003 at 1 (Virginia Cellular April 17, 2003
Supplement).
4 Virginia Cellular asked the Commission to redefine the service areas of Shenandoah, NTELOS, and MGW. See
Virginia Cellular Petition at 11-12 and Virginia Cellular Reply Comments at 7. See also Virginia Cellular
Amendment to Petition for Designation as an Eligible Telecommunications Carrier, filed October 21, 2002, at 2
(Virginia Cellular Amendment).
5 As discussed below, at this time, we do not designate Virginia Cellular as an ETC in the study area ofNTELOS.
See infra paras. 35, 39. Accordingly, we do not find it necessary to redefine the service area ofNTELOS.
6 If the Virginia Commission does not agree to our redefmition of the affected rural service areas, we will reexamine
our decision with regard to redefining these rural service areas.
Federal Communications Commission FCC 03-338
Because we do not designate Virginia Cellular as an ETC in NTELOS' study area , we do not
redefine this service area.
3. In response to a request from the Commission, the Federal-State Joint Board on
Universal Service (Joint Board) is currently reviewing: (1) the Commission s rules relating to
the calculation of high-cost universal service support in areas where a competitive ETC is
providing service; (2) the Commission s rules regarding support for non-primary lines; and (3)
the process for designating ETCs.7 Some commenters in that proceeding have raised concerns
about the rapid growth of high-cost universal service support and the impact of such growth on
consumers in rural areas.8 The outcome of that proceeding could potentially impact, among
other things, the support that Virginia Cellular and other competitive ETCs may receive in the
future and the criteria used for continued eligibility to receive universal service support.
4. While we await a recommended decision from the Joint Board, we acknowledge the
need for a more stringent public interest analysis for ETC designations in rural telephone
company service areas. The framework enunciated in this Order shall apply to all ETC
designations for rural areas pending further action by the Commission. We conclude that the
value of increased competition, by itself, is not sufficient to satisfy the public interest test in rural
areas. Instead, in determining whether designation of a competitive ETC in a rural telephone
company s service area is in the public interest, we weigh numerous factors, including the
benefits of increased competitive choice, the impact of multiple designations on the universal
service fund, the unique advantages and disadvantages of the competitor s service offering, any
commitments made regarding quality of telephone service provided by competing providers, and
the competitive ETC's ability to provide the supported services throughout the designated
service area within a reasonable time frame. Further, in this Order, we impose as ongoing
conditions the commitments Virginia Cellular has made on the record in this proceeding.9 These
conditions will ensure that Virginia Cellular satisfies its obligations under section 214 of the Act.
We conclude that these steps are appropriate in light of the increased frequency of petitions for
competitive ETC designations and the potential impact of such designations on consumers in
rural areas.
II.BACKGROUND
The Act
5. Section 254(e) ofthe Act provides that "only an eligible telecommunications carrier
designated under section 214(e) shall be eligible to receive specific Federal universal service
support.lO Pursuant to section 214(e)(1), a common carrier designated as an ETC must offer
See Federal-State Joint Board on Universal Service CC Docket No. 96-, Order, FCC 02-307 (reI. Nov. 8 2002)
(Referral Order); Federal-State Joint Board on Universal Service Seeks Comment on Certain of the Commission
Rules Relating to High Cost Universal Service Support and the ETC Process CC Docket 96-, 18 FCC Rcd 1941
Public Notice (reI. Feb. 7, 2003) (Portability Public Notice).
See generally, Federal-State Joint Board on Universal Service CC Docket No. 96-, United States Telecom
Association s Comments, filed May 5, 2003; Federal-State Joint Board on Universal Service CC Docket No. 96-
, Verizon s Comments, filed May 5 2003.
See infra para. 46.
47 U.C. ~ 254(e).
Federal Communications Commission FCC 03-338
and advertise the services supported by the federal universal service mechanisms throughout the
eslgnate service area.
6. Section 214(e)(2) of the Act gives state commissions the primary responsibility for
performing ETC designations.12 Section 214(e)(6), however, directs the Commission, upon
request, to designate as an ETC "a common carrier providing telephone exchange service and
exchange access that is not subject to the jurisdiction of a State commission.13 Under section
214(e)(6), the Commission may, with respect to an area served by a rural telephone company,
and shall, in all other areas, designate more than one common carrier as an ETC for a designated
service area, consistent with the public interest, convenience, and necessity, so long as the
requesting carrier meets the requirements of section 214( e) (1 ).
14 Before designating an
additional ETC for an area served by a rural telephone company, the Commission must
determine that the designation is in the public interest.
Commission Requirements for ETC Designation and Redefining the Service
Area
7. Filing Requirements for ETC Designation. An ETC petition must contain the
following: (1) a certification and brief statement of supporting facts demonstrating that the
petitioner is not subject to the jurisdiction of a state commission; (2) a certification that the
petitioner offers or intends to offer all services designated for support by the Commission
pursuant to section 254(c); (3) a certification that the petitioner offers or intends to offer the
supported services "either using its own facilities or a combination of its own facilities and resale
of another carrier s services;" (4) a description of how the petitioner "advertise( s J the availability
of (supportedJ services and the charges therefor using media of general distribution;" and (5) if
the petitioner is not a rural telephone company, a detailed description of the geographic service
area for which it requests an ETC designation from the Commission.
47 US.c. ~ 214(e)(1).
47 US.c. ~ 214(e)(2). See also Federal-State Joint Board on Universal Service, Promoting Deployment and
Subscribership in Unserved and Underserved Areas, Including Tribal and Insular Areas CC Docket No. 96-
Twelfth Report and Order, Memorandum Opinion and Order, and Further Notice of Proposed Rulemaking, 15 FCC
Rcd 12208, 12255, para. 93 (2000) (Twelfth Report and Order).
13 47 US.c. ~ 214(e)(6). See, e.g., Western Wireless Corporation Petition for Designation as an Eligible
Telecommunications Carrierfor the Pine Ridge Reservation in South Dakota CC Docket No. 96-, Memorandum
Opinion and Order, 16 FCC Rcd 18133 (2001) (Western Wireless Pine Ridge Order); Pine Belt Cellular, Inc. and
Pine Belt PCS, Inc., Petition for Designation as an Eligible Telecommunications Carrier CC Docket No. 96-
Memorandum Opinion and Order, 17 FCC Rcd 9589 (Wire1ine Compo Bur. 2002); Corr Wireless Communications
LLC Petition for Designation as an Eligible Telecommunications Carrier CC Docket 96-, Memorandum Opinion
and Order, 17 FCC Rcd 21435 (Wireline Compo Bur. 2002). We note that the Wire line Competition Bureau has
delegated authority to perform ETC designations. See Procedures for FCC Designation of Eligible
Telecommunications Carriers Pursuant to Section 214(e)(6) of the Communications Act Public Notice, 12 FCC Rcd
22947, 22948 (1997) (Section (e)(6) Public Notice). The Wireline Competition Bureau was previously named
the Common Carrier Bureau.
47 US.c. ~ 214(e)(6).
15 !d.
16 Section 214(e)(6) Public Notice 12 FCC Rcd at 22948-49. See also Federal-State Joint Board on Universal
Service, Western Wireless Corporation Petition for Preemption of an Order of the South Dakota Public Utilities
Federal Communications Commission FCC 03-338
8. Twelfth Report and Order On June 30, 2002, the Commission released the Twelfth
Report and Order which, among other things, sets forth how a carrier seeking ETC designation
from the Commission must demonstrate that the state commission lacks jurisdiction to perform
the ETC designation.17 Carriers seeking designation as an ETC for service provided on non-
tribal lands must provide the Commission with an "affirmative statement" from the state
commission or a court of competent jurisdiction that the carrier is not subject to the state
commission s jurisdiction. 18 The Commission defined an "affirmative statement" as "any duly
authorized letter, comment, or state commission order indicating that (the state commissionJ
lacks jurisdiction to perform the designation over a particular carrier.,,19 The requirement to
provide an "affirmative statement" ensures that the state commission has had "a specific
opportunity to address and resolve issues involving a state commission s authority under state
law to regulate certain carriers or classes of carriers.
9. Redefining a Service Area. Under section 214(e)(5) of the Act
, "
(iJn the case of an
area served by a rural telephone company, 'service area' means such company s 'study area
unless and until the Commission and the States, after taking into account recommendations of a
Federal-State Joint Board instituted under section 410(c), establish a different definition of
service area for such company.',2l Section 54.207(d) of the Commission s rules permits the
Commission to initiate a proceeding to consider a definition of a service area that is different
from a rural telephone company s study area as long as it seeks agreement on the new definition
with the applicable state commission.22 Under section 54.207(d)(1), the Commission must
petition a state commission with the proposed definition according to that state commission
procedures.23 In that petition, the Commission must provide its proposal for redefining the
service area and its decision presenting reasons for adopting the new definition, including an
analysis that takes into account the recommendations of the Federal-State Joint Board on
Universal Service (Joint Board).24 When the Joint Board recommended that the Commission
retain the current study areas of rural telephone companies as the service areas for the rural
telephone companies, the Joint Board made the following observations: (1) the potential for
cream skimming" is minimized by retaining study areas because competitors, as a condition of
eligibility, must provide services throughout the rural telephone company s study area; (2) the
Telecommunications Act of 1996 (1996 Act), in many respects, places rural telephone
Commission Declaratory Ruling, CC Docket No. 96-, 15 FCC Rcd 15168 (2000) (Declaratory Ruling), recon.
pending.
17 See Twelfth Report and Order 15 FCC Rcd at 12255-, paras. 93-114.
18 fd. at 12255, para. 93.
19 Id. at 12264, para. 113.
20 fd.
47 D.C. ~ 214(e)(5).
22 See 47 c.F.R. ~ 54.207(d). Any proposed definition will not take effect until both the Commission and the state
commission agree upon the new definition. See 47 c.F.R. ~ 54.207(d)(2).
23
See 47 c.F.R. ~ 54.207(d)(1).
24 See id. We note that the Wireline Competition Bureau has delegated authority to redefine service areas. 47
c.F.R. ~ 54.207(e).
Federal Communications Commission FCC 03-338
companies on a different competitive footing from other local telephone companies; and (3)
there would be an administrative burden imposed on rural telephone companies by requiring
them to calculate costs at something other than a study area level.
Virginia Cellular s Petition
10. On April 26, 2002 , Virginia Cellular filed with this Commission a petition, pursuant
to section 214(e)(6), seeking designation as an ETC throughout its licensed service area in the
Commonwealth ofVirginia.26 In its petition, Virginia Cellular contends that the Virginia
Commission issued an "affirmative statement" that the Virginia Commission does not have
jurisdiction to designate a CMRS carrier as an ETC. Accordingly, Virginia Cellular asks the
Commission to exercise jurisdiction and designate Virginia Cellular as an ETC pursuant to
section 214(e)(6).27 Virginia Cellular also maintains that it satisfies the statutory and regulatory
prerequisites for ETC designation, and that designating Virginia Cellular as an ETC serves the
public interest.
11. Virginia Cellular also requests the Commission to redefine the service areas of three
rural telephone companies, Shenandoah, NTELOS, and MGW, because it is not permitted under
its current license to provide facilities-based service to the entire study area of each of these
companies.29 Virginia Cellular states that as a wireless carrier, it is restricted to providing
facilities-based service only in those areas where it is licensed by the Commission.3o It adds that
it is not picking and choosing the "lowest cost exchanges" of the affected rural telephone
companies, but instead is basing its requested ETC area solely on its licensed service area and
proposes to serve the entirety of that area.31 Virginia Cellular contends that the proposed
redefinition of the rural telephone companies' service areas is consistent with the
recommendations regarding rural telephone company study areas set forth by the Joint Board in
its Recommended Decision
2S See Federal-State Joint Board on Universal Service CC Docket No. 96-, Recommended Decision, 12 FCC Rcd
, 179-, paras. 172-74 (1996) (J 996 Recommended Decision).
