20040416Fourth Joint Motion to Take Official Notice.pdf

Morgan W. Richards, ISB No. 1913
MOFFATT, THOMAS, BARRETT, ROCK &
FIELDS, CHARTERED
101 S. Capitol Boulevard, 10th Floor
Post Office Box 829
Boise, Idaho 83701
Telephone: [phone]
Facsimile: [phone]
mwr~moffatt.com
Attorneys for Citizens Telecommunications
Company of Idaho
Conley E. Ward, ISB No. 1683
GIVENS PURSLEY LLP
601 W. Bannock Street
O. Box 2720
Boise, Idaho 83701-2720
Telephone: [phone]
Facsimile: [phone]
Attorneys for Idaho Telephone Association
15-881.19
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C ,c i i ':;U i iLl i i;~~; CUf-;iSSION
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
IAT COMMUNICATIONS, INC., d.
NTCH-IDAHO, INe. OR CLEAR TALK
FOR DESIGNATION AS AN ELIGIBLE
TELECOMMUNICATIONS CARRIER
IN THE MATTER OF THE APPLICATION
OF NPCR, INC. d.a. NEXTEL PARTNERS
SEEKING DESIGNATION AS AN
ELIGIBLE TELECOMMUNICATIONS
CARRIER
Case No. GNR-03-
Case No. GNR-03-
FOURTH JOINT MOTION TO TAKE
OFFICIAL NOTICE
The Idaho Telephone Association ("ITA") 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 Case No. 96-
, "
In the Matter of Federal-State Joint Board on Universal Service - Highland
ORIGINAL
FOURTH JOINT MOTION TO TAKE OFFICIAL NOTICE - 1 BOI MT2:543732.
Cellular, Inc. Petition for Designation as an Eligible Telecommunications Carrier in the
Commonwealth of Virginia." In support of this Motion, Petitioners state as follows:
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 federa1."
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 opinion and order until April 12, 2004, too late to be included in
the parties' Briefs.
The FCC Memorandum Opinion and Order is very relevant to the
Commission s deliberations because it addresses issues relating to the
applications by Nextel Partners and Clear Talk for ETC status.
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 of the FCC Memorandum Opinion and Order; and
Directing that the FCC Memorandum Opinion and Order be marked as an
exhibit and included in the record as a late-file exhibit.
FOURTH JOINT MOTION TO TAKE OFFICIAL NOTICE - 2 BOI MT2:543732.
Oral argument is not requested on this Motion.
Respectfully submitted this 15th day of April, 2004.
I..
Morgan W. . chards
MOFFATT, THOMAS, BARRETT, ROCK & FIELDS
CHID.
Attorneys for CitizensTelec unications Comp,ofIdaho
Con y
GIVENS PURSLEY LLP
Attorneys for Idaho Telephone Company
FOURTH JOINT MOTION TO TAKE OFFICIAL NOTICE - 3 BOI MT2:543732.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 15th day of April, 2004, I caused a true and
correct copy of the foregoing FOURTH JOINT MOTION TO TAKE OFFICIAL NOTICE
to be served by the method indicated below, and addressed to the following:
John Hammond, Deputy AG
IDAHO PUBLIC UTILITIES COMMISSION
472 West Washington Street
Post Office Box 83720
Boise, Idaho 83720-0074
( 1
us. Mail, Postage Prepaid
( 0/) Hand Delivered
( ) Overnight Mail
( ) Facsimile
( ) Electronic Mail
Molly O'Leary
RICHARDSON & O'LEARY, P.LLC.
99 East State Street, Suite 200
Eagle, Idaho 83616
(J5 US. Mail, Postage Prepaid
( ) Hand Delivered
( )
Overnight Mail
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Philip R. Schenkenberg
BRIGGS AND MORGAN, P.
2200 First National Bank Building
332 Minnesota Street
St. Paul, Minnesota 55101
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Dean J. Miller
420 West Bannock
Post Office Box 2564-83701
Boise, Idaho 83702
Lance A. Tade, Manager
State Government Affairs
CITIZENS TELECOMMUNICATIONS
COMPANY OF IDAHO
4 Triad Center, Suite 200
Salt Lake City, UT 84180
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Morgan W. Richards
MOFFATT THOMAS
101 S. Capitol Blvd., 10th Floor
Post Office Box 829
Boise, Idaho 83701
FOURTH JOINT MOTION TO TAKE OFFICIAL NOTICE - 4 BOI MT2:543732.
Robert M. Nielsen
548 E Street
Post Office Box 706
Rupert, Idaho 83350
Charles H. Creason, Jr.
President and General Manager
PROJECT MUTUAL TELEPHONE COOPERATIVE
ASSOCIATION, INC.
507 G Street
Post Office Box 366
Rupert, Idaho 83350
Mary S. Hobson
STOEL RIvES, LLP.
101 South Capitol Boulevard, Suite 1900
Boise, Idaho 83702
Eric Steinmann
Corporate Counsel
CLEAR TALK
Post Office Box 1976
Wrightwood, California 92397
Clay Sturgis
Senior Manager
Moss ADAMS, LLP.
601 Riverside, Suite 1800
Spokane, Washington 99201-0063
(-1 US. Mail, Postage Prepaid
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( 0U.S. Mail, Postage Prepaid
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(bdJ'
(!.
Conley E. Ward
FOURTH JOINT MOTION TO TAKE OFFICIAL NOTICE - 5 BOI MT2:543732.
Federal Communications Commission FCC 04-
Before the
Federal Communications Commission
Washington, D.C. 20554
In the matter of
CC Docket No. 96-45
Federal-State Joint Board on
Universal Service
Highland Cellular, Inc.
Petition for Designation as an
Eligible Telecommunications Carrier
in the Commonwealth of Virginia
MEMORANDUM OPINION AND ORDER
Adopted: February 24, 2004 Released: April 12, 2004
By the Commission: Commissioners Copps and Adelstein issuing separate statements;
Commissioner Martin dissenting and issuing a separate statement.
INTRODUCTION1. In this Order, we grant in part and deny in part the petition of Highland Cellular
Inc. (Highland Cellular) to be designated as an eligible telecommunications carrier (ETC) in
portions of 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).l In so doing, we conclude
that Highland Cellular, a commercial mobile radio service (CMRS) carrier, has satisfied the
statutory eligibility requirements of section 214( e)(1). 2 Specifically, we conclude that Highland
Cellular has demonstrated that it will offer and advertise the services supported by the federal
universal service support mechanisms throughout the designated service area. Highland Cellular
requests ETC designation for a service area that overlaps, among other areas, the study areas of
three rural telephone companies.3 We find that the designation of Highland Cellular as an ETC
in a wire center served by Verizon Virginia, In.::. (Verizon Virginia), a non-rural carrier, and
certain areas served by two of the three rural companies serves the public interest and furthers
the goals of universal service. As explained below, with regard to the study area of Verizon
South, Inc. (Verizon South) and the Saltville wire center of United Telephone Company-
Southeast Virginia (United Telephone) we do not find that ETC designation would be in the
public interest.
1 Highland Cellular, Inc., Petition for Designation as an Eligible Telecommunications Carrier in the Commonwealth
of Virginia, filed Sep. 19 2002 (Highland Cellular Petition).
47 US.C. ~ 214(e)(I).
3 The remainder of Highland Cellular s requested service area falls within the service area ofVerizon Virginia, a
non-rural telephone company.
Federal Communications Commission FCC 04-
2. Highland Cellular is licensed to serve the entire study area of only one of tre three
rural companies for which it seeks ETC designation- Burkes Garden Telephone Company, Inc.
(Burkes Garden).4 Because Highland Cellular is licensed to serve only part of the study areas of
the other two incumbent rural telephone companies, Highland Cellular has requested that we
redefine the service areas of these rural telephone companies for ETC designation purposes, in
accordance with section 214( e)( 5) of the Act. 5 We agree to the service area redefinition
proposed by Highland Cellular for the service area of United Telephone, subject to agreement by
the Virginia State Corporation Commission (Virginia Commission) in accordance with
applicable Virginia Commission requirements. 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.6 Because we do not designate Highland
Cellular as an ETC in Verizon South's 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 EfC 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 Highland Cellular and other competitive ETCs may receive in the
future and the criteria used for continued eligibility to receive 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. As we concluded in a recent order granting ETC designation to Virginia
Cellular in the Commonwealth of Virginia, this framework shall apply to all ETC designations
4 Highland Cellular requests ETC designation in the service areas of the rural telephone companies Burkes Garden
Telephone Company, Inc. (Burkes Garden), United Telephone Company- Southeast Virginia (United Telephone),
and Verizon South, Inc. - VA (Verizon South). Highland Cellular Petition at 10-13; Highland Cellular, Inc.
Amendment to Petition for Designation as an Eligible Telecommunications Carrier, filed Oct 23, 2002, at 1-
(Highland Cellular Amendment I).
5 Highland Cellular Petition at 11-13; Highland Cellular Amendment I at 1-2; Highland Cellular, Inc., Second
Amendment to Petition for Designation as an Eligible Telecommunications Carrier in the Commonwealth of
Virginia, filed Feb. 26, 2003 (Highland Cellular Amendment II). Specifically, Highland requests redefinition of the
service areas of United Telephone and Verizon South. Id. In light of our decision to deny ETC designation for the
area served by Verizon South, we do not address Highland Cellular s request to redefine that service area.
6 If the Virginia Commission does not agree to the proposal to redefine the affected rural service areas, we will
reexamine our decision with regard to redefining these service areas.
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 96-45 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. 96-45, United States Telecom
Association s Comments, filed May 5, 2003; Federal-State Joint Board on Universal Service CC Docket No. 96-
, Verizon s Conrnents , filed May 5, 2003.
Federal Communications Commission FCC 04-
for rural areas pending further action by the Commission 9 We conclude that the value of
increased competition, by itself, is not sufficient to satisfy the public interest test in rural areas.
Instead, in detennining 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 Highland Cellular has made on the record in this proceeding.
These conditions will ensure that Highland 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 Act5. Section 254( e) of the Act provides that "only an eligible telecommunications
carrier designated under section 214(e) shall be eligible to receive specific Federal universal
service support. ,,11 Pursuant to section 214( e)( 1), a common carrier designated as an ETC must
offer and advertise the services supported by the federal universal service mechanisms
throughout the designated service area. 6. Section 214(e)(2) ofthe Act provides state commissions with the primary
responsibility for perfonning ETC designations. 13 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.,,14 Under section 214(e)(6), the Commission may, with respect to an area served
See Federal-State Joint Board on Universal Service, Virginia Cellular, LLC Petition for Designation as an
Eligible Telecommunications Carrier for the State of Virginia CC Docket No. 96-, Memorandum Opinion and
Order, FCC 03-338, para. 14 (reI. Jan. 22, 2004) (Virginia Cellular Order).
10 See infra para. 43.
11 47 V.C. ~ 254(e).
47 US.e. ~ 214(e)(I).
47 V.e. ~ 214(e)(2). See also Federal-State Joint Board on Universal Service; Promoting Deployment and
Subscribership in Unserved Areas, Including Tribal and Insular Areas CC Docket No. 96-45, 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).
47 V.C. ~ 214(e)(6). See, e., Western Wireless Corporation Petition for Designation as an Eligible
Telecommunications Carrier for the Pine Ridge Reservation in South Dakota CC Docket No. 96-45, 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. 96-45
Memorandum Opinion and Order, 17 FCC Rcd 9589 (Wireline Compo Bur. 2002); Corr Wireless Communications
LLC Petition for Desfgnation as an Eligible Telecommunications Carrier CC Docket 96-45, Memorandum Opinion
and Order, 17 FCC Rcd 21435 (Wire line Compo Bur. 2002). We note that the Wire line Competition Bureau has
delegated authority to perform ETCdesignations. See Procedures for FCC Designation of Eligible
(continued....
Federal Communications Commission FCC 04-
by a rural telephone company, and shall, in all other cases, 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)(I).
Before designating an additional ETC for an area served by a rural telephone company, the
Commission must detennine 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) the availability
of (supported) 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.
8. Twelfth Report and Order.On June 30, 2000, 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 perfonn the ETC designation. 18 Carriers seeking designation as an ETC for service provided
on non-tribal lands must provide the Commission with an "affinnative statement" from the state
commission or a court of competent jurisdiction that the carrier is not subject to the state
commission s jurisdiction. 19 The Commission defined an "affinnative statement" as "any duly
authorized letter, comment, or state commission order indicating that (the state commission)
lacks jurisdiction to perfonn the designation over a particular carrier."zo The requirement to
provide an "affinnative statement" ensures that the state commission has had "a specific
opportunity to address and resolve issues involving a state commission s authority under state
(...
continued from previous page)
Telecommunications Carriers Pursuant to Section 214(e)(6) of the Communications Act Public Notice, 12 FCC Rcd
22947 22948 (1997) (Section 214(e)(6) Public Notice). The Wireline Competition Bureau was previously named
the Common Carrier Bureau.
47 U.C. ~ 214(e)(6).
16 Id.
17 See 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
Commission Declaratory Ruling, CC Docket No. 96-45, 15 FCC Rcd 15168 (2000) (Declaratory Ruling), recon.
pending.
18 See Twelfth Report and Order 15 FCC Rcd at 12255-, paras. 93-114.
19 Twelfth Report and Order 15 FCC at 12255, para. 93.
20 Twelfth Report and Order 15 FCC at 12264, para. 113.
Federal Communications Commission FCC 04-
law to regulate certain carriers or classes of carriers.,,21
9. Redefining a Service Area.Under section 214(e)(5), "(i)n 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.,,22 Section 54.207(d) permits the Commission to initiate a
proceeding to consider a definition of a service area that is different ITom a rural telephone
company s study area as lon~ as the Commission seeks agreement on the new defmition with the
applicable state commission. 3 Under section 54.207(d)(1), the Commission must petition a state
commission with the proposed definition according to that state commission s procedures.24 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).25 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 Act, in many
respects, places rural telephone companies on a different competitive footing ITom the 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 the study area
level. 26
Highland Cellular s Petition
10. On September 19, 2002, Highland 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 of Virginia. 27 Highland Cellular contends that the Virginia Commission
21 Twelfth Report and Order 15 FCC at 12264, para. 113 (citations omitted).
47 U.c. ~ 214(e)(5).
23 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).
24 See 47 c.F.R. ~ 54.207(d)(1).
25 See 47 C.R ~ 54.207(d)(1).
26 See Federal-State Joint Board on Universal Service CC Docket No. 96-, Recommended Decision, 12 FCC Rcd
, 179-80, paras. 172-74 (1996) (1996 Recommended Decision).
27
See generally, Highland Cellular Petition. On October 2, 2002, the Wireline Competition Bureau released a
Public Notice seeking comment on the Highland Cellular Petition. See Wireline Competition Bureau Seeks
Comment on Highland Cellular Telephone, Inc. Petition for Designation as an Eligible Telecommunications Carrier
in the State of Virginia CC Docket No. 96-45, Public Notice, DA 02-2487 (reI. Oct. 2, 2002); In the Matter of
Federal-State Joint Board on Universal Service CC Docket 96-45, Comments of the Cellular Telecommunications
and Internet Association, filed Oct. 15 2002 (CTIA Comments); In the Matter of High land Cellular Telephone, Inc.
Petitionfor Designation as and Eligible Telecommunications Carrier in Virginia Comments of the Telephone
Association of Maine, filed Oct. 15 , 2002 (TAM Comments); In the Matter of Federal-State Joint Board on
Universal Service CC Docket 96-45 , Comments ofVerizon, filed Oct. 15 2002 (Verizon Comments); In the Matter
of Federal-State Joint Board on Universal Service CC Docket 96-45, Reply Comments of Highland Cellular, Inc.
filed Oct. 22 (Highland Cellular Reply Comments).