26
See generally, Virginia Cellular Petition. On May 15 2002, the Wireline Competition Bureau released a Public
Notice seeking comment on the Virginia Cellular Petition. See Wireline Competition Bureau Seeks Comment on
Virginia Cellular LLC Petition for Designation as an Eligible Telecommunications Carrier in the State of Virginia
CC Docket No 96-, Public Notice, 17 FCC Rcd 8778 (Wire line Compo Bur. 2002); In the Matter of Federal-State
Joint Board on Universal Service CC Docket 96-, Comments of Virginia Rural Telephone Companies, filed June
2002 (Virginia Rural Telephone Companies Comments); In the Matter of Federal-State Joint Board on
Universal Service CC Docket 96-, Reply Comments of the National Telecommunications Cooperative
Association, filed June 17 2002 (NTCA Comments).
27 Virginia Cellular Petition at 3-
28 !d. at 1-14-17.
29 Id. at 10-14. See Supplement to Virginia Cellular, LLC Petition for Designation as an Eligible
Telecommunications Carrier in the Commonwealth of Virginia, filed October 11 2002 at 1-2 (Virginia Cellular
October 11 Supplement) and Virginia Cellular Amendment at 2.
30 Virginia Cellular Petition at 13.
31 Id.
32 !d. at 12-14. See also 47 u.S.c. ~ 214(e)(5).
Federal Communications Commission FCC 03-338
III.DISCUSSION
12. After careful review ofthe record before us, we find that Virginia Cellular has met all
the requirements set forth in section 214(e)(1) and (e)(6) to be designated as an ETC by this
Commission for portions of its licensed service area. First, we find that Virginia Cellular has
demonstrated that the Virginia Commission lacks the jurisdiction to perform the designation and
that the Commission therefore may consider Virginia Cellular s petition under section 214(e)(6).
Second, we conclude that Virginia Cellular has demonstrated that it will offer and advertise the
services supported by the federal universal service support mechanisms throughout the
designated service area upon designation as an ETC in accordance with section 214( e)(1). In
addition, we find that the designation of Virginia Cellular as an ETC in certain areas served by
rural telephone companies serves the public interest and furthers the goals of universal service by
providing greater mobility and a choice of service providers to consumers in high-cost and rural
areas of Virginia. Pursuant to our authority under section 214(e)(6), we therefore designate
Virginia Cellular as an ETC for parts of its licensed service area in the Commonwealth of
Virginia, as set forth below. As explained below, however, we do not designate Virginia
Cellular as an ETC in the study area ofNTELOS.33 In areas where Virginia Cellular s proposed
service areas do not cover the entire study area of a rural telephone company, Virginia Cellular
ETC designation shall be subject to the Virginia Commission s agreement with our new
definition for the rural telephone company service areas. In all other areas, as described herein
Virginia Cellular s ETC designation is effective immediately. Finally, we note that the outcome
of the Commission s pending proceeding before the Joint Board examining the rules relating to
high-cost universal service support in competitive areas could potentially impact the support that
Virginia Cellular and other ETCs may receive in the future.34 This Order is not intended to
prejudge the outcome of that proceeding. We also note that Virginia Cellular always has the
option of relinquishing its ETC designation and its corresponding benefits and obligations to the
extent that it is concerned about its long-term ability to provide supported services in the affected
rural study areas.
Commission Authority to Perform the ETC Designation
13. We find that Virginia Cellular has demonstrated that the Virginia Commission lacks
the jurisdiction to perform the requested ETC designation and that the Commission has authority
to consider Virginia Cellular s petition under section 214(e)(6) ofthe Act. Specifically, Virginia
Cellular states that it submitted an application for designation as an ETC with the Virginia
Commission, and on April 9, 2002, the Virginia Commission issued an order stating that it had
not asserted jurisdiction over CMRS carriers.36 In its order, the Virginia Commission directed
Virginia Cellular to file for ETC designation with the FCe.37 Based on this statement by the
Virginia Commission, we find that the Virginia Commission lacks jurisdiction to designate
Virginia Cellular as an ETC and that this Commission has authority to perform the requested
33 See infra paras. 35, 39.
34 See Portability Public Notice 18 FCC Rcd at 1941.
35 See
Declaratory Ruling, 15 FCC Rcd at 15173; see also 47 U.c. ~ 214(e)(4).
36 See Virginia Cellular Petition at 3-4 and Exhibit A.
37 !d.
Federal Communications Commission FCC 03-338
ETC designation in the Commonwealth of Virginia pursuant to section 214(e)(6).
Offering and Advertising the Supported Services
14. Offering the Services Designated for Support. We find that Virginia Cellular has
demonstrated through the required certifications and related filings, that it now offers, or will
offer upon designation as an ETC, the services supported by the federal universal service support
mechanism. As noted in its petition, Virginia Cellular is an "Band" cellular carrier for the
Virginia 6 Rural Service Area, serving the counties of Rocking ham, Augusta, Nelson, and
Highland, as well as the cities of Harrison burg, Staunton, and Waynesboro.39 Virginia Cellular
states that it currently provides all of the services and functionalities enumerated in section
54.101(a) ofthe Commission s rules throughout its cellular service area in Virginia.4o Virginia
Cellular certifies that it has the capability to offer voice-grade access to the public switched
network, and the functional equivalents to DTMF signaling, single-party service, access to
operator services, access to interexchange services, access to directory assistance, and toll
limitation for qualifying low-income consumers.41 Virginia Cellular also complies with
applicable law and Commission directives on providing access to emergency services.42 In
addition, although the Commission has not set a minimum local usage requirement, Virginia
Cellular certifies it will comply with "any and all minimum local usage requirements adopted by
the FCC" and it intends to offer a number of local calling plans as part of its universal service
offering.43 As discussed below, Virginia Cellular has committed to report annually its progress
in achieving its build-out plans at the same time it submits its annual certification required under
sections 54.313 and 54.314 ofthe Commission s rules.
15. Virginia Cellular has also made specific commitments to provide service to
requesting customers in the service areas that it is designated as an ETe. Virginia Cellular states
that if a request is made by a potential customer within its existing network, Virginia Cellular
will provide service immediately using its standard customer equipment.45 In instances where a
request comes from a potential customer within Virginia Cellular s licensed service area but
outside its existing network coverage, it will take a number of steps to provide service that
include determining whether: (1) the requesting customer s equipment can be modified or
replaced to provide service; (2) a roof-mounted antenna or other equipment can be deployed to
provide service; (3) adjustments can be made to the nearest cell tower to provide service; (4)
there are any other adjustments that can be made to network or customer facilities to provide
service; (5) it can offer resold services from another carrier s facilities to provide service; and (6)
an additional cell site, cell extender, or repeater can be employed or can be constructed to
47 U.c. ~ 214(e)(6).
39 Virginia Cellular Petition at 1.
40 /d. at 2.
41
/d. at 4-8 and Exhibit B.
42
See 47 c.F.R. ~ 54.101(a)(5); Virginia Cellular Petition at 7.
43 Id. at 5-6 and Exhibit B.
44
See infra para 46; Virginia Cellular November 12 Supplement at 4.
/d. at 3.
Federal Communications Commission FCC 03-338
provide service.46 In addition, if after following these steps, Virginia Cellular still cannot
provide service, it will notify the requesting party and include that information in an annual
report filed with the Commission detailing how many requests for service were unfulfilled for
t e past year.
16. Virginia Cellular has further committed to use universal service support to further
improve its universal service offering by constructing several new cellular sites in sparsely
populated areas within its licensed service area but outside its existing network coverage.
Virginia Cellular estimates that it will construct 11 cell sites over the first year and a half
following ETC designation.49 These
11 cell sites will serve a population of 157 060.50 Virginia
Cellular notes that the parameters of its build-out plans may evolve over time as it responds to
consumer demand.
17. The Virginia Rural Telephone Companies raise several concerns about Virginia
Cellular s service offerings. We address each of these concerns below, and in so doing, we
conclude that Virginia Cellular has demonstrated that it will offer the services supported by the
federal universal service support mechanism upon designation as an ETC. Initially, we note that
the Commission has held that to require a carrier to actually provide the supported services
before it is designated an ETC has the effect of prohibiting the ability of prospective entrants
from providing telecommunications service. 52 Instead
, "
a new entrant can make a reasonable
demonstration. . . of its capability and commitment to provide universal service without the
actual provision of the proposed service.
18. We also reject the argument of the Virginia Rural Telephone Companies that Virginia
Cellular does not offer all of the services supported by the federal universal service support
mechanisms as required by section 214(e)(1)(A).54 Specifically, the Virginia Rural Telephone
Companies claim that Virginia Cellular: (1) has not yet upgraded from analog to digital and until
/d. at 3-
47 /d. at 4.
48 Id. at 4-
/d. at 4-5 and Attachment. For purposes of this analysis, we exclude Virginia Cellular s proposed cell site in
Crimora, Augusta County, Virginia, which would be located in the study area ofNTELOS. As discussed above, we
deny Virginia Cellular s request for ETC designation in the NTELOS study area.
/d. Virginia Cellular estimates the populations covered by these cell 'sites as follows: Hinton (population of
027), North Harrisonburg (population of 52 750), Churchville (population of 5 865), Spottswood (population of
114), Central Nelson (population of9 354), Middlebrook (population of 4 749), Bergton (population of2 987),
Afton (population of7 064), McDowell (population of731), Mustoe (population of 1 094), and West Augusta
(population of 325). /d. at 5 and Attachment.
51 Id. at 5.
52
See DeclaratOlY Ruling, 15 FCC Rcd at 15173-, paras. 12-14. In the Declaratory Ruling, the Commission
stated that "a new entrant cannot reasonably be expected to be able to make the substantial financial investment
required to provide the supported services in high-cost areas without some assurance that it will be eligible for
federal universal service support.Id. at 15173, para. 13.
/d. at 15178, para. 24.
54
See Virginia Rural Telephone Companies Comments at 4-
Federal Communications Commission FCC 03-338
this happens, Virginia Cellular cannot effectively implement E-911 or the Communications
Assistance for Law Enforcement Act (CALEA); (2) offers no local usage; (3) has stated that its
customers will not have equal access to interexchange carriers; (4) states only that it will
participate "as required" with respect to Lifeline service; and (5) has wireless signals that are
sporadic or unavailable in some of the mountainous regions that Virginia Cellular proposes to
serve. 55
19. We find that Virginia Cellular s commitment to provide access to emergency services
is sufficient. Virginia Cellular states that it is in compliance with state and federal 911 and E-
911 mandates and is upgrading from analog to digital technology. 56 Virginia Cellular states that
it is implementing Phase I E-911 services in those areas where local governments have
developed E-911 functionality and that upon designation as an ETC, it will be able to effectively
implement E-911. 57
20. We find sufficient Virginia Cellular s showing that it will offer minimum local usage
as part of its universal service offering. Therefore, we reject the Virginia Rural Telephone
Companies' claim that Virginia Cellular should be denied ETC designation because it does not
currently offer any local usage.58 Although the Commission did not set a minimum local usage
requirement, in the Universal Service Order it determined that ETCs should provide some
minimum amount of local usage as part of their "basic service" package of supported services.
Virginia Cellular states that it will comply with any and all minimum local usage requirements
adopted by the FCC.6o It adds that it will meet the local usage requirements by including a
variety of local usage plans as part of a universal service offering. 61 In addition, Virginia
Cellular states that its current rate plans include access to the local exchange network, and that
many plans include a large volume ofminutes.62 Accordingly, we find that Virginia Cellular
commitment to provide local usage is sufficient.
21. We reject the Virginia Rural Telephone Companies ' claim that ETC designation
should be denied because Virginia Cellular s customers will not have equal access to
55 !d. at 5-
56
See Supplement to Virginia Cellular, LLC Petition for Designation as an ETC in the Commonwealth of Virginia
filed October 3 , 2002 at 3-4 (Virginia Cellular October 3 Supplement); Virginia Cellular October 11 Supplement at
57 See Virginia Cellular Reply Comments at 3.
58 Virginia Rural Telephone Companies Comments at 5.
59 See Federal-State Joint Board on Universal Service Report and Order, CC Docket No, 96-, 12 FCC Rcd 8776
8813, para. 67 (1997) (Universal Service Order) (subseq. history omitted). Although the Commission s rules define
local usage" as "an amount of minutes of use of wire center service, prescribed by the Commission, provided free
of charge to end users " the Commission has not specified a number of minutes of use. See 47 c.F .R. ~
54.1O1(a)(2). See also Federal-State Joint Board on Universal Service Recommended Decision, CC Docket No.