Federal Communications Commission FCC 04-
has issued an "affirmative statement" that the Virginia Commission does not have jurisdiction to
designate a CMRS carrier as an ETc. Accordingly, Highland Cellular asks the Commission to
designate Highland Cellular as an ETC pursuant to section 2l4(e)(6).28 Highland Cellular also
maintains that it satisfies the statutory and regulatory prerequisites for ETC designation and that
designating Highland Cellular as an ETC will serve the public interest.
11. Highland Cellular also requests that the Commission redefine the service areas of
two incumbent rural telephone companies, United Telephone and Verizon South, because it is
not able to serve the entire study area of each of these companies.30 Highland Cellular states that
as a wireless carrier, it is restricted to only providing facilities-based service in those areas where
it is licensed by the Commission. 31 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 tIe entirety of that area.32 Highland
Cellular further contends that the proposed redefinition of the rural telephone companies' service
areas is consistent with the recommendations regarding rural telephone company study areas, as
set forth by the Joint Board in its Recommended Decision.
III.DISCUSSION
12. After careful review of the record before us, we find that Highland 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 the portions of its licensed service area described herein First, we find that
Highland Cellular has demonstrated that the Virginia Commission lacks the jurisdiction to
perform the designation and that the Commission therefore may consider Highland Cellular
petition under section 2l4(e)(6). Second, we conclude that Highland 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 2l4(e)(I). In addition, we find that designation of Highland Cellular as an ETC in
certain areas served by rural telephone companies serves the public interest and furthers the goals
of universal service by better ensuring that consumers in high-cost and rural areas of Virginia
have access to the services supported by universal service at affordable rates. Pursuant to our
authority under section 214( e)( 6), we therefore designate Highland 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 Highland Cellular as an ETC in the study area of the rural
telephone company, Verizon South, and the Saltville wire center of the rural telephone company,
United Telephone.34 In areas where Highland Cellular s proposed service areas do not cover the
entire study area of a rural telephone company, Highland Cellular s ETC designation shall be
28 Highland Cellular Petition at 3-4.
29 Highland Cellular Petition at 4-, 15-18; Highland Cellular Amendment I at 2.
30 Highland Cellular Petition at 10-13; Highland Cellular Reply Comments at 2-3; Highland Cellular Amendment I
at 1-2; Highland Cellular Amendment II at 2.
31 Highland Cellular Petition at 13; Highland Cellular Amendment I at 1-
32 Highland Cellular Petition at 13.
33 Id. at 13-15. See also 1996 Recommended Decision 12 FCC Rcd at 179-, paras. 172-74.
34 See infra paras. 29-33.
Federal Communications Commission FCC 04-
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, Highland Cellular s ETC
designation is effective immediately. Finally, we note that the outcome of the Commission
pending proceeding, now before the Joint Board, examining the rules relating to high-cost
universal service support in competitive areas could potentially impact the support that Highland
Cellular and other ETCs may receive in the future.35 This Order is not intended to prejudge the
outcome of tint proceeding. We also note that Highland 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. 36
Commission Authority to Perform the ETC Designation
13. We find that Highland Cellular has demonstrated that the Virginia Commission
lacks the jurisdiction to perform the requested ETC designation and the Commission has
authority to consider Highland Cellular s petition under section 2l4(e)(6) of the Act. Highland
Cellular submitted as an "affirmative statement" an order issued by the Virginia Commission
addressing an application filed by Virginia Cellular, LLC (Virginia Cellular) seeking ETC
designation.37 In the Virginia Commission Order the Virginia Commission concluded that it
has not asserted jurisdiction over CMRS carriers and that the Applicant should apply to the
FCC for ETC designation.,,38
14. We find that, as required by the Twelfth Report and Order the Virginia
Commission was given the specific opportunity to address and resolve the issue of whether it has
authority to regulate CMRS providers as a class of carriers when it rendered its decision in the
Virginia Commission Order.39 We find it sufficient that the Virginia Commission indicated that
it does not have jurisdiction over CMRS carriers and that the Federal Communications
Commission is the proper venue for CMRS carriers seeking ETC designation in the
Commonwealth of Virginia. Therefore, based on this statement by the Virginia Commission, we
find the Virginia Commission lacks jurisdiction to designate Highland Cellular as an ETC and
this Commission has authority to perform the requested ETC designation in the Commonwealth
of Virginia pursuant to section 214(e)(6).
35 See Portability Public Notice 18 FCC Rcd at 1941-
36 See Declaratory Ruling, 15 FCC Rcd at 15173; see also 47 U.C. ~ 214(e)(4).
37 See Highland Cellular Petition at Exhibit A (Virginia Corporation Commission Virginia Cellular, LLC Order
Case Nos. PUC970135 & PUCOI0263 at 4-5 (Apr. 9 2002) (Virginia Commission Order)).
38 Virginia Commission Order at 4-5. Virginia Cellular s application was the first time a CMRS carrier filed for
ETC designation before the Virginia Commission. See id. at 2.
39 See Twelfth Report and Order 15 FCC Rcd at 12264, para. 113. See also RCC Holdings, Inc. Petition for
Designation as and Eligible Telecommunications Carrier Throughout its Licensed Service Area in the State of
Alabama CC Docket No. 96-45 , Memorandum Opinion and Order, 17 FCC Rcd 23532 , 23537, para. 13 (Wireline
Compo Bur. 2002) (RCC Holdings ETC Designation Order) (finding that an order from a prior proceeding involving
unaffiliated CMRS providers seeking ETC status constituted an "affirmative statement" for the purposes satisfying
section 214(e)(6) of the Act).
47 U.C. ~ 214(e)(6).
Federal Communications Commission FCC 04-
Offering and Advertising the Supported Services
15. Offering the Services Designated for Support. We find that Highland 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, Highland Cellular is an "A2-Band" cellular carrier for the
Virginia 2 Rural Service Area, serving the counties of Bland and Ta:zewell.41 Highland Cellular
states that it currently provides all of the services and functionalities enumerated in section
54.101(a) of the Commission s rules throughout its cellular service area in Virginia.42 Highland
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.43 Highland Cellular also complies with
applicable law and Commission directives on providing access to emergency services.44 In
addition, although the Commission has not set a minimum local usage requirement, Highland
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.45 As discussed below, Highland 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 of the Commission s rules. 46
16. Highland Cellular has also made specific commitments to provide service to
requesting customers in the service areas in which it is designated as an ETC. Highland Cellular
states that if a request is made by a potential customer within its existing network, Highland
Cellular will provide service immediately using its standard customer equipment. 47 In instances
where a request comes from a potential customer within Highland 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
41 Highland Cellular Petition at 1.
42 Id. at 2. The Commission has defined the services that are to be supported by the federal universal service support
mechanisms to include: (1) voice grade access to the public switched network; (2) local usage; (3) Dual Tone
Multifrequency (DTMF) signaling or its functional equivalent; (4) single-party service or its functional equivalent;
(5) access to emergency services, including 911 and enhanced 911; (6) access to operator services; (7) access to
interexchange services; (8) access to directory assistance; and (9) toll limitation for qualifying low-income
customers. 47 C.R. ~ 54.101(a).
43 Highland Cellular Petition at 4-8 and Exhibit B.
44 See 47 c.F.R. ~ 54.101(a)(5); Highland Cellular Petition at 7.
45 Highland Cellular Petition at 5 -6 and Exhibit B.
46 See infra para. 43; Letter from David LaFuria, Lukas, Nace, Gutierrez & Sachs to Marlene H. Dortch, FCC, filed
Nov. 19 2003 (Highland Cellular November 19 Supplement).