96-, FCC 02J-1 (reI. Jui. 10 2002) (Supported Services Recommended Decision).
60 Virginia Cellular Petition at 5-
61
!d. at 6.
62 Virginia Cellular Reply Comments at 4.
Federal Communications Commission FCC 03-338
interexchange carriers.63 Section 54.101 (a)(7) of the rules states that one of the supported
services is access to interexchange services, not equal access to those services.64 Virginia
Cellular states that it provides access to interexchange services.65 Accordingly, we find
sufficient Virginia Cellular s showing that it will offer access to interexchange services.
22. We find that Virginia Cellular s commitment to participate in the Lifeline and Linkup
programs is sufficient. In its petition, Virginia Cellular states that it currently has no Lifeline
customers, and upon designation as an ETC, it will participate in Lifeline as required.66 Virginia
Cellular also states that it will advertise the availability of Lifeline service to its customers.
Although Virginia Cellular does not currently advertise Lifeline to its customers, we note that the
advertising rules for Lifeline and Linkup services apply only to already-designated ETCs.
Thus, we find sufficient Virginia Cellular s commitment to participate in Lifeline and Linkup.
23. Although the Virginia Rural Telephone Companies claim that Virginia Cellular
wireless signals are sporadic in certain areas, we find that the existence of so-called "dead spots
in Virginia Cellular s network does not preclude us from designating Virginia Cellular as an
ETC. The Commission has already determined that a telecommunications carrier s inability to
demonstrate that it can provide ubiquitous service at the time of its request for designation as an
ETC should not preclude its designation as an ETe.69 Moreover, as stated above, Virginia
Cellular has committed to improve its network.7o In addition, the Commission s rules
acknowledge the existence of dead spots.71 "Dead spots" are defined as "(sJmall areas within a
service area where the field strength is lower than the minimum level for reliable service.
Section 22.99 ofthe Commission s rules states that "(sJervice within dead spots is presumed.
Additionally, the Commission s rules provide that "cellular service is considered to be provided
in all areas, including dead spots. . . .74 Because "dead spots" are acknowledged by the
Commission s rules, we are not persuaded by the Virginia Rural LECs that the possibility of
63 Virginia Rural Telephone Companies Comments at 5.
47 c.F.R. ~54.101(a)(7). We note that in July 2002, four members of the Joint Board recommended adding equal
access as a supported service. See Supported Services Recommended Decision at paras. 75-86. In July 2003, the
Commission decided to defer consideration of this issue pending resolution of the Commission s proceeding
examining the rules relating to high-cost universal service support in competitive areas. See Federal-State Joint
Board on Universal Service CC Docket No. 96-, Order and Order on Reconsideration, 18 FCC Rcd 15 090
104, para. 33 (2003).
65 Virginia Cellular Reply Comments at 4-
66 Virginia Cellular Petition at 8.
67 Virginia Cellular Reply Comments at 5.
68 See Twelfth Report and Order 15 FCC Rcd at 12249-, para. 76-80.
69 See Declaratory Ruling, 15 FCC Rcd at 15175, para. 17.
70
See supra para. 16; Virginia Cellular Petition at 2, 17 and Virginia Cellular October 3 Supplement at 2, Virginia
Cellular November 12 Supplement at 4-5 and Attachment.
71 See 47 c.F.R. ~ 22.99.
72 Id.
73 Id.
74
See 47 c.F.R. ~ 22.911(b).
Federal Communications Commission FCC 03-338
dead spots demonstrates that Virginia Cellular is not willing or capable of providing acceptable
levels of service throughout its service area.
24. Offering the Supported Services Using a Carrier s Own Facilities.Virginia Cellular
has demonstrated that it satisfies the requirement of section 214( e )(1 )(A) that it offer the
supported services using either its own facilities or a combination of its own facilities and resale
of another carrier s services.75 Virginia Cellular states that it intends to provide the supported
services using its cellular network infrastructure, which includes "the same antenna, cell-site
tower, trunking, mobile switching, and interconnection facilities used by the company to serve its
existing conventional mobile cellular service customers.76 We find that this certification is
sufficient to satisfy the facilities requirement of section 214(e)(1)(A).
25. Advertising the Supported Services. We conclude that Virginia Cellular has
demonstrated that it satisfies the requirement of section 214(e)(1)(B) to advertise the availability
ofthe supported services and the charges therefor using media of general distribution.77 Virginia
Cellular certifies that it "will use media of general distribution that it currently employs to
advertise its universal service offerings throughout the service areas designated by the
Commission.,,78 In addition, Virginia Cellular details alternative methods that it will employ to
advertise the availability of its services. For example, Virginia Cellular will provide notices at
local unemployment, social security, and welfare offices so that unserved consumers can learn
about Virginia Cellular s service offerings and learn about Lifeline and Linkup discounts.
Virginia Cellular also commits to publicize locally the construction of all new facilities in
unserved or underserved areas so customers are made aware of improved service.80 We find that
Virginia Cellular s certification and its additional commitments to advertising its service
offerings satisfy section 214(e)(1)(B). In addition, as the Commission has stated in prior
decisions, because an ETC receives universal service support only to the extent that it serves
customers, we believe that strong economic incentives exist, in addition to the statutory
obligation, for an ETC to advertise its universal service offering in its designated service area.
Public Interest Analysis
26. We conclude that it is "consistent with the public interest, convenience, and
necessity" to designate Virginia Cellular as an ETC for the portion of its requested service area
that is served by the non-rural telephone companies Bell Atlantic and GTE South, Inc. We also
conclude that it is in the public interest to designate Virginia Cellular as an ETC in Virginia in
the study areas served by five of the six affected rural telephone companies. In determining
whether the public interest is served, the Commission places the burden of proof upon the ETC
applicant. We conclude that Virginia Cellular has satisfied the burden of proof in establishing
47 u.S.c. ~ 214(e)(1)(A).
76 Virginia Cellular Petition at 9.
77 47 u.S.C. ~ 2l4(e)(1)(B).
78 Virginia Cellular Petition at 9.
79 Virginia Cellular November 12 Supplement at 5.
/d.
81 See Pine Ridge Order 16 FCC Rcd at 18137, para. 10.
Federal Communications Commission FCC 03-338
that its universal service offering in these areas will provide benefits to rural consumers. We do
not designate Virginia Cellular as an ETC, however, for the study area ofNTELOS because we
find that Virginia Cellular has not satisfied its burden of proof in this instance.
27. Non-Rural Study Areas. We conclude that it is "consistent with the public interest
convenience, and necessity" to designate Virginia Cellular as an ETC for the portion of its
requested service area that is served by the non-rural telephone companies of Bell Atlantic and
GTE South.83 We note that the Bureau previously has found designation of additional ETCs in
areas served by non-rural telephone companies to be per se in the public interest based upon a
demonstration that the requesting carrier complies with the statutory eligibility obligations of
section 214( e)( 1) of the Act. 84 We do not believe that designation of an additional ETC in a non-
rural telephone company s study area based merely upon a showing that the requesting carrier
complies with section 214(e)(1) of the Act will necessarily be consistent with the public interest
in every instance. We nevertheless conclude that Virginia Cellular s public interest showing
here is sufficient based on the detailed commitments Virginia Cellular made to ensure that it
provides high quality service throughout the proposed rural and non-rural service areas; indeed
given our finding that Virginia Cellular has satisfied the more rigorous public interest analysis
for the rural study areas, it follows that its commitments satisfy the public interest requirements
for non-rural areas. 85 We also note that no parties oppose Virginia Cellular s request for ETC
designation in the study areas of these non-rural telephone companies. We therefore conclude
that Virginia Cellular has demonstrated that its designation as an ETC in the study areas of these
non-rural telephone companies, is consistent with the public interest, as required by section
214(e)(6).86 We further note that the Joint Board is reviewing whether to modify the public
interest analysis used to designate ETCs in both rural and non-rural carrier study areas under
section 214(e) of the Act.87 The outcome of that proceeding could impact the Commission
public interest analysis for future ETC designations in non-rural telephone company service
areas.
28. Rural Study Areas. Based on the record before us, we conclude that grant of this
ETC designation for the requested rural study areas, in part, is consistent with the public interest.
In considering whether designation of Virginia Cellular as an ETC will serve the public interest
we have considered whether the benefits of an additional ETC in the wire centers for which
Virginia Cellular seeks designation outweigh any potential harms. We note that this balancing of
benefits and costs is a fact-specific exercise. In determining whether designation of a
competitive ETC in a rural telephone company s service area is in the public interest, we weigh
the benefits of increased competitive choice, the impact of the designation on the universal
service fund, the unique advantages and disadvantages of the competitor s service offering, any
82
See infra para. 35.
83 See 47 u.S.c. ~ 214(e)(6). See also Appendix A.
84 See, e.g., Cellco Partnership d/b/a Bell Atlantic Mobile Petition for Designation as an Eligible
Telecommunications Carrier CC Docket No. 96-, Memorandum Opinion and Order, 16 FCC Rcd 39 (Com. Car.
Bur. 2000).
85
See Virginia Cellular November 12 Supplement at 4-, Attachment; infra para. 28.
86 See 47 u.S.c. ~ 214(e)(6).
87 See Portability Public Notice 18 FCC Rcd at 1954-, para. 33.
Federal Communications Commission FCC 03-338
commitments made regarding quality of telephone service, and the competitive ETC's ability to
satisfy its obligation to serve the designated service areas within a reasonable time frame. We
recognize that as part of its review of the ETC designation process in the pending proceeding
examining the rules relating to high-cost support in competitive areas, the Commission may
adopt a different framework for the public interest analysis ofETC applications. This Order
does not prejudge the Joint Board's deliberations in that proceeding and any other public interest
framework that the Commission might ultimately adopt.
29. Virginia Cellular s universal service offering will provide benefits to customers in
situations where they do not have access to a wire line telephone. For instance, Virginia Cellular
has committed to serve residences to the extent that they do not have access to the public
switched network through the incumbent telephone company.88 Also, the mobility of Virginia
Cellular s wireless service will provide other benefits to consumers. For example, the mobility
of telecommunications assists consumers in rural areas who often must drive significant
distances to places of employment, stores, schools, and other critical community locations. In
addition, the availability of a wireless universal service offering provides access to emergency
services that can mitigate the unique risks of geographic isolation associated with living in rural
communities.89 Virginia Cellular also submits that, because its local calling area is larger than
those of the incumbent local exchan~e carriers it competes against, Virginia Cellular s customers
will be subject to fewer toll charges. 0
30. We acknowledge arguments made in the record that wireless telecommunications
offerings may be subject to dropped calls and poor coverage.91 Parties also have noted that
wireless carriers often are not subject to mandatory service quality standards.92 Virginia Cellular
has committed to mitigate these concerns. Virginia Cellular assures the Commission that it will
alleviate dropped calls by using universal service support to build new towers and facilities to
offer better coverage.93 As evidence of its commitment to high service quality, Virginia Cellular
has also committed to comply with the Cellular Telecommunications Industry Association
Consumer Code for Wireless Service, which sets out certain principles, disclosures, and practices
for the provision of wireless service.94 In addition, Virginia Cellular has committed to provide
88 Virginia Cellular November 12 Supplement at 3-4. According to Virginia Cellular, 11 out of 12 of its proposed
cell sites contain some area that is unserved by Virginia Cellular s facilities and/or wire line networks. See id. at
but see Virginia Rural Telephone Companies Comments at 3 (stating that there is an incumbent ETC in all the areas
where Virginia Cellular seeks ETC designation).
89 Virginia Cellular Petition at 16 (citing Smith Bagley, Inc.Order, Decision No. 63269, Docket No. T-02556A-99-
0207 (Ariz. Corp. Comm n Dec. 15 2001) (finding that competitive entry provides a potential solution to "health
and safety risks associated with geographic isolation
).