47 Highland Cellular November 19 Supplement, at 3.
Federal Communications Commission FCC 04-
provide service.48 In addition, if after following these steps, Highland Cellular still cannot
provide service, it will notify tre requesting party and include that information in an annual
report filed with the Commission detailing how many requests for service were unfulfilled for
the past year. 49
17. Highland Cellular has further committed to use universal service support to
further improve its universal service offering by constructing new cellular sites in sparsely
populated areas within its licensed service area but outside its existing network coverage.
Highland Cellular states that it will modify its construction plans based on the areas where ETC
designation is granted. 51 Highland Cellular notes that the parameters of its build-out plans may
evolve over time as it responds to consumer demand. 52 In connection with its annual reporting
obligations, Highland Cellular will submit detailed information on its progress toward meeting
build-out plans.
18. Offering the Supported Services Using a Carriers s Own Facilities. Highland
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. 54 Highland 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.,,55 We find that this certification is
sufficient to satisfy the facilities requirement of section 2l4(e)(I)(A).
19. Advertising the Supported Services. We conclude that Highland Cellular has
demonstrated that it satisfies the requirement of section 2l4( e) (1 )(B) to advertise the availability
of the supported services and the charges therefor using media of general distribution.
Highland Cellular certifies that it will "use media of general distribution that it currently employs
48 Highland Cellular November 19 Supplement, at 3-
49 Highland Cellular November 19 Supplement at 4, n. 7 (agreeing to follow the service provisioning commitments
made by Virginia Cellular during its ETC designation proceeding). See Virginia Cellular Order, FCC 03-338, at
para. 14.
50 Supplement to Highland Cellular, Inc. Petition for Designation as an ETC in the Commonwealth of Virginia, filed
April 8, 2003 at 3-4 (Highland Cellular April 8 Supplement).
51 See Highland Cellular December 12 Supplement at 5. For example, to date Highland Cellular has committed to
construct cell sites only in areas for which we deny ETC designation - notably in the Jewell Ridge, Richlands, and
Tazewell wire centers in the Verizon South rural study area. See Highland Cellular November 19 Supplement at 4-
5. In a subsequent filing, Highland Cellular described alternative build-out plans should the Commission limit
Highland Cellular s ETC designation to complete wire centers. See Highland Cellular December 12 Supplement at
5 (proposing cell sites in the Verizon South and Burkes Garden rural study areas). We assume that Highland
Cellular s build-out plans will change as a result of this Order.
52 See Highland Cellular November 19 Supplement at 5; Letter from David LaFuria, Lukas, Nace, Gutierrez &
Sachs to Marlene H. Dortch, FCC, filed Dec. 12, 2003 (Highland Cellular December 12 Supplement).
53 See infra para. 43.
47 U.c. ~ 214(e)(1)(A).
55 Highland Cellular Petition at 8-
47 u.S.C. ~ 214(e)(1)(B).
Federal Communications Commission FCC 04-
to advertise its universal service offerings throughout the service areas designated by the
Commission.57 In addition, Highland Cellular details alternative methods that it will employ to
advertise the availability of its services. For example, Highland Cellular will provide notices at
local unemployment, social security, and welfare offices so that unserved consumers can learn
about Highland Cellular s service offerings and learn about Lifeline and Linkup discounts.
HigWand 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. 59 We find that
Highland Cellular s certification and its additional commitments to advertise its service offerings
satisfy section 214(e)(l)(B). In addition, as the Commission has stated in prior decisions
because anETC receives universal service support only to the extent that it serves customers, we
believe that strong economic incentives exist, in addition to the statuto
70 obligation
, for an ETC
to advertise its universal service offering in its designated service area. 0
Public Interest Analysis
20. We conclude that it is "consistent with the public interest, convenience, and
necessity" to designate Highland Cellular as an ETC for the portion of its requested service area
that is served by the non-rural telephone company, Verizon Virginia. We also conclude that it is
in the public interest to designate HigWand Cellular as an ETC in Virginia in the study area
served by the rural telephone company, Burkes Garden and the Bland and Ceres wire centers
served by the rural telephone company, United Telephone. In determining whether the public
interest is served, the Commission places the burden of proof upon the ETC applicant. We
conclude that Highland Cellular has satisfied the burden of proof in establishing that its universal
service offering in these areas will provide benefits to rural consumers. We do not designate
Highland Cellular as an ETC, however, for the study area of Verizon South and the Saltville wire
center of United Telephone because we find that Highland Cellular has not satisfied its burden of
proof in this instance.
21. Non-Rural Study Areas.We conclude that it is "consistent with the public
interest, convenience, and necessity" to designate Highland Cellular as an ETC for the portion of
its requested service area that is served by the non-rural telephone company, Verizon Virginia.
We note that the Common Carrier Bureau previously 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. 63 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
57 Highland Cellular Petition at 9.
58 Highland Cellular November 19 Supplement at 5.
59 Highland Cellular November 19 Supplement at 5.
60 See Western Wireless Pine Ridge Order 16 FCC Rcd at 18137, para. 10.
61
See infra paras. 29-33.
62 See 47 D.c. ~ 214(e)(6). See also Appendix A.
63 See, e., 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).
Federal Communications Commission FCC 04-
complies with section 2l4(e)(l) of the Act will necessarily be consistent with the public interest
in every instance. We nevertheless conclude that Highland Cellular s public interest showing
here is sufficient based on the detailed commitments Highland Cellular made to ensure that it
provides high quality service throughout the proposed rural and non-rural service areas; indeed
given our finding that Highland Cellular has satisfied the more rigorous public interest analysis
for certain rural study areas, it follows that its commitments satisfy the public interest
requirements for non-rural areas. 64 We also note that no parties oppose Highland Cellular
request for ETC designation in the study area of this non-rural telephone company. We therefore
conclude that Highland Cellular has demonstrated that its designation as an ETC in the study
area of this non-rural telephone company, is consistent with the public interest, as required by
section 214(e)(6). 65 We further note that the Joint Board is reviewing whether to modify the
public interest analysis used to designate both non-rural and rural ETCs under section 2l4(e)
the Act. 66 The outcome of that proceeding could impact the Commission s public interest
analysis for future ETC designations in non-rural telephone company service areas.
22. 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 Highland 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
Highland Cellular seeks designation outweigh any potential haII"rn. 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
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.
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 of ETC applications. This Order
does not prejudge the Joint Board's deliberations in thtt proceeding and any other public interest
framework that the Commission might ultimately adopt.
23. Highland Cellular s universal service offering will provide benefits to customers
in situations where they do not have access to a wireline telephone. For instance, Highland
Cellular has committed to serve residences that do not have access to the public switched
network through the incumbent telephone company.67 Also, the mobility of Highland Cellular
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 uniq~ risks of geographic isolation associated with living in rural
64 See Highland Cellular November 19 Supplement at 1-
65 See 47 U.C. ~ 214(e)(6).
66 See Portability Public Notice 18 FCC Rcd at 1954-55, para. 33.
67 Highland Cellular November 19Supplement at 3-
Federal Communications Commission FCC 04-
communities.68 Highland Cellular also submits that, because its local calling area is larger than
those of the incumbent local exchange carriers it competes against, Highland Cellular
custorrers will be subject to fewer toll charges.
24. We acknowledge arguments made in the record that wireless telecommunication
offerings may be subject to dropped calls and poor coverage. In addition, wireless carriers often
are not subject to mandatory service quality standards. Highland Cellular has committed to
mitigate these concerns. Highland 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.70 As evidence of its commitment to high service quality, Highland Cellular has also
committed to comply with the Cellular Telecommunications Imustry Association Consumer
Code for Wireless Service, which sets out certain principles, disclosures, and practices for the
provision of wireless service. 71 In addition, Highland Cellular has committed to provide the
Commission with the number of consumer complaints per 1 000 handsets on an annual basis.
Therefore, we find that Highland 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.
25. 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 the number of competitive ETCs.73 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
68 Highland 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.
69 See Highland Cellular Petition at 16, 17; Highland Cellular April 8 Supplement at 1-
70 See supra para 17.
71 Highland Cellular November 19 Supplement
, at 1; CTIA, Consumer Code for Wireless Service available at
http://www.wow-com.com/pdf/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; (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.