See also Twelfth Report and Order 15 FCC Rcd at 12212
para. 3.
90 See Virginia Cellular Petition at 17; Virginia Cellular April 3 Supplement at 1-
91 See e.Virginia Rural Telephone Companies Comments at 6; 12 Va. Admin. Code ~ 5-400-80.
92 See Virginia Rural Telephone Companies Comments at 6; 12 Va. Admin. Code ~ 5-400-80.
93 See Virginia Cellular November 12 Supplement at 1.
94 /d.; CTIA, Consumer Code/or Wireless Service available at http://www.wow-com.comipdf/The Code.pdf.
Under the CTIA Consumer Code, wireless carriers agree to: (1) disclose rates and terms of service to customers; (2)
make available maps showing where service is generally available; (3) provide contract terms to customers and
confirm changes in service; (4) allow a trial period for new service; (5) provide specific disclosures in advertising;
Federal Communications Commission FCC 03-338
the Commission with the number of consumer complaints per 1 000 handsets on an annual
basis.95 Therefore, we find that Virginia Cellular s commitment to provide better coverage to
unserved areas and its other commitments discussed herein adequately address any concerns
about the quality of its wireless service.
31. Although we find that grant of this ETC designation will not dramatically burden the
universal service fund, we are increasingly concerned about the impact on the universal service
fund due to the rapid growth in high-cost support distributed to competitive ETCs.
Specifically, although competitive ETCs only receive a small percentage of all high-cost
universal service support, the amount of high-cost support distributed to competitive ETCs is
growing at a dramatic pace. For example, in the first quarter of2001 , three competitive ETCs
received approximately $2 million or 0.4 percent of high-cost support.97 In the fourth quarter of
2003, 112 competitive ETCs are projected to receive approximately $32 million or 3.7 percent of
high-cost support.98 This concern has been raised by parties in this proceeding, especially as it
relates to the long-term sustainability of universal service high-cost support. Specifically,
commenters argue that designation of competitive ETCs will place significant burdens on the
federal universal service fund without any corresponding benefits.99 We recognize these
commenters raise important issues regarding universal service support. As discussed above, the
Commission has asked the Joint Board to examine, among other things, the Commission s rules
relating to high-cost universal service support in service areas in which a competitive ETC is
providing service, as well as the Commission s rules regarding support for second lines.lOO We
note that the outcome of the Commission s pending proceeding examining the rules relating to
(6) separately identify carrier charges from taxes on billing statements; (7) provide customers the right to terminate
service for changes to contract terms; (8) provide ready access to customer service; (9) promptly respond to
, consumer inquiries and complaints received from government agencies; and (10) abide by policies for protection of
consumer privacy. See id.
95
See infra para. 46 (requesting that Virginia Cellular provide consumer complaint data on October 1 of each year).
96 For example, assuming, that Virginia Cellular captures each and every customer located in the five affected rural
study areas, the overall size of the high-cost support mechanisms would not significantly increase because the total
amount of high-cost universal service support available to incumbent carriers in the rural study areas where we grant
Virginia Cellular ETC designation is only approximately 0.105% percent of the total high-cost support available to
all ETCs. See Federal Universal Service Support Mechanisms Fund Size Projections for the Fourth Quarter of2003
Appendix HC 1 (Universal Service Administrative Company, August 1 2003) (determining that the total amount of
high-cost universal service support available to incumbent carriers in the affected rural study areas is projected to be
$899 706 out ofa total of$857 903 276 in the fourth quarter of2003). We note, however, in light of the rapid
growth in competitive ETCs, comparing the impact of one competitive ETC on the overall fund may be
inconclusive. We hope that the Joint Board will speak to this issue in the proceeding addressing rules relating to
high-cost support in competitive areas.
97 See Federal Universal Service Support Mechanisms Fund Size Projections for the First Quarter of 2001 (Universal
Service Administrative Company, Jan. 31, 2002).
98 Federal Universal Service Support Mechanisms Fund Size Projections for the Fourth Quarter of 2003 (Universal
Service Administrative Company, Aug. 1 2003). At the same time, we recognize that high-cost support to
incumbent ETCs has grown significantly in real and percentage terms over the same period. See generally, Federal-
State Joint Board on Universal Service CC Docket No. 96-, Cellular Telecommunications Industry Association
Comments, filed May 5 2003.
99 See Virginia Rural Telephone Companies Comments at 2-4; NTCA Comments at 2-
100 See Portability Public Notice.
Federal Communications Commission FCC 03-338
high-cost support in competitive areas could potentially impact, among other things, the support
that Virginia Cellular and other competitive ETCs may receive in the future. It is our hope that
the Commission s pending rulemaking proceeding also will provide a framework for assessing
the overall impact of competitive ETC designations on the universal service mechanisms.
32. Additionally, we conclude that, for most ofthe rural areas in which Virginia Cellular
seeks ETC designation, such designation does not raise the rural creamskimming and related
concerns alleged by commenters.IOI Rural creamskimming occurs when competitors seek to
serve only the low-cost, high revenue customers in a rural telephone company s studyarea.IO2 In
this case, because the contour of its CMRS licensed area differs from the existing rural telephone
companies ' study areas , Virginia Cellular will be unable to provide facilities-based service to the
entirety of the study areas of three of the six affected rural telephone companies - Shenandoah
MGW, and NTELOS. Generally, a request for ETC designation for an area less than the entire
study area of a rural telephone company might raise concerns that the petitioner intends to
creamskim in the rural study area.IO3 In this case, however, Virginia Cellular commits to provide
universal service throughout its licensed service area.IO4 It therefore does not appear that
Virginia Cellular is deliberately seeking to enter only certain portions of these companies' study
areas in order to creamskim.
33. At the same time, we recognize that, for reasons beyond a competitive carrier
control, the lowest cost portion of a rural study area may be the only portion of the study area
that a wireless carrier s license covers. 105 Under these circumstances, granting a carrier ETC
designation for only its licensed portion of the rural study area may have the same effect on the
ILEC as rural creamskimming.
34. We have analyzed the record before us in this matter and find that, for the study areas
of Shenandoah and MGW, Virginia Cellular s designation as an ETC is unlikely to undercut the
incumbents' ability to serve the entire study area. Our analysis of the population density of each
of the affected wire centers reveals that, for the study areas ofMGW and Shenandoah, Virginia
Cellular will not be serving only low-cost areas to the exclusion of high-cost areas. 106 Although
101
See NTCA Comments at 5-6; see also Virginia Rural Telephone Companies Comments at 11.
102 See 1996 Recommended Decision 12 FCC Rcd at 180, para. 172. "Creamskimming" refers to the practice of
targeting only the customers that are the least expensive to serve, thereby undercutting the ILEC's ability to provide
service throughout the area. See, e., Universal Service Order 12 FCC Rcd at 8881-, para. 189.
103
See 1996 Recommended Decision 12 FCC Rcd at 180, para. 172 (stating that potential creamskimming is
minimized when competitors, as a condition of eligibility for universal service support, must provide services
throughout a rural telephone company s study area).
104 See Virginia Cellular Petition at 2, 13.
105 See NTCf\ Comments at 5.
106 The Virginia Rural Telephone Companies express concerns about use of the term "wire center" versus
exchange" as the relevant area designated for support. See Virginia Rural Telephone Companies November 8
2002 ex parte (stating that, in Virginia, the defined area for regulatory purposes is "exchange ). Virginia Cellular
responded that the rural ILEC exchanges in Virginia contain a single wire center and therefore use of the term "wire
center" is synonymous with "exchange.See Virginia Cellular November 20 Supplement at 2. The Virginia Rural
Telephone Companies also state "generally, in rural companies there is one wire center per exchange.See Virginia
Rural Telephone Companies November 8 ex parte. We note that the Commission has historically viewed high cost
Federal Communications Commission FCC 03-338
there are other factors that define high-cost areas, a low population density typically indicates a
high-cost area.IO7 Our analysis of population density reveals that Virginia Cellular is serving not
only the lower cost, higher density wire centers in the study areas ofMGW and Shenandoah. 108
The population density for the Shenandoah wire center for which Virginia Cellular seeks ETC
designation is approximately 4.64 persons per square mile and the average population density for
Shenandoah's remaining wire centers is approximately 53.62 persons per square mile.IO9 The
average population density for the MGW wire centers for which Virginia Cellular seeks ETC
designation is approximately 2.30 persons per square mile and the average population density for
MGW's remaining wire centers is approximately 2.18 persons per square mile.llo
35. We conclude, however, for the following reasons, that it would not be in the public
interest to designate Virginia Cellular as an ETC in the study area ofNTELOS. Virginia
Cellular s licensed CMRS area covers only the Waynesboro wire center in NTELOS' study area.
Based on our examination of the population densities of the wire centers in NTELOS' study area
we find that Waynesboro is the lowest-cost, highest-density wire center in the study area of
NTELOS, and that there is a great disparity in density between the Waynesboro wire center and
the NTELOS wire centers outside Virginia Cellular s service area. The population density in the
Waynesboro wire center is approximately 273 persons per square mile, while the average
population density of the remaining wire centers in NTELOS' study area is approximately 33
support in terms of wire centers. See, e.
g.,
47 u.S.c. 9 54.309. Thus, consistent with our rules, hereinafter in this
order, we will discuss support in terms of wire centers.
107 See Multi-Association Group (MAG) Plan for Regulation of Interstate Services of Non-Price Cap Incumbent
Local Exchange Carriers and Interexchange Carriers CC Docket No. 00-256, Second Report and Order and
Further Notice of Proposed Rulemaking, Federal-State Joint Board on Universal Service CC Docket No. 96-45
Fifteenth Report and Order Access Charge Reform for Incumbent Local Exchange Carriers Subject to Rate-of-
Return Regulation CC Docket No. 98-, Report and Order Prescribing the Authorized Rate of Return From
Interstate Services of Local Exchange Carriers CC Docket No. 98-166, Report and Order, 16 FCC Rcd 19613
para. 28 (2001) (MAG Order), recon. pending (discussing Rural Task Force White Paper 2 at
.chttp://www.wutc.wa.gov/rtf::.) (stating that "(r)ural carriers generally serve more sparsely populated areas and
fewer large, high-volume subscribers than non-rural carriers" and that "(t)he isolation of rural carrier service areas
creates numerous operational challenges, including high loop costs, high transportation costs for personnel
equipment, and supplies, and the need to invest more resources to protect network reliability
108 See Virginia Cellular October 29 Supplement. We note that the Virginia Rural Telephone Companies object to
accuracy ofthe population density data submitted by Virginia Cellular. Rather than submitting different population
density data, however, the Virginia Rural Telephone Companies submitted line count data. See Virginia Rural
Telephone Companies November 8 ex parte. Virginia Cellular s response is that it calculated population density
using the software program Exchange Plus by MapInfo, which allows a user to "simultaneously query an ILEC'
exchange and the Census Bureau population database.See Virginia Cellular November 20 Supplement. Virginia
Cellular asserts that this software is commonly used in the telecommunications industry and yields accurate data. /d.
Our review of the line count data submitted by the Virginia Rural Telephone Companies reveals that Virginia
Cellular will be serving many of the high-cost, low-density wire centers in the study areas ofMGW and
Shenandoah. Accordingly, this line count analysis is consistent with the population density analysis that was based
on data submitted by Virginia Cellular.
109 See Virginia Cellular October 29 Supplement.
110 See id. Although the average population density of the MGW wire centers which Virginia Cellular proposes to
serve is slightly higher than the average population density ofMGW's remaining wire centers, the amount of this
difference is not significant enough to raise creamskimming concerns. We also note that there is very little disparity
between the population densities of the wire centers in the MGW study area.
Federal Communications Commission FCC 03-338
persons per square mile. III Universal service support is calculated on a study-area-wide basis.
Although NTELOS did not take advantage ofthe Commission s disaggregation options to
protect against possible uneconomic entry in its lower-cost area, 112 we find on the facts here that
designating Virginia Cellular as an ETC only for the Waynesboro wire center could potentially
significantly undermine NTELOS' ability to serve its entire study area. The widely disparate
population densities in NTELOS' study area and the status of Waynesboro as NTELOS' sole
low-cost, high-density wire center could result in such an ETC designation placing NTELOS at a
sizeable unfair competitive disadvantage. In addition, we believe that, ifNTELOS had
disaggregated, the low costs of service in the Waynesboro wire center would have resulted in
little or no universal service support targeted to those lines. I 13 Therefore, our decision not to
designate Virginia Cellular as an ETC in the study area ofNTELOS is unlikely to impact
consumers in the Waynesboro wire center because Virginia Cellular will make a business
decision on whether to provide service in that area without regard to the potential receipt of
universal service support.
Designated Service Area
36. Virginia Cellular is designated an ETC in the areas served by the non-rural carriers
Bell Atlantic and GTE South, as listed in Appendix A.114 We designate Virginia Cellular as an
ETC throughout most of its CMRS licensed service area in the Virginia 6 Rural Service Area.
Virginia Cellular is designated an ETC in the areas served by the three rural telephone
companies whose study areas Virginia Cellular is able to serve completely, as listed in Appendix115 As discussed below, and subject to the Virginia Commission s agreement on redefining the
III See id.
112 In the RTF Order the Commission provided incumbent LECs with certain options for disaggregating their study
areas, determining that universal service support should be disaggregated and targeted below the study area level to
eliminate uneconomic incentives for competitive entry caused by the averaging of support across all lines served by
a carrier within its study area. Under disaggregation and targeting, per-line support is more closely associated with
the cost of providing service. There are fewer issues regarding inequitable universal service support and potential
harm to concerns regarding the incumbent's ability to serve its entire study area when there is in place a
disaggregation plan in which the per-line support available to a competitive ETC in the wire centers located in "low-
cost" zones is less than the amount a competitive ETC could receive if it served in one of the wire centers located in
the "high-cost" zones. See Federal-State Joint Board on Universal Service, Multi-Association Group (MAG) Plan
for Regulation of Interstate Services of Non-Price Cap Incumbent Local Exchange Carriers and Interexchange
Carriers Fourteenth Report and Order, Twenty-Second Order on Reconsideration, and Further Notice of Proposed
Rulemaking in CC Docket No. 96-, and Report and Order in CC Docket No. 00-256, 16 FCC Rcd 11244, 11302
para. 145 (2001) (RTF Order), as corrected by Errata, CC Docket Nos. 96-00-256 (Acc. Pol. Div. reI. Jun. 1
2001), recon. pending. Although the deadline (May 15 2002) for carriers to file disaggregation plans has passed
the relevant state commission or appropriate regulatory authority may nonetheless require a carrier to disaggregate
either on its own motion or that of an interested party. See VSAC's website
http://www.universalservice.orglhc/disaggregation; see also RTF Order 16 FCC Rcd at 11303, para. 147.
113 Section 54.315(d)(2)(ii) of the Commission s rules requires self-certified disaggregation plans to "be reasonably
related to the cost of providing service for each disaggregation zone within each disaggregated category of support.
47 c.F.R. ~ 54.315(d)(2)(ii).
114
See Virginia Cellular Petition at 10 and Exhibit D. We note that, when designating a service area served by a
non-rural carrier, the Commission may designate a service area that is smaller than the contours of the incumbent
carrier s study area. See Universal Service Order 12 FCC Rcd at 8879-, paras. 184-85.
115 See Virginia Cellular Petition at 10-11 and Exhibit E.
Federal Communications Commission FCC 03-338
service areas ofMGW and Shenandoah, we also designate Virginia Cellular as an ETC for the
entire Bergton, McDowell, Williamsville, and Deerfield wire centers.
37. We designate Virginia Cellular as an ETC in the entire Deerfield, McDowell, and
Williamsville wire centers in the study area ofMGW.1l6 We note that, although the boundaries
of its CMRS licensed service area in Virginia exclude a small part ofMGW's Williamsville wire
center, Virginia Cellular has committed nevertheless to offer service to customers in the entirety
of the Williamsville wire center through a combination of its own facilities and resale of either
wireless or wireline services. I I?
38. We also designate Virginia Cellular as an ETC for the Bergton wire center in
Shenandoah's study area. We note that the study area of Shenandoah is composed of two non-
contiguous areas. One such area is composed solely of the Bergton wire center, which falls
within Virginia Cellular s licensed service area, and the other area is composed of eight
remaining wire centers, which fall outside of Virginia Cellular s licensed service area.ll8 We
find that, because the Bergton wire center is a low-density, high-cost wire center, concerns about
undermining Shenandoah's ability to serve the entire study area are substantially minimized. We
further note that the Commission has previously expressed concern about requiring competitive
ETCs to serve non-contiguous areas. In the Universal Service Order the Commission concluded
that requiring a carrier to serve a non-contiguous service area as a prerequisite of eligibility
might impose a serious barrier to entry, particularly to wireless carriers.119 The Commission
further concluded that "imposing additional burdens on wireless entrants would be particularly
harmful in rural areas... .,,120 Accordingly, we find that denying Virginia Cellular ETC status for
Shenandoah's Bergton wire center simply because Virginia Cellular is not licensed to serve the
eight remaining wire centers would be inappropriate. Thus, we conclude that it is appropriate to
designate Virginia Cellular as an ETC for the Bergton wire center within Shenandoah's study
area.
39. Finally, for the reasons described above, we do not designate Virginia Cellular as an
ETC in any portion ofNTELOS' service area. 121
Redefining Rural Telephone Company Service Areas
40. We redefine the service areas ofMGW and Shenandoah pursuant to section
214( e)( 5). Consistent with prior rural service area redefinitions, we redefine each wire center in
116 MGW's study area consists of the Deerfield, McDowell, Williamsville, Mountain Grove, and McClung wire
centers. Virginia Cellular is licensed to completely serve the Deerfield and McDowell wire centers and to partially
serve the Williamsville wire center. See Virginia Cellular Amendment at 2.
117 See Appendix C. Virginia Cellular s wireless license covers all but approximately 200 people in 13.5 square
miles of the Williamsville wire center. See Virginia Cellular October 11 Supplement at 2; Virginia Cellular April 17
Supplement at 2.
118 The other wire centers within Shenandoah's s~dy area are: Bayse, Edinburg, Fort Valley, Mount Jackson, New
Market, Strasburg, Toms Brook, and Woodstock, all in Virginia.
119 Universal Service Order 12 FCC Rcd at 8882, para. 190.
120 !d. at 8883, para. 190.
121
See supra para. 35.
Federal Communications Commission FCC 03-338
the MGW and Shenandoah study areas as a separate service area. 122 Our decision to redefine the
service areas of these telephone companies is subject to the review and final agreement of the
Virginia Commission in accordance with applicable Virginia Commission requirements.
Accordingly, we submit our redefinition proposal to the Virginia Commission and request that it
examine such proposal based on its unique familiarity with the rural areas in question.
41. In order to designate Virginia Cellular as an ETC in a service area that is smaller than
the affected rural telephone company study areas, we must redefine the service areas of the rural
telephone companies in accordance with section 214( e)( 5) of the Act. 123 We define the affected
service areas only to determine the portions of rural service areas in which to designate Virginia
Cellular and future competitive carriers seeking ETC designation in the same rural service areas.
Any future competitive carrier seeking ETC designation in these redefined rural service areas
will be required to demonstrate that such designation will be in the public interest. 124 In defining
the rural telephone companies' service areas to be different than their study areas , we are
required to act in concert with the relevant state commission
, "
taking into account the
recommendations" of the Joint Board.125 The Joint Board's concerns regarding rural telephone
company service areas as discussed in the 1996 Recommended Decision are as follows: (1)
minimizing creamskimming; (2) recognizing that the 1996 Act places rural telephone companies
on a different competitive footing from other LECs; and (3) recognizing the administrative
burden of requiring rural telephone companies to calculate costs at something other than a study
area level. 126 We find that the proposed redefinition properly addresses these concerns.
42. First, we conclude that redefining the affected rural telephone company service areas
at the wire center level for MGW and Shenandoah should not result in opportunities for
creamskimming. Because Virginia Cellular is limited to providing facilities-based service only
where it is licensed by the Commission and because Virginia Cellular commits to providing
universal service throughout its licensed territory in Virginia, concerns regarding
cream skimming are minimized. 127 In addition, we have analyzed the population densities of the
wire centers Virginia Cellular can and cannot serve to determine whether the effects of
creamskimming would occur.128 We note that we do not propose redefinition in areas where
ETC designation would potentially undermine the incumbent's ability to serve its entire study
122 See RCC Holdings ETC Designation Order 17 FCC Rcd at 23547, para. 37. We do not designate Virginia as an
ETC in the study area ofNTELOS. Thus, we do not redefine the service area ofNTELOS. In its original petition
Virginia Cellular stated that the Commission might choose not to redefine the service area ofMGW, because
Virginia Cellular serves all but a small portion ofMGW's study area. See Virginia Cellular Petition at 12.
Subsequently, Virginia Cellular amended its petition, explaining that there are two additional wire centers (McClung
and Mountain Grove) within MGW's service area that it does not propose to serve. See Virginia Cellular
Amendment at 2. In its amended petition, Virginia Cellular asks the Commission to reclassify each ofMGW's five
wire centers as separate service areas. !d.
123 See 47 u.S.c. ~ 214(e)(5).
124 See 47 u.S.c. ~ 214(e)(2), (6).
125 See 47 US.C. ~ 214(e)(5).
126 See 1996 Recommended Decision 12 FCC Rcd at 179-, paras. 172-74.
127
See supra para. 32.
128
See supra paras. 32-35.
Federal Communications Commission FCC 03-338
area.129 Therefore, we conclude, based on the particular facts ofthis case, that there is little
likelihood of rural cream skimming effects in redefining the service areas ofMGW and
Shenandoah as proposed.
43. Second, our decision to redefine the service areas of the affected rural telephone
companies includes special consideration for the affected rural carriers. Nothing in the record
convinces us that the proposed redefinition will harm the incumbent rural carriers. The high-cost
universal service mechanisms support all lines served by ETCs in rural areas.130 Under the
Commission s rules, receipt of high-cost support by Virginia Cellular will not affect the total
amount of high-cost support that the incumbent rural telephone company receives.131 Therefore
to the extent that Virginia Cellular or any future competitive ETC captures incumbent rural
telephone company lines, provides new lines to currently unserved customers, or provides
second lines to existing wireline subscribers, it will have no impact on the amount of universal
service support available to the incumbent rural telephone companies for those lines they
continue to serve.132 Similarly, redefining the service areas of the affected rural telephone
companies will not change the amount of universal service support that is available to these
incumbents.
44. Third, we find that redefining the rural telephone company service areas as proposed
will not require the rural telephone companies to determine their costs on a basis other than the
study area level. Rather, the redefinition merely enables competitive ETCs to serve areas that
are smaller than the entire ILEC study area. Our decision to redefine the service areas does not
modify the existing rules applicable to rural telephone companies for calculating costs on a study
area basis, nor, as a practical matter, the manner in which they will comply with these rules.
Therefore, we find that the concern of the Joint Board that redefining rural service areas would
impose additional administrative burdens on affected rural telephone companies is not at issue
here.
45. In accordance with section 54.207(d) of the Commission s rules, we submit this order
to the Virginia Commission.133 We request that the Virginia Commission treat this Order as a
petition to redefine a service area under section 54.207(d)(1) of the Commission s rules.134
Virginia Cellular s ETC designation in the service areas of Shenandoah and MGW is subject to
the Virginia Commission s review and agreement with the redefinition proposal herein.135 We
129
See supra para. 35.
130 See Western Wireless Pine Ridge Order 16 FCC Rcd at 18138-, para. 15.
131 See RTF Order 16 FCC Rcd at 11299-11309, paras. 136-164.
132 See Western Wireless Pine Ridge Order 16 FCC Rcd at 18138-, para. 15.
133 47 c.F.R. ~ 54.207(d).
134
Virginia Cellular submits that the Commonwealth of Virginia has no process for redefIning service areas. See
Virginia Cellular October 11 Supplement at 2.