72 See infra para. 43 (requesting that Highland Cellular provide consumer complaint data on October 1 of each year).
73 For example, assuming, that Highland Cellular captures each and every customer located in the two affected 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
Highland Cellular ETC designation is only approximately 0.04 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, January 31 , 2002) (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 $360 030 out of a total of $8 57 903 276 in the fourth quarter of 2003). We note, however, in light of the rapid
growth in competitive ETCs, discussed above, comparing the impact of one competitive ETC on the overall fund
may be inconclusive.
Federal Communications Commission FCC 04-
dramatic pace. For example, in the first quarter of200l , three competitive ETCs received
approximately $2 million or 0.4 percent of high-cost support.74 In the fourth quarter of2003
112 competitive ETCs received approximately $32 million or 3.7 percent of high-cost support.
This concern has been raised by parties in this proceeding, especially as it relates to the long-
tenn sustainability of universal service high-cost support. Specifically, Verizon Telephone
Companies (Verizon) argues that the Commission should not rule on the Highland Cellular ETC
petition until after it has had an opportunity to initiate a broader rulemaking on high-cost fund
issues.76 In particular, Verizon contends that the Commission should reexamine the rules
concerning portability of support for ETCs and the designation of ETCs for areas different from
those served by the incumbent LEC.77 We recognize that Verizon raises important issues
regarding universal service high-cost support.78 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.79 We note that the outcome
of the Commission s pending proceeding examining the rules relating to high-cost support in
competitive areas could potentially impact, among other things, the support that Highland
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.
26. We further conclude that designation of Highland Cellular as an ETC in the
Burkes Garden study area and the Bland and Ceres wire centers served by United Telephone
does not create rural creamskimming concerns. As discussed below, however, we conclude that
designation of Highland Cellular as an ETC in the study area of Verizon South and the Saltville
wire center does raise cream skimming and other concerns, and therefore would be inconsistent
with the public interest. Rural creamskimming occur s when competitors serve only the low-cost
high revenue customers in a rural telephone company s study area.80 Because Highland Cellular
requests ETC designation in the entire study area of Burkes Garden, designation of Highland
Cellular as an ETC in this portion of its licensed service area does not create creamskimming
74 See Federal Universal Service Support Mechanisms Fund Size Projections for the First Quarter of 2001 (Universal
Service Administrative Company, January 31, 2002)
75 At the same time, we acknowledge 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 s Comments, filed May 5, 2003.
76 See Verizon Comments at 2.
77 See id. at 4.
78 In addition, the Telephone Association of Maine (TAM) filed comments requesting that the Commission use this
proceeding to indicate how wireless ETCs should be regulated by states after receiving ETC designation. See TAM
Comments at 1. Specifically, TAM requests that the Commission expressly designate state commissions as the
appropriate regulatory agencies to oversee consumer protection matters and service offerings supported by universal
service for all ETCs, including wireless carriers. See TAM Comments at 3. We decline to address this issue
because it is outside the scope of the ETC petition.
79 See Portability Public Notice.
80 See 1996 Recommended Decision 12 FCC Rcd at 180, para. 172. "Creamskimming" refers to instances in which
a carrier serves 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.
Federal Communications Commission FCC 04-
concerns. We note, however, that because the contours of Highland Cellular s CMRS licensed
area differ from United Telephone s and Verizon South's service areas, Highland Cellular will
be unable to provide facilities-based service to the entire study areas of these two companies. In
this case, however, Hifhland Cellular commits to provide universal service throughout itslicensed service area. 8 It therefore does not appear that Highland Cellular is deliberately
seeking to enter only certain portions of these companies ' study areas in order to creamskim.
27. 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 is licensed to serve. Under these circumstances, granting a carrier ETC
designation for only its licensed portion of the rural study may have the same effect on the ILEC
as rural creamskimming.
28. We have analyzed the record before us in this matter ani find that, for the study
area of United Telephone, Highland Cellular s designation as an ETC is unlikely to undercut the
incumbent's ability to serve the entire study area. Our analysis of the population density of each
of the affected wire centers for United Telephone reveals that Highland Cellular will not be
serving only low-cost areas to the exclusion of high-cost areas. Although there are other factors
that define high-cost areas, a lovver population density indicates a higher cost area.82 The
average population density for the United Telephone wire centers for which we grant Highland
Cellular ETC designation is 19.5 persons per square mile and the average population density for
United Telephone s remaining wire centers is 73.21 persons per square mile.
29. We conclude, however, that it would not be in the public interest to designate
Highland Cellular as an ETC in the study area ofVerizon South. Highland Cellular s licensed
81 See Highland Cellular Petition at 9.
82 See Multi-Association Group (MAG) Planfor 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
19628, para. 28 (2001) (MAG Order), recon. pending (discussing Rural Task Force White Paper # 2 at
http://www.wutc.wa.gov/rtt).
83 Letter from David LaFuria and Steven M. Chernoff, Lukas, Nace, Gutierrez & Sachs to Marlene H. Dortch, FCC
filed Jan. 23, 2004 (Highland Cellular January 23 Supplement).
84 Verizon opposes the designation of Highland Cellular as an ETC in Verizon South's study area because, among
other things, Highland Cellular wrongly classified six of the seven wire centers for which it seeks ETC designation
as non-rural and therefore failed to make the necessary showing for ETC designation for these areas. See Verizon
Comments at 2-3. Specifically, because these wire centers are served by rural telephone companies, Verizon notes
that Highland Cellular was required to describe the geographic area for these wire centers for which it seeks ETC
designation and demonstrate that granting ETC status in these areas would serve the public interest. See Verizon
Comments at 3; 47 U.C. ~ 214(e)(6). In response to the arguments raised by Verizon in its comments, Highland
Cellular amended its petition in order to correctly reclassify Verizon South as a rural telephone company. See
Highland Cellular Amendment I at 1-, revised Exhibit D, and revised Exhibit F. Moreover, Highland Cellular
stated in its amendment that the public interest analysis in its original petition was applicable to the study area of
Verizon South. See Highland Cellular Amendment I at 2. Although we find that Highland's amendment
sufficiently resolves these specific concerns raised by Verizon, as explained in the text, however, it would not be in
the public interest to designate Highland Cellular as an ETC in Verizon South's study area.
Federal Communications Commission FCC 04-
CMRS service area covers only certain wire centers in the study area of Verizon South.85 Based
on our examination of the population densities of the wire centers in Verizon South's study area
and using the same analysis used by the Commission in the Virginia Cellular Order 86 we find
that designating Highland Cellular as an ETC in Verizon South's study area would not be in the
public interest.
30. In the Virginia Cellular Order the Commission granted in part and denied in part
the petition of Virginia Cellular LLC (Virginia Cellular) to be designated as an ETC throughout
parts of its licensed service area in the Commonwealth of Virginia. 87 In that proceeding,
Virginia Cellular requested ETC designation for the study areas of six rural telepho ne
companies.88 The Commission found that the designation of Virginia Cellular as an ETC in
certain areas served by five of the six rural telephone companies served the public interest by
promotin~ the provision of new technologies to consumers in high-cost and rural areas of
Virginia. 9 However, the Commission denied designation of Virginia Cellular as an ETC in one
rural incumbent LEC's study area because Virginia Cellular would only have served the lowest-
cost, highest-density wire center within the incumbent LEC's study area.