135 In the Universal Service Order the Commission decided to minimize any procedural delays caused by the need
for the federal-state coordination on redefining rural servic~ areas. See Universal Service Order 12 FCC Rcd at
8880-, para. 187. Therefore, the Commission adopted section 54.207 of the Commission s rules by which the
state commissions may obtain agreement of the Commission when proposing to redefme a rural service area. !d.
8881 , para. 188. Similarly, the Commission adopted a procedure in section 54.207 to address the occasions when
the Commission seeks to redefme a rural service area. fd. The Commission stated that "in keeping with our intent
Federal Communications Commission FCC 03-338
find that the Virginia Commission is uniquely qualified to examine the redefinition proposal
because of its familiarity with the rural service areas in question. Upon the effective date of the
agreement of the Virginia Commission with our redefinition of the service areas of Shenandoah
and MGW, our designation of Virginia Cellular as an ETC for these areas as set forth herein
shall also take effect. In all other areas for which this Order grants ETC status to Virginia
Cellular, as described herein, such designation is effective immediately. If, after its review, the
Virginia Commission determines that it does not agree with the redefinition proposal herein, we
will reexamine Virginia Cellular s petition with regard to redefining the affected rural service
areas.
Regulatory Oversight
46. We note that Virginia Cellular is obligated under section 254( e) of the Act to use
high-cost support "only for the provision, maintenance, and upgrading of facilities and services
for which support is intended" and is required under sections 54.313 and 54.314 of the
Commission s rules to certify annually that it is in compliance with this requirement.l36 Separate
and in addition to its annual certification filing under sections 54.313 and 54.314 of our rules
Virginia Cellular has committed to submit records and documentation on an annual basis
detailing its progress towards meeting its build-out plans in the service areas it is designated as
an ETe.137 Virginia Cellular also has committed to become a signatory to the Cellular
Telecommunications Industry Association s Consumer Code for Wireless Service and provide
the number of consumer complaints per 1 000 mobile handsets on an annual basis.138 In
addition, Virginia Cellular will annually submit information detailing how many requests for
service from potential customers in the designated service areas were unfulfilled for the past
year.139 We require that Virginia Cellular submit these additional data to the Commission and
USAC on October 1 of each year beginning October 1 , 2004.140 We find that reliance on
Virginia Cellular s commitments is reasonable and consistent with the public interest and the Act
and the Fifth Circuit decision in Texas Office of Public Utility Counsel v. FCc.141 We conclude
that fulfillment of these additional reporting requirements will further the Commission s goal of
ensuring Virginia Cellular satisfies its obligation under section 214(e) of the Act to provide
to use this procedure to minimize administrative delay, we intend to complete consideration of any proposed
definition of a service area promptly./d.
136 47 u.S.c. ~ 254(e); 47 C.R. 99 54.313, 54.314.
137
See Virginia Cellular November 12 Supplement at 4-
138
See supra para. 30; Virginia Cellular November 12 Supplement at 1.
139 See supra para. 15; Virginia Cellular November 12 Supplement at 2.
140 Virginia Cellular s submissions concerning consumer complaints per 1 000 handsets and unfulfilled service
requests will include data from July 1 of the previous calendar year through June 30 of the reporting calendar year.
We anticipate that Virginia Cellular s annual submission will only encompass the service areas where it is
designated as an ETc.
141 Texas Office of Public Utility Counsel v. FCC 183 F.3d 393, 417-18 (5th Cir. 1999) In TOPUC v. FCC the Fifth
Circuit held that that nothing in section 214( e )(2) of the Act prohibits states from imposing additional eligibility
conditions on ETCs as part of their designation process. See id. Consistent with this holding, we find that nothing
in section 214(e)(6) prohibits the Commission from imposing additional conditions on ETCs when such
designations fall under our jurisdiction.
Federal Communications Commission FCC 03-338
supported services throughout its designated service area. We adopt the commitments that
Virginia Cellular has made as conditions on our approval of its ETC designation for the
Commonwealth of Virginia. We note that the Commission may institute an inquiry on its own
motion to examine any ETC's records and documentation to ensure that the high-cost support it
receives is being used "only for the provision, maintenance, and upgrading of facilities and
services" in the areas where it is designated as an ETC.142 Virginia Cellular will be required to
provide such records and documentation to the Commission and USAC upon request. We
further emphasize that if Virginia Cellular fails to fulfill the requirements of the statute, our
rules, and the terms of this Order after it begins receiving universal service support, the
Commission has authority to revoke its ETC designation.143 The Commission also may assess
forfeitures for violations of Commission rules and orders.144
IV.ANTI-DRUG ABUSE ACT CERTIFICATION
47. Pursuant to section 5301 of the Anti-Drug Abuse Act of 1988 , no applicant is eligible
for any new, modified, or renewed instrument of authorization from the Commission, including
authorizations issued pursuant to section 214 of the Act, unless the applicant certifies that neither
, nor any party to its application, is subject to a denial of federal benefits, including
Commission benefits.145 Virginia Cellular has provided a certification consistent with the
requirements of the Anti-Drug Abuse Act of 1988.146 We find that Virginia Cellular has satisfied
the requirements of the Anti-Drug Abuse Act of 1988, as codified in sections 1.2001-1.2003 of
the Commission s rules.
ORDERING CLAUSES
48. Accordingly, IT IS ORDERED that, pursuant to the authority contained in section
214(e)(6) of the Communications Act, 47 U.e. 9 214(e)(6), Virginia Cellular, LLC IS
DESIGNATED AN ELIGIBLE TELECOMMUNICATIONS CARRIER for specified portions
of its licensed service area in the Commonwealth of Virginia subject to the conditions described
herein. 147
49. IT IS FURTHER ORDERED that, pursuant to the authority contained in section
214(e)(5) of the Communications Act, 47 U.C. 9 214(e)(5), and sections 54.207(d) and (e) of
the Commission s rules, 47 e.F.R. 99 54.207(d) and (e), the request of Virginia Cellular, LLC to
redefine the service areas of Shenandoah Telephone Company and MGW Telephone Company
in Virginia IS GRANTED, SUBJECT TO the agreement of the Virginia State Corporation
Commission with the Commission s redefinition of the service areas for these rural telephone
companies. Upon the effective date of the agreement of the Virginia State Corporation
142 47 US.C. ~~ 220, 403; 47 c.F.R. ~~ 54.313 54.314.
143 See Declaratory Ruling, 15 FCC Rcd at 15174, para. 15. See also 47 u.S.c. ~ 254(e).
144 See 47 u.S.C. ~ 503(b).
145 47 u.S.c. ~ 1.2002(a); 21 u.S.c. ~ 862.
146 Virginia Cellular Petition at 18. See also Supplement to Virginia Cellular, LLC Petition for Designation as an
ETC in the Commonwealth of Virginia, filed February 28 2003.
147 See supra para. 46.
Federal Communications Commission FCC 03-338
Commission with the Commission s redefinition of the service areas for those rural telephone
companies, this designation of Virginia Cellular, LLC as an ETC for such areas as set forth
herein shall also take effect.
50. IT IS FURTHER ORDERED that, pursuant to the authority contained in section
214(e)(5) of the Communications Act, 47 U.C. 9 214(e)(5), and sections 54.207(d) and (e) of
the Commission s rules, 47 C.R. 99 54.207(d) and (e), the request of Virginia Cellular, LLC to
redefine the service area ofNTELOS Telephone Inc. in Virginia IS DENIED.
51. IT IS FURTHER ORDERED that a copy of this Memorandum Opinion and Order
SHALL BE transmitted by the Office of the Secretary to the Virginia State Corporation
Commission and the Universal Service Administrative Company.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
Federal Communications Commission FCC 03-338
APPENDIX A
VIRGINIA NON-RURAL WIRE CENTERS FOR INCLUSION IN VIRGINIA
CELLULAR'S ETC SERVICE AREA
Bell Atlantic (Verizon)GTE South, Inc. (Verizon)
Staunton (STDRV ASD)*Broadway
Staunton (STTNV AST)Edom
Staunton (STTNV AVE)Hinton
Craigsville Dayton
Lovingston (NLFR V ANF)Keezletown
Lovingston (L VTNV ALN)Harrisonburg
Lovingston (WNTRV A WG)McGaheysville
Greenwood Bridgewater
Pine River Weyers cave
Grottoes
Elkton
Amherst
Gladstone
. Because the wire center locality names are the same in some instances, the Wire Center Codes are listed in
parentheses.
Federal Communications Commission FCC 03-338
APPENDIX B
VIRGINIA RURAL TELEPHONE COMPANY STUDY AREAS FOR INCLUSION IN
VIRGINIA CELLULAR'S ETC SERVICE AREA
New Hope Telephone Company
North River Telephone Company
Highland Telephone Cooperative
Federal Communications Commission FCC 03-338
APPENDIX C
VIRGINIA RURAL TELEPHONE COMPANY WIRE CENTERS
FOR INCLUSION IN
VIRGINIA CELLULAR'S ETC SERVICE AREA
Shenandoah Telephone Company
Bergton
MGW Telephone Company
McDowell
Williamsville
Deerfield
Federal Communications Commission FCC 03-338
SEPARATE STATEMENT OF
CHAIRMAN MICHAEL K. POWELL
Re:Federal-State Joint Board on Universal Service; Virginia Cellular, LLC, Petition for
Designation as an Eligible Telecommunications Carrier in the Commonwealth of
Virginia.
Competition is for rural as well as urban consumers. In this item, we recognize the
unique value that mobile services provide to rural consumers by giving added substance to the
public interest standard by which we evaluate wireless eligible telecommunications carriers
(ETC). At the same time, we reinforce the requirement that wireless networks be ready, willing
and able to serve as carriers of last resort to support our universal service goals.
The areas Virginia Cellular proposes to serve are indeed rural- they are areas where
retail rates do not cover the cost of providing service and where high-quality wireless service is
intermittent or scarce. This decision remains true to the requirement that ETCs must be prepared
to serve all customers upon reasonable request and requires them to offer high-quality
telecommunications services at affordable rates throughout the designated service area. In this
case, Virginia Cellular has documented its proposed use of federal universal service funding and
made important commitments to provide high-quality service throughout its designated service
area. To ensure that Virginia Cellular abides by its commitments, moreover, we have imposed
reporting requirements and, of course, retain the right to conduct audits and other regulatory
oversight activities, if necessary.
Despite the importance of making rural, facilities-based competition a reality, we must
ensure that increasing demands on the fund should not be allowed to threaten its viability.
Incumbent local exchange carriers, competitive local exchange carriers and wireless carriers
should have a competitively neutral opportunity to receive universal service funding. Yet
determining an effective, equitable and affordable means of balancing competition and universal
service goals is no easy task. The Federal-State Joint Board on Universal Service (Joint Board)
is now considering a comprehensive record on these issues and plans to provide a recommended
decision to us. I urge them to conclude their inquiry as expeditiously as possible in light of the
complexity of the issues involved. Once we receive recommendations from the Joint Board, I
hope to move quickly to provide much-needed regulatory certainty in this area and to ensure the
support necessary to maintain a sustainable, competitively neutral universal service fund.
Federal Communications Commission FCC 03-338
SEPARATE STATEMENT OF
COMMISSIONER KATHLEEN Q. ABERNATHY
Re:Federal-State Joint Board on Universal Service; Virginia Cellular, LLC, Petition for
Designation as an Eligible Telecommunications Carrier in the Commonwealth of
Virginia.
In this Order, the Commission has taken an important (albeit incremental) step toward
establishing a more rigorous framework for evaluating ETC applications. When the Commission
initially exercised its authority to grant ETC status in areas where state commissions lack
jurisdiction, it appeared to regard entry by any new competitor as per se consistent with the
public interest. While promoting competition is undoubtedly a core goal under the
Telecommunications Act of 1996, the use of universal service funding to engender competition
where market forces alone cannot support it presents a more complex question. Particularly in
rural study areas, where the cost of providing service typically far exceeds retail rates, regulators
must carefully consider whether subsidizing the operations of an additional ETC promotes the
public interest.