31. In this case, we find that the ETC designation of Highland Cellular in the portion
of its licensed service area that covers only certain wire centers ofVerizon South raises
creamskimming concerns similar to those identified by the Commission in the Virginia Cellular
Order. We agree with the arguments of Verizon that Highland Cellular should not be allowed to
serve only the low-cost customers in a rural telephone company s study area. 91 Our analysis of
the populatim data for each of the affected rural wire centers, including the wire centers in
Verizon South's study area that are not covered by Highland Cellular s licensed service area
reveals that Highland Cellular would be primarily serving customers in the low-cost and high-
density portion of Verizon South's study area.92 Specifically, although the wire centers in
Verizon South's study area that Highland Cellular would be able to serve includes two low
density wire centers, approximately 94 percent of Highland Cellular s potential customers in
Verizon South's study area would be located in the four highest-density, and thus presumably
85 Verizon South's study area consists of the Jewell Ridge, Richlands, Bluefield, Pocahontas, Rocky Gap, Tazewell
Big Prater, Big Rock, Dwight, Grundy, Hurley, Maxie, and Oakwood wire centers. Highland Cellular is licensed to
completely serve the Bluefield, Pocahontas, Rocky Gap, and Tazewell wire centers. In addition, Highland Cellular
is licensed to partially serve the Jewell Ridge and Richlands wire centers. See Highland Cellular Amendment I at
Exhibit F.
86 See Virginia Cellular Order FCC 03-338, at paras. 33-35.
87 See Virginia Cellular Order FCC 03-338, at para. 1-
88 See Virginia Cellular Order FCC 03-338, at para. n. 3.
89 See Virginia Cellular Order FCC 03-338, at para. 29.
90 See Virginia Cellular Order FCC 03-338, at para. 35.
91 Verizon argues that allowing ETCs, such as Highland Cellular
, "
to receive high cost support by serving only the
lowest cost customers would waste universal service funds, increasing the burden on those who contribute to the
universal service program, and potentially taking funds away from places where the funding is more needed.
Verizon Comments at 7.
92 See Virginia Cellular Order FCC 03-338, at para. 35.
Federal Communications Commission FCC 04-
lowest-cost, wire centers in Verizon South's study area.93 The population in these four wire
centers represents approximately 42 128 customers. In contrast, the remaining approximate ly six
percent of Highland Cellular s potential customers in Verizon South's study area, which are
located in the two lowest-density, highest-cost wire centers, represent only approximately 2 800
customers. 94
32. As we discussed in the Virginia Cellular Order when a competitor serves only
the lowest-cost, highest-density wire centers in a study area with widely disparate population
densities, the incumbent may be placed at a sizeable unfair disadvantage.95 Universal service
support is calculated on a study-area-wide basis. Although Verizon South did not take advantage
of the Commission s disaggregation options to protect against possible uneconomic entry in its
lower cost area 96 we find on the facts here that designating Highland Cellular as an ETC in the
requested wire centers potentially could undennine Verizon South's ability to serve its entire
study area. Specifically, because Verizon South's study area includes wire centers with highly
variable population densities, and therefore highly variable cost characteristics, disaggregation
may be a less viable alternative for reducing creamskimming opportunities.97 This problem may
be compounded where the cost characteristics of the incumbent and competitor differ
substantially.98 We therefore reject arguments that incumbents can, in every instance, protect
93 The four highest-density areas that Highland Cellular proposes to serve are the Tazewell wire center (98 persons
per square mile), the Pocahontas wire center (100 persons per square mile), the Bluefield wire center (101 persons
per square mile), and the Richlands wire center (143 persons per square mile). See Highland Cellular January 14
Supplement.
94 The Rocky Gap wire center has a population density of 18 persons per square mile and the Jewell Ridge wire
center has a population density of22 persons per square mile.
95 See Virginia Cellular Order FCC 03-338, at para. 35.
96 In the Rural Task Force 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 concerns regarding the incumbent's ability to serve its entire study area when there is in place a disaggregation
plan for 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 (MA G) 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. 96-45, and Report and Order in CC Docket No. 00-256, 16 FCC Rcd 11244, para.
145 (2001) (Rural Task Force Order), as corrected by Errata, CC Docket Nos. 96-45, 00-256 (Acc. PoL Div. reL
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 USAC's website
http://www.universalservice.org/hc/disaggregation. See also Rural Task Force Order 16 FCC Rcd at 11303, para.
147.
97 The population densities of the requested Verizon South wire centers are: Rocky Gap (18 persons per square),
Jewell Ridge (22 persons per square mile), Tazewell (98 persons per square mile), Pocahontas (100 persons per
square mile), Bluefield (101 persons per square mile), and Richlands (143 persons per square mile). We note that
these figures do not take into account cost variability within specific wire centers, which may be particularly acute in
rural areas.
98 See Federal-State Joint Board on Universal Service CC Docket No. 96-, Montana Universal Service Task
Force s Reply Comments, filed June 3, 2003, at 8; Federal-State Joint Board on Universal Service CC Docket No.
(continued....
Federal Communications Commission FCC 04-
against creamskimming by disaggregating high-cost support to the higher-cost portions of the
incumbent's study area.
33. Finally, we conclude that designating Highland Cellular as an ETC in a portion of
United Telephone s Saltville wire center would not serve the public interest. Although the
Wireline Competition Bureau previously designated an ETC for portions of a rural telephone
company s wire center, 100 we conclude that making designations for a portion of a rural
telephone company s wire center would be inconsistent with the public interest. In particular, we
conclude, that prior to designating an additional ETC in a rural telephone company s service
area, the competitor must commit to provide the supported services to customers throughout a
minimum geographic area. A rural telephone company s wire center is an appropriate minimum
geographic area for ETC designation because rural carrier wire centers typically correspond with
county and/or town lines. We believe that requiring a competitive ETC to serve entire
communities will make it less likely that the competitor will relinquish its ETC designation at a
later date. Because consumers in rural areas tend to have fewer competitive alternatives than
consumers in urban areas, such consumers are more vulnerable to carriers relinquishing ETC
designation. 101 Highland Cellular has stated that, should the Commission impose a requirement
that competitive ETCs serve complete rural telephone company wire centers, it would not seek
designation in the Saltville wire center. 102 We, therefore, do not designate Highland Cellular as
an ETC in the Saltville wire center.
Designated Service Area
34. Highland Cellular is designated an ETC in the requested areas served by the non-
rural telephone company, Verizon Virginia, as listed in Appendix A. We designate Highland
Cellular as an ETC throughout most of its CMRS licensed service area in the Virginia 2 Rural
Service Area. 103 Highland Cellular is designated as an ETC in the area served by the rural
telephone company, Burkes Garden, whose study area Highland Cellular is able to serve
completely, as listed in Appendix B.IO4 Subject to the Virginia Commission s agreement on
redefining the service area of United Telephone, we also designate Hi?hland Cellular as an ETC
for the entire Bland and Ceres wire centers as listed in Appendix c.lo Finally, we do not
designate Highland Cellular as an ETC in the sttrly area served by Verizon South or the Saltville
(...
continued from previous page)
96-45, Organization for the Advancement and Promotion of Small Telephone Companies' Reply Comments , filed
June 3, 2003, at 5.
99 See Highland Cellular Reply Comments at 7-
100 RCC Holdings ETC Designation Order 17 FCC Rcd at paras. 34-35, 37.
101 See In the Matter 0/2000 Biennial Regulatory Review Spectrum Aggregation Limits/or Commercial Mobile
Radio Services WT Docket No. 01-, Report and Order, 16 FCC Rcd 22668, 22684-, para. 34 (2001).
102 See Highland Cellular December 12 Supplement at 4. In contrast, Virginia Cellular amended its petition for ETC
designation in the Commonwealth of Virginia to cover the entirety of the Williamsville, Virginia wire center
although its CMRS licensed service area in Virginia only covered a portion of that wire center. See Virginia
Cellular Order FCC 03-338, at para. 37.
103 Highland Cellular Petition at 1.
104 See Appendix B.
105 See Appendix C.
Federal Communications Commission FCC 04-
wire center served by United Telephone.
35. We designate Highland Cellular as an ETC in the Bland and Ceres wire centers in
the study area of United Telephone. 106 We find that because the Bland and Ceres wire centers
are low-density, high-cost wire centers, concern; about undermining United Telephone s ability
to serve the entire study area are minimized. Accordingly, we find that denying Highland
Cellular ETC status for United Telephone s Bland and Ceres wire centers simply because
Highland Cellular is not licensed to serve the twenty- five remaining wire centers would be
inappropriate. Consequently, we conclude that it is in the public interest to designate Highland
Cellular as an ETC in United Telephone s Bland and Ceres wire centers and include those wire
centers in Highland Cellular s service area, as redefined below.
36. Finally, for the reasons described above, the service area we designate for
Highland Cellular does not contain any portion of Verizon South's study area or United
Telephone s Saltville wire center. 107
Redefining Rural Company Service Areas
37. We redefine the service area of United Telephone pursuant to section 214(e)(5).
Consistent with prior rural service area redefinitions, we redefine each wire center in the United
Telephone study area as a separate service area.l0S Our decisim to redefine the service area of
United Telephone is subject to the review and fmal 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.
38. In order to designate Highland Cellular as an ETC in a service area that is
different from the affected rural telephone company study area, we must redefine the service
areas of the rural telephone company in accordance with section 214(e)(5) of the Act 109 We
redefine the affected service area only to determine the portions of the rural service area in which
to designate Highland Cellular and future competitive carriers seeking ETC designation in the
same rural service area.ll0 In defining United Telephone s service area to be different than its
106 We note that the study area of United Telephone is composed of a contiguous block of twenty-eight wire centers
which include the Abingdon, Austinville, Bland, Bristol, Cana, Ceres, Chilhowie, Comers Rock-Elk Creek, Cripple
Creek, Damascus, Fries, Galax, Glade Spring, Gate City, Hillsville, Independence, Konnarock, Laurel Fork, Marion-
Atkins, Meadowview, Mouth of Wilson, Max Meadows, Rich Valley, Rural Retreat, Saltville, Sugar Grove
Sylvatus, and Wytheville wire centers. See Highland Cellular Amendment I at Exhibit F; Highland Cellular
Amendment II at 1-2. Within this contiguous block, the Bland wire center, Ceres wire center, and a portion of the
Saltville wire center fall within Highland Cellular s licensed service area, and the remaining twenty-five wire
centers fall outside Highland Cellular s licensed service area. Highland Cellular Amendment II at 2.
107 See supra paras. 29-33.
108 See RCC Holdings ETC Designation Order 17 FCC Rcd at 23547, para. 37. See also Highland Cellular
Amendment II at 2. Highland Cellular initially requested that that the Commission designate United Telephone
Bland, Ceres, and Saltville wire centers as one individual service area. See Highland Cellular Petition at 12.
Highland Cellular subsequently amended its petition to request that each wire center be defined as separate service
areas. See Highland Cellular Amendment II at 2.
109 See 47 V.C. 9214(e)(5).
110 See 47 U.C. 9 214(e)(2), (6).
Federal Communications Commission FCC 04-
study area, we are required to act in concert with the relevant state commission
, "
taking into
account the recommendations" of the Joint Board.ll1 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 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. 112 We find that the proposed redefinition properly addresses these
concerns.
39. First, we conclude that redefining United Telephone s service area at the wire
center level should not result in opportunities for creamskimming. We have analyzed the
population densities of the wire centers in United Telephone s study area where Highland
Cellular will and will not receive support and conclude that this redefinition does not raise
creamskimming concerns. 113 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 area.
Therefore, we conclude, based on the particular facts of this case, that there is little likelihood of
rural cream skimming effects in redefining the service area of United Telephone.
40. Second, our decision to redefine the service area includes special consideration
for the affected rural carrier. We find no evidence that the proposed redefinition will harm
United Telephone. Altoough no parties have opposed the specific redefinition of United
Telephone s service area, Verizon has raised general concerns that the designation of Highland
Cellular as a competitive ETC will result in inefficient investment or will strain the universal
service fund.114 We find no evidence tha t the proposed redefinition will harm United
Telephone.115 We note that redefining the service area of the affected rural telephone company
will not change the amount of universal service support that is available to the incumbents.
41. Third, we find that redefining United Telephone s service area as proposed will
not require United Telephone to determine its costs on any 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 redefme the service area 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 United Telephone will comply with these rules. Therefore
we find that the concern of the Joint Board that redefining rural service areas might impose
additional administrative burdens on affected rural telephone companies is not at issue here.
42. In accordance with section 54.207(d) of the Commission s rules, we submit this
Order to the Virginia Commission, 116 and request that the Virginia Commission treat this Order
as a petition to redefine a service area under section 54.207(d)(I) of the Commission s rules.
Highland Cellular s ETC designation in the service area of United Telephone is subject to the
111 See 47 V.C. ~ 214(e)(5).
112 See 1996 Recommended Decision 12 FCC Rcd at 179-, paras. 172-74.
113 See supra paras. 26-28.
114 See Verizon Comments at 3-
115 See supra para. 25.
116 47 C.R. ~ 54.207(d).
Federal Communications Commission FCC 04-
Virginia Commission s review and agreement with the redefinition proposal herein. 117 We find
that the Virginia Commission is uniquely qualified to examine the proposed redefinition because
of its familiarity with the rural service area in question. Upon the effective date of the agreement
of the Virginia Commission with our redefinition of the service area of United Telephone, our
designation of Highland Cellular as an ETC in the area served by United Telephone as set forth
herein, shall also take effect. In all other areas for which this Order grants ETC status to
Highland 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 Highland Cellular s petition with regard to redefining United
Telephone s service area.
Regulatory Oversight
43. We note that Highland 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. 118 Separate
and in addition to its annual certification filing under sections 54.313 and 54.314 of our rules
Highland Cellular has committed to submit records and documentation on an annual basis
detailing its progress towards meeting its build-out plans. Highland 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. 119 In addition, Highland Cellular will annually submit information
detailing how many requests for service from potential customers were unfulfilled for the past
year.120 We require Highland Cellular to submit these additional data to the Commission and
USAC on October 1 of each year beginning October 1 , 2004.121 We find that reliance on
Highland 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.122
117 We note that
, 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 service areas. See Universal Service Order
FCC Rcd at 8880-1 , 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 redefine a rural service
area. !d. at 8881. Similarly, the Commission adopted a procedure in section 54.207 to address the occasions when
the Commission seeks to redefine a rural service area. Id. at 8881 , para. 188. The Commission stated that "
keeping with our intent to use this procedure to minimize administrative delay, we intend to complete consideration
of any proposed definition of a service area promptly.!d.
118 47 V.C. g 254(e); 47 C.R. gg 54.313 , 54.314.
119
See supra para 24; Highland Cellular November 19 Supplement, at 2.
120
See supra para. 16; at 4, Highland Cellular November 19 Supplement at 4, n.
121 Highland Cellular s additional 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.
122
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 04-
conclude that fulfillment of these additional reporting requirements will further the
Commission s goal of ensuring Highland Cellular satisfies its obligation under section 2l4( e) of
the Act to provide supported services throughout its designated service area. 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
provisio n, maintenance, and upgrading of facilities and services" in the areas where it is
designated as an ETc. 123 Highland Cellular will be required to provide such records and
documentation to the Commission and USAC upon request. We further emphasize that
Highland 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. 124 The Commission also may assess forfeitures for violations of
Commission rules and orders. 125
IV.ANTI-DRUG ABUSE ACT CERTIFICATION
44. 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. 126 Highland Cellular has provided a certification consistent with the
requirements of the Anti-Drug Abuse Act of 1988.127 We find that Highland 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
45. Accordingly, IT IS ORDERED that, pursuant to the authority contained in section
2l4(e)(6) of the Communications Act, 47 u.S.c. ~ 214(e)(6), Highland Cellular, Inc. IS
DESIGNATED AN ELIGIBLE TELECOMMUNICATIONS CARRIER for portions of its
licensed service area in the Commonwealth of Virginia to the extent described herein.