The Joint Board is developing comprehensive recommendations on the ETC designation
process and the appropriate scope of support, and this isolated case is not an appropriate
proceeding in which to make any fundamental changes. Nevertheless, to qualify for support
even under our existing rules , I believe that an ETC must be prepared to serve all customers upon
reasonable request, and it must offer high-quality services at affordable rates throughout the
designated service area. State commissions exercising their authority under section 214(e)(2),
and this Commission acting pursuant to section 214( e)( 6), therefore should make certain that an
applicant for ETC status is ready, willing, and able to serve as a carrier of last resort and is
otherwise prepared to fulfill the goals set forth in section 254 of the Act.
To this end, I am pleased that the Commission has required Virginia Cellular to submit
build-out plans to document its proposed use of federal universal service funding for
infrastructure investment. I also support the Commission s insistence on appropriate service-
quality commitments. Moreover, the Commission is right to consider the increasing demands on
the universal service fund: While at one point the cost of granting ETC status to new entrants
may have appeared trifling, the dramatic rate of growth in the flow of funds to competitive ETCs
compels us to consider the overall impact of new ETC designations on the stability and
sustainability of universal service. Finally, I strongly support our efforts to beef up regulatory
oversight by imposing reporting requirements on Virginia Cellular and by reserving the right to
conduct audits and revoke this ETC designation in the event of a failure to fulfill the
requirements of the statute and this Order. All of these requirements are consistent with the
statutory framework. The Joint Board may soon recommend that this Commission and state
commissions impose additional requirements, and I eagerly await the outcome of that
proceeding.
Federal Communications Commission FCC 03-338
SEPARATE STATEMENT OF
COMMISSIONER MICHAEL J. COPPS
Re:Federal-State Joint Board on Universal Service; Virginia Cellular, LLc, Petition for
Designation as an Eligible Telecommunications Carrier in the Commonwealth of
Virginia.
Today we grant Virginia Cellular eligible telecommunication carrier (ETC) status in
study areas served by rural and non-rural telephone companies. We make some headway in this
decision toward articulating a more rigorous template for review of ETC applications. Although
I support this grant, I believe that the ETC process needs further improvement. The long-term
viability of universal service requires that the Commission get the ETC designation process right.
We must give serious consideration to the consequences that flow from using the fund to support
multiple competitors in truly rural areas. And when we do fund competition, we need to ensure
that we provide the appropriate level of support. For these reasons, I look forward to reviewing
the Joint Board's upcoming Recommendation on universal service portability and ETC
designation. I am hopeful that this document will lay the foundation for an improved approach
that both honors the public interest and reflects the realities of the market.
Federal Communications Commission FCC 03-338
SEPARATE STATEMENT OF
COMMISSIONER JONATHAN S. ADELSTEIN
Re:Federal-State Joint Board on Universal Service; Virginia Cellular, LLC, Petition for
Designation as an Eligible Telecommunications Carrier in the Commonwealth of
Virginia.
Late last year, I had the opportunity to further outline my thoughts on the Commission
eligible telecommunications carrier (ETC) designation process and the role of the public interest
in that process. 148 For the reasons discussed at that time, I am pleased to support this Order
responding to the petition of Virginia Cellular, LLC to be designated as an ETC in the
Commonwealth of Virginia. I believe this Order establishes a better template for the ETC
designation process that is a significant improvement from past Commission decisions and that
more fully embraces the statutory public interest mandate. I expect that state commissions also
will find the template that we adopt here to be useful in their deliberations of ETC requests.
I am confident that this Order remains true to the Communications Act, which, through
Universal Service, requires the Commission to ensure that all Americans, whoever they are or
wherever they live, have access to a rapid and efficient communications system at reasonable
rates. Congress clearly intended that, when appropriate, competitive carriers should have access
to high cost funds on a technologically neutral basis. I believe the Federal-State Joint Board on
Universal Service (Joint Board) can playa critical role in determining the parameters of where
such competition is appropriate. I am pleased, however, that this Commission has been willing
to strengthen the public interest test, pending a Joint Board recommendation. The template
established in this Order provides a much more stringent examination of the public interest in
making our ETC determination. Among other factors, Virginia Cellular has made significant
investment and service quality commitments throughout its proposed service areas. Finally,
believe that our Order conducts a thorough and proper analysis of rural telephone company
service areas pursuant to Section 214(e)(5). Indeed, we ultimately decided not to designate
Virginia Cellular as an ETC in certain portions of its licensed service area. In other areas, it was
determined, based on a detailed review of the affected service areas, that cream skimming or
other similar concerns do not arise, and these areas ultimately are proposed for redefinition.
I look forward to working with my colleagues both at the Commission and on the Joint
Board to provide further guidance on the ETC designation process and other Universal Service
support issues in the upcoming months. As I outlined in the attached remarks, I believe there are
many constructive actions we can take to make sure our Universal Service mandate is upheld
while still ensuring that the fund does not grow dramatically.
148 Commissioner Jonathan S. Adelstein Accessing the Public Interest: Keeping America Well-Connected Address
Before the 21 st Annual Institute on Telecommunications Policy & Regulation (Dec. 4, 2003)
http;//www.fcc.gov/cornmissioners!adelstein!s?eeches2003.html). A copy of the remarks is incorporated into this
statement.
Federal Communications Commission FCC 03-338
Remarks of
Jonathan S. Adelstein
Commissioner, Federal Communications Commission
Accessing the Public Interest:
Keeping America Well-Connected"
21st Annual Institute on Telecommunications Policy & Regulation
The International Trade Center - Washington, DC
December 4, 2003
(As prepared for delivery
Introduction
Thank you Hemy for that kind introduction.
There is no greater opportunity for someone who has dedicated his whole life to public service
than to serve as an FCC Commissioner. My singular goal is to serve the public interest. But
sometimes the hardest part is figuring out what that means. It is especially frustrating in the
context of communications policy, because we hear so many conflicting views from parties with
big stakes in the outcome.
Winston Churchill once described Russia as "a riddle, wrapped in a mystery, inside of an
enigma." Similar terms are used to describe the public interest standard of the FCC. As an
eternal optimist, I still believe the public interest does exist and can be a meaningful standard. It
is our job to figure it out, since Congress referred to it over 100 times in the Communications
Act. Ifwe are not sure what it means any given case, it is job number one to figure it out.
Looking back over the past year and across the Commission s broad jurisdiction, I am guided in
my public interest determinations by one key principle - that the public interest means securing
access to communications for everyone, including those the market may leave behind.
I have tried to address these needs this last year, by protecting people with disabilities, non-
English speakers, rural and low-income consumers, and many others. I have looked for
opportunities for new entrants and smaller players who are seeking to compete in spectrum-
based services and in broadcasting.
Today, I would like to focus on securing access to communications opportunities in three key
areas. First, we face an urgent need to establish a new framework to shore up universal service
so it can continue to fulfill its function of connecting everyone in this country to the latest
telecommunications systems, no matter where they live. Second, we need to expand access to
the spectrum so that people can maintain those connections in the increasingly untethered
portable world made possible by advances in wireless technologies. Finally, we need to ensure
that communities have access to the broadcast airwaves and local broadcasters remain connected
to the communities they serve, even as these broadcasters make the transition to the digital era.
Federal Communications Commission FCC 03-338
II.Universal Service
Just this week, the Commission held an important forum on a development that could
revolutionize not only the telephone system as we know it today, but the entire regulatory
structure that has grown around it over the last century: Voice over Internet Protocol, or VoIP.
As voice traffic is increasingly conveyed in packets, it becomes difficult to distinguish a voice
call from e-mail, photos, or video clips sailing over the Internet.
This is one of the most exciting developments in telephony in decades, and promises a new era
of competition, new efficiencies, lower prices, and innovative services. But we have to make
sure that all consumers can benefit from the promises that VoIP may hold.
At Monday s forum, we kept coming back to the question of what that means for the future of
universal service. The Communications Act requires that, through Universal Service, the
Commission ensure that all Americans, whoever they are or wherever they live, have access to a
rapid and efficient, communications system at reasonable rates. VoIP presents a long-term
challenge to the current structure of the Universal Service program.
Yet, the system is already under increasing pressures as it is financed by interstate revenues - a
declining source of funding - while new demands are being placed on it by competitive
providers, and by those carriers that are trying to invest in upgrading their networks. This is the
imminent crisis we must address now.
One area of concern is the growth of new entrants that are receiving universal service funding.
Although the amount of funding these carriers receive is not yet that large, it is growing rapidly.
The Act provides that only eligible telecommunications carriers, or ETCs, can receive Universal
Service support. State commissions have the primary responsibility for designating ETCs, and
can designate additional carriers, known as competitive ETCs or CETCs. In some cases, the
FCC evaluates requests for these additional carriers because the states do not have the authority
or have chosen not to use it.
This ETC process has raised a lot of questions from those who are concerned that many States
and the FCC began using universal service to "create" competition in areas that could barely
support just one provider, let alone multiple providers. They question if this is what Congress
intended.
Reading the Act, it is safe to assume that Congress did intend that multiple carriers would have
access to universal service. Otherwise, it would not have given the authority to designate
additional carriers for eligibility. But it is not clear that Congress fully contemplated the impact
of this growing competition on the ability of the fund to keep up with demand, and eventually to
support advanced services. It may come down to a choice Congress never envisioned between
financing competition or financing network development that will give people in Rural America
access to advanced services like broadband.
But Congress did give some very clear direction we cannot ignore. The law requires that the
designation of an additional ETC in a service area, both rural and non-rural, must be consistent
Federal Communications Commission FCC 03-338
with the public interest. And it established an even higher level of review for those areas served
by rural carriers. In those rural areas, the law requires that the authorizing agency shall find that
the designation is in the public interest.
ETC Desi2nation Template
That is why I have been working with my colleagues to establish a better template that
appropriately embraces this public interest mandate.
Under this approach, competition alone cannot satisfy the public interest analysis. We must
weigh other factors in determining whether the benefits exceed the costs. For example, we must
increase oversight to ensure that universal service funds are actually being invested in the
network for which funding is received. We should weigh the overall impact on the Universal
Service Fund. And we should also assess the value of the provider s service offering. We must
consider whether the applicant has made a service quality commitment or will provide essential
services in its community. This is particularly important, as providers that gain ETC status may
some day serve as their customers ' only connection , so they must work well.
I will recommend that the Commission use this analysis whenever it reviews an ETC request.
The Gre22 Benchmark Proposal
In response to these concerns, Joint Board member Billy Jack Gregg has suggested that there are
certain areas where financing a competitor is simply not a proper use of universal service funds.
He proposed that in areas where the high cost carrier receives more than $30 per line, we should
limit funding to only one ETC. In areas where the funding per line is between $20-$30, then we
should permit no more than two ETCs. And in areas with less than $20 per line in funding there
would be no li~it on the number of ETCs. These benchmarks could be challenged and
overridden on a case-by-case basis with specific evidence.
Although this proposal needs further discussion, it has a lot of merit. The High Cost Fund
ensures that end users in high cost, mostly rural, areas will have access to quality services at
reasonable rates. Universal service funding became necessary in these areas because the costs of
service were prohibitively high and without it, many would not have had access to
telecommunications service at all. Yet, we now fund more than one carrier in several of these
same high cost areas.
Mr. Gregg s proposal may allow us to move back toward the initial concept of the High-Cost
Fund. Maybe the public interest is better served by ensuring that we use that fund to build out
and advance the network in the highest cost areas rather than funding competitive ventures there.
This proposal would help to limit and better control the growth of the fund.
Federal Communications Commission FCC 03-338
Primary Lines
Some are suggesting that a way to control costs is to fund only the primary lines. I believe that
this would deny consumers the full support Congress intended. Universal service is not about
one connection per household - it encompasses that concept, but is not limited by it. The Low-
Income fund ensures at least one connection per household. But the High-Cost Fund embraces
the concept of network development and support so that all Americans have access to
comparable services at comparable rates, eventually evolving to advanced services.