46. IT IS FURTHER ORDERED that, pursuant to the authority contained in section
214(e)(5) of the Communications Act, 47 U.C. ~ 214(e)(5), and sections 54.207(d) and (e) of
the Commission s rules, 47 C.R. ~~ 54.207(d) and (e), the request of Highland Cellular, Inc. to
redefine the service area of United Telephone Company - Southeast Virginia in Virginia to
GRANTED to the extent described herein and SUBJECT TO the agreement of the Virginia State
Corporation Commission with the Commission s redefinition of the service area. For United
Telephone Company - Southeast Virginia, 1.4'on the effective date of the agreement of the
Virginia State Corporation Commission with the Commission s redefinition of such service area,
this designation of Highland Cellular, Inc. as an ETC for such area as set forth herein shall also
take effect.
123 47 V.C. ~~ 220, 403; 47 c.F.R. ~ 54.313 54.314.
124 See Declaratory Ruling, 15 FCC Rcd at 15174, para. 15. See also 47 US.C. ~ 254(e).
125 See 47 V.C. ~ 503(b).
126 47 V.C. ~ 1.2002(a); 21 U.C. ~ 862.
127 See Highland Cellular Petition at 19.
Federal Communications Commission FCC 04-
47. IT IS FURTHER ORDERED that, pursuant to the authority contained in section
214(e)(5) of the Communications Act, 47 u.S.c. ~ 214(e)(5), and sections 54.207(d) and (e) of
the Commission s rules, 47 C.R. ~~ 54.207(d) and (e), the request of Highland Cellular, Inc. to
redefine the service area ofVerizon South, Inc. - Virginia in Virginia IS DENIED.
48. 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 04-
APPENDIX A
VIRGINIA NON -RURAL TELEPHONE COMPANY WIRE CENTERS FOR
INCLUSION IN IDGHLAND CELLULAR'S ETC SERVICE AREA
Verizon Virginia Inc.
Honaker (wire center code HNKR V ARK)
Federal Communications Commission FCC 04-
APPENDIX B
VIRGINIA RURAL TELEPHONE COMPANY STUDY AREAS FOR INCLUSION IN
IDGHLAND CELLULAR'S ETC SERVICE AREA
Burkes Garden Telephone Company, Inc. (study area code 190220)
Federal Communications Commission FCC 04-
APPENDIX C
VIRGINIA RURAL TELEPHONE COMPANY WIRE CENTERS
FOR INCLUSION IN IDGHLAND CELLULAR'S ETC SERVICE AREA
United Telephone Company - Southeast Virginia
Bland (wire center code BLNDV AXA)
Ceres (wire center code CERSV AXA)
Federal Communications Commission FCC 04-
STATEMENT OF
COMMISSIONER MICHAEL J. COPPS
Re:Federal-State Joint Board on Universal Service; Highland Cellular, Inc. Petition
for Designation as an Eligible Telecommunications Carrier in the Commonwealth
of Virginia
The long-term viability of universal service depends on a more rigorous review process
for ETC applications. Today s decision, like the decision in Virginia Cellular that preceded it
represents a step in the right direction. During the coming year, as we consider the Joint Board'
guidance, we need to seize the opportunity to improve it further. We must give serious
consideration to the consequences that flow ITom using the fund to support several competitors in
truly remote areas. We also need to bear in mind that when we do fund competition, our rules
must provide the right level of support.
I look forward to this important dialogue at the Commission. To keep tre country well-
connected, we must ensure that all Americans enjoy comparable services at comparable rates.
Federal Communications Commission FCC 04-
DISSENTING STATEMENT OF
COMMISSIONER KEVIN J. MARTIN
Re:Federal-State Joint Board on Universal Service; Highland Cellular, Inc. Petition for
Designation as an Eligible Telecommunications Carrier In the Commonwealth of
Virginia
Today s decision designates Highland Cellular, Inc. (Highland Cellular) as an eligible
telecommunications carrier (ETC) in areas served by two rural telephone companies and one
non-rural telephone company in the Commonwealth of Virginia. The Commission finds the
designation of Highland 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. 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. 1 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 we fail 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 of last 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.
Today s decision also 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. 2
1 Separate Statement of Commissioner Kevin 1. Martin Multi-Association Group (MAG) Planfor 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).
2 Separate Statement of Commissioner Kevin 1. Martin Federal-State Joint Board on Universal Service
Docket No.96-45, (reI. July 10 2002); Separate Statement of Commissioner Kevin J. Martin Federal-State Joint
Board on Universal Service, FCC 03-170 CC Docket No. 96-45, (reI. July 14 2003).
Federal Communications Commission FCC 04-
The Commission also redefines the service area of United Telephone where Highland
Cellular s proposed service area does not cover the entire service area of the incumbent rural
telephone company. I am concerned with the redefining of service areas of incumbent rural
telephone companies. I am also concerned that the Commission did not sufficiently consider the
cost data to verify whether or not Highland Cellular is serving only low-cost, high revenue
customers in the rural telephone company s area.
Finally, I remain concerned that the Commission s recent decisions on pending CETC
applications may prejudge the Commission s upcoming decision regarding the framework for
high-cost universal service support. These decisions now provide a template for approving the
numerous CETC applications currently pending at the Commission, and I believe may ultimately
push the Commission 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.
Federal Communications Commission FCC 04-
SEPARATE STATEMENT OF
COMMISSIONER JONATHAN S. ADELSTEIN
Re:Federal-State Joint Board on Universal Service; Highland Cellular, Inc., 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. 1 For the reasons discussed then, I support this Order responding to the petition of
Highland Cellular to be designated as an ETC in the Commonwealth of Virginia. This Order
along with the recently released Virginia Cellular Order marks a significant improvement from
past Commission decisions by more fully embracing the statutory public interest mandate.
Through these orders, we have provided a more stringent examination of the public
interest and acknowled~d that competition alone cannot satisfy the public interest analysis.
Instead, we have weighed a variety of factors to assess the overall benefits and costs.
considered whether the applicant has made a commitment to service quality and will provide
essential services in its community. We have also improved the accountability of the process by
requiring ETCs to submit regularly documentation detailing their progress towards meeting their
build-out plans and other commitments.
On February 27, 2004, after adoption of this Highland Cellular Order the Federal-State
Joint Board on Universal Service (Joint Board) released a Recommended Decision that further
clarifies and strengthens the standards for designating ETCs and for assessing the public interest.
I was pleased that the Joint Board recognized that establishing a meaningful public interest test
and providing meaningful guidance on ETC designations will help limit federal universal service
funding to those providers who are committed to serving rural communities. I have been pleased
to hear reports that state commissions and other parties are using the new Virginia Cellular
Order template in many state ETC proceedings. I am also encouraging the FCC and state
commissions to embrace the Joint Board's approach as soon as possible.
Establishing a more meaningful public interest test is a critical first step in a larger effort to
manage responsibly the growth of the universal service fund overall. I believe there are
constructive actions we can take to make sure our universal service mandate is upheld while still
ensuring that the fund does not grow dramatically. First, reforming the process for designating
ETCs is essential. Second, funding new entrants based on their own costs, rather than the costs
of the incumbent, would more correctly align our rules with the statutory requirement that funds
be used only for the provision, maintenance, and upgrading of facilities and services for which
the support is intended. And third, the Commission should explore frameworks to identify those
1 Commissioner Jonathan S. Adelstein Accessing the Public Interest: Keeping America Well-Connected Address
Before the 21st Annual Institute on Telecommunications Policy & Regulation (Dec. 4, 2003)
(htto:/ /www.fcc.goy/ commissioners/adelstein/soeeches2003 .html)
Federal-State Joint Board on Universal Service; Virginia Cellular, LLc., Petition for Designation as an Eligible
Telecommunications Carrier in the Commonwealth of Virginia CC Docket No. 96-, FCC 03-338 (reI. Jan. 22
2004) (Virginia Cellular Order).
Federal Communications Commission FCC 04-
very high-cost areas where it may be prohibitive to fund lIDre than one ETc. These three key
refonns, if carried out together, would measurably reduce fund growth without shortchanging
Rural America.