Basing support solely on primary lines is likely to reduce network investment. It also will have
severe implications for consumers who use second lines for fax machines or dial-up access to the
Internet. This could have disastrous results for small businesses that operate in rural areas. Their
telecommunications costs could easily become too expensive to continue affording services.
This could undercut rural economic development and severely damage the economy in Rural
America.
So I will not support restricting funding to primary lines only. There are other, better options for
addressing the growth of the fund, such as the steps I already have outlined.
do'Basis of Support
Another way to better control the size of the fund and be true to our'Congressional mandate is to
make sure to provide the right level of support. Currently, competitive ETCs receive the same
per line amount of funding as the incumbent local exchange carrier or ILECs. If the ILEC is
rural, then its universal service funding is based on its own costs. That means the funds received
by the competitive carriers are based on the rural ILECs ' costs , not their own.
A large number of CETCs are wireless carriers. Wireline and wireless carriers provide different
types of services and operate under different rules and regulations. Their cost structures are not
the same. To allow a wireless CETC to receive the same amount of funding as the wireline
carrier, without any reference to their cost structures, is artificial, not to mention clearly
inconsistent with Section 254( e).
Section 254( e) requires that all carriers receiving Universal Service funding use that support
only for the provision, maintenance, and upgrading of facilities and services for which that
support is intended." I believe the law compels us to change the basis on which we provide
support to competitors.
III.Mana2in2 Spectrum in the Public Interest
When thinking about the federal role in ensuring access to the latest technologies, the
Commission is also charged with managing the nation s spectrum in the public interest.
Spectrum is the lifeblood of innovations that provide so many new services that people are
demanding.
Federal Communications Commission FCC 03-338
As some of you may know, I have set out an approach for spectrum policy that I call a
Framework for Innovation." In dealing with the spectrum, I believe the Commission should
establish ground rules for issues such as interference and availability. But, to the greatest extent
possible, we should let innovation and the marketplace drive the development of spectrum-based
services. My goal is to maximize the amount of communications and information that flow over
the Nation s airwaves, on earth and through space.
Spectrum is a finite public resource. And in order to improve our country s use of it, we need to
improve access to spectrum-based services. We cannot afford to let spectrum lie fallow. It is not
a property right, but a contingent right to use a public resource - it should be put to use for the
benefit of as many people as possible.
I remain concerned that we need to do more to get spectrum in the hands of people who are
ready and willing to use it. That is why I am taking a fresh look at our service and construction
rules to ensure that our policies do not undercut the ability of carriers to get access to unused
spectrum - whether they are in underserved areas or have developed new technologies. For
example, we need to adopt tough but fair construction requirements to ensure that spectrum is
truly being put to use. This was the case in our decision earlier this year to shorten the
construction period for the MVDDS service from ten years to five.
Improved access to spectrum is also the reason why I pushed for our relatively unique service
rules for the 70/80/90 GHz bands, which can provide for fiber-like first and last mile
connections. This makes it easier for all licensees to get access to spectrum for Gigabit-speed
broadband.
While I continue to support the use of auctions, Section 309(j)( 6) of the Act recognizes that the
public interest is not always served by adopting a licensing scheme that creates mutual
exclusivity. Because of the unique sharing characteristics of the 70/80/90 GHz bands, we had an
opportunity here to break that mold, and I am glad we did.
I have repeatedly said the FCC needs to improve access to spectrum by those providers who
want to serve rural areas, particularly community-based providers. That is why I pushed for the
inclusion of both Economic Areas as well as RSA licenses in our recent Advanced Wireless
Services Order. Large license areas can raise auction prices so high that many companies that
want to serve smaller areas cannot even afford to make a first bid. I certainly recognize that
there is value in offering larger service areas for economies of scale and to facilitate wider area
deployments. But the public interest demands that we find a balance in developing a band plan
and I am very pleased we did so in that item.
But I am not sure we are doing enough in this area. We heard last month at our wireless ISP
forum that operators across the country need access to more spectrum. More spectrum can drive
broadband deployment deeper and farther into rural America. We have to be more creative with
a term I will coin "spectrum facilitation." That means stripping away barriers, regulatory or
economic, to get spectrum into the hands of operators serving consumers at the most local levels.
Federal Communications Commission FCC 03-338
For example, I was very pleased to support new guidelines to facilitate a more robust secondary
market. We removed significant obstacles and provided a framework for allowing licensees to
lease spectrum more easily, while ensuring that the Commission does not lose ultimate control
over the spectrum. In doing so, we move closer to achieving our goal of ensuring that all
Americans have access to the latest wireless technologies, no matter where they live.
The mobile wireless industry is marked by dynamic competition - due in no small part to the
regulatory framework that the Commission initially adopted. In the future, we should continue
to apply only those rules that truly benefit the public interest so as to avoid undermining these
healthy competitive conditions.
For example, I was very pleased that this summer we took significant steps toward improving
access to digital mobile wireless phones by those Americans who use hearing aids. We stepped
in where the market did not step up. I can think of no more an appropriate action for a
government agency to take.
Similarly, there is no higher priority for us at the Commission than improving E911 service.
Every day, we confront issues that can affect millions of dollars; but nothing we do is more
important than emergency response services. Unlike a lot of issues that get so much attention
this literally is a matter of life or death.
During the last year, the Commission has really stepped up its work with all stakeholders to
accelerate the deployment of wireless E911. Continued success requires the unprecedented
cooperation of such a wide range of players - the FCC, wireless carriers, public safety answering
points, equipment and technology vendors, local exchange carriers, state commissions, and local
governments. We all need to work together to get this done quickly and effectively.
Local number portability, or LNP, is another one of the more difficult issues that we faced over
the past several months. It truly seemed that everyone in the telecommunications industry hated
some part of it. Yet, LNP is one of those issues where the consumer clearly is the winner.
Clearly, there are a number oflingering concerns with LNP and its implementation. Ultimately,
though, I believe both the public interest and the law are on our side. And while the concerns
raised by both wireline and wireless carriers are significant, and we need to address them, the
benefits to consumers outweigh these concerns.
IV.Media Diversity
As we saw this past year, Americans are very concerned about their media. The airwaves belong
to the American people. Nowhere is it more important for us to preserve access to the airwaves
as widely as possible. We should encourage a broad range of voices and viewpoints.
In today s radio and television, we are hearing troubling accounts of pay- for-play that is not
being fully disclosed to the listening and viewing public. To the extent these allegations are true
this poses a real threat to the public airwaves. Practices like payola may inhibit the local
broadcaster from making independent judgments about the needs of listeners in their community.
Federal Communications Commission FCC 03-338
This can deny local artists and musicians access to their local airwaves. We need to investigate
these allegations and make sure our rules address any troubling practices we identify.
It seems that the transition to digital television is finally upon us. As we move into the new era
we should not abandon our public interest model that sustains localism, competition and
diversity. Courts have consistently reaffirmed these priorities as central to the health of our
democracy.
We should reaffirm the public interest accountability of our broadcast media. Broadcasters enter
into a social compact to use the public airwaves. Broadcasters can now magnify their voice
digitally from one channel to say five or six. If triopolies are allowed by the courts, digital can
expand three channels to up to eighteen. It is time to examine the public interest obligations of
broadcasters on those multiple programming streams. Broadcasting is still a public privilege.
Broadcasters must serve the public interest and remain accountable to their local communities
for all their programming.
The FCC already has undertaken a number of steps to accelerate the digital transition. As we
turn to the few remaining pieces, we should establish comprehensive public interest obligations
for the digital era. With respect to carriage, broadcasters make the case that multicast carriage
will further localism. If so, there should be no reason why they cannot accept a localism
requirement on all their digital program streams that gain the privilege of must-carry.
Conclusion
As we have seen from the recent media debate, Congress clearly considers the communications
industries as far more than makers of widgets. All communications fields involve externalities
that are not fully captured in the marketplace. Communications technologies are the way people
become informed and participate in society. These technologies bring us up-to-date with our
friends and relatives. They educate us with stories, images, and people s creativity. They
expand our horizons - from our neighborhoods to our towns and cities, our country, and the
world around us. They literally bring the world to our fingertips.
It is the Commission s duty to protect every segment of the public in their access to technologies
that convey information necessary to stay well-connected in our society. I look forward to
working with all of you, and welcome your ideas on furthering the public interest as we move
forward to secure the blessings of modern telecommunications for all of our citizens.
Thank you.
Federal Communications Commission FCC 03-338
DISSENTING STATEMENT OF
COMMISSIONER KEVIN J. MARTIN
Re:Federal-State Joint Board on Universal Service; Virginia Cellular, LLC, Petition for
Designation as an Eligible Telecommunications Carrier in the Commonwealth of
Virginia.
Today s decision designates Virginia Cellular, LLC (Virginia Cellular) as an eligible
telecommunications carrier (ETC) in areas served by five rural telephone companies and two
non-rural telephone companies in the State of Virginia. The Commission finds the designation
of Virginia Cellular as an ETC to be in the public interest and furthers the goals of universal
service by "providing greater mobility" and "a choice" of providers in high-cost and rural areas
of Virginia. 149 I object to this Order s finding that the goals of universal service are to "provide
greater mobility" and "a choice" of providers in rural areas. Rather, I believe the main goals of
the universal service program are to ensure that all consumers-including those in high cost
areas have access at affordable rates.
During the past two years, I have continued to express my concerns with the
Commission s policy of using universal service support as a means of creating "competition" in
high cost areas. ISO As I have stated previously, I am hesitant to subsidize multiple competitors to
serve areas in which costs are prohibitively expensive for even one carrier. The Commission
policy may make it difficult for anyone carrier to achieve the economies of scale necessary to
serve all of the customers in rural areas.
I am troubled by today s decision because the Commission fails to require ETCs to
provide the same type and quality of services throughout the same geographic service area as a
condition of receiving universal service support. In my view, competitive ETCs seeking
universal service support should have the same "carrier oflast resort" obligations as incumbent
service providers in order to receive universal service support. Adopting the same "carrier of last
resort" obligation for all ETCs is fully consistent with the Commission s existing policy of
competitive and technological neutrality amongst service providers.
First, today s decision fails to require CETCs to provide equal access. Equal access
provides a direct, tangible consumer benefit that allows individuals to decide which long distance
plan, if any, is most appropriate for their needs. As I have stated previously, I believe an equal
access requirement would allow ETCs to continue to offer bundled local and long distance
service packages, while also empowering consumers with the ability to choose the best calling
plan for their needs.lsl
149 Order at para. 12.
150 Separate Statement of Commissioner Kevin J. Martin Multi-Association Group (MA G) Plan for Regulation of
Interstate Services of Non-Price Cap Incumbent Local Exchange Carriers and Interexchange Carriers, Second
Report and Order and Further Notice of Proposed Rulemaking, CC Docket (No. 00-256)(rei. October, 11 , 2002).
151 Separate Statement of Commissioner Kevin 1. Martin Federal-State Joint Board on Universal Service
Docket No.96-, (reI. July 10, 2002); Separate Statement of Commissioner Kevin 1. Martin Federal-State Joint
Board on Universal Service, FCC 03-170 CC Docket No. 96-, (reI. July 14, 2003).
Federal Communications Commission FCC 03-338
Second, the Commission redefines several rural telephone company service areas where
Virginia Cellular s proposed service areas do not cover the entire service area of the incumbent
rural telephone company. Given the potential for creamskimming, I do not support this
redefining of the service areas of incumbent rural telephone companies. The Commission
decision to permit service area redefinition relies solely on an analysis of population densities of
the wire centers that Virginia cellular can and cannot serve to determine whether the effects of
creamskimming would occur, but fails to justify the decision based upon any cost data to verify
whether Virginia Cellular is serving low-cost, high revenue customers in the rural telephone
company s area.
Finally, I am concerned that the Commission s decision on Virginia Cellular
application may prejudge the on-going work ofthe Federal-State Joint Board regarding the
framework for high-cost universal service support. Today s decision provides a template for
approving the numerous CETC applications currently pending at the Commission, and I believe
may push the Joint Board to take more aggressive steps to slow the growth of the universal
service fund such as primary line restrictions and caps on the amount of universal service support
available for service providers in rural America.