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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF WWC HOLDING CO., INC. D/B/A
CELLULAR-ONE SEEKING
DESIGNATION AS AN ELIGIBLE
TELECOMMUNICATIONS CARRIER
THAT MAY RECEIVE FEDERAL
UNIVERSAL SERVICE SUPPORT.
Case No. WST- T-05-
COMMENTS OF CENTURYTEL
In Order No. 29749, the Commission issued its Notice of Application and Notice
Modified Procedure and established a comment period for this case. On April 14, 2005 , the
Idaho Telecommunications Association (IT A) filed a Motion to Dismiss the Application of
Western Wireless stating that the Company failed to meet the commitments and requirements
issued by the Federal Communications Commission (FCC) since the time Western Wireless filed
its Application. CenturyTel of the Gem State, Inc., and CenturyTel of Idaho, Inc. (CenturyTel)
supports the ITA's Motion and hereby submits its comments regarding the Application of
Western Wireless seeking designation as an Eligible Telecommunications Carrier (ETC) in
Idaho.
INTRODUCTION
The Federal Communications Commission ("Commission" or "FCC") recently
adopted additional mandatory requirements for a telecommunications carrier to be designated as
an Eligible Telecommunications Carrier ("ETC") by the Commission and, thus, eligible for
universal service support.l By statute, state commissions have the primary responsibility for
designating most ETCs.2 The FCC has jurisdiction to designate carriers that are not subject to
the jurisdiction of a state commission.3 In this Order, the Commission encourages states
exercising jurisdiction over ETC designations, to adopt the Commission s requirements for state
ETC designation proceedings.
According to the Communications Act of 1934, as amended (the "Act"), only a
designated ETC is eligible to receive Federal universal service support.4 The Act requires that
upon request and consistent with the public interest, convenience, and necessity, the State
commission may, in the case of an area served by a rural telephone company, and shall, in the
case of all other areas, designate more than one common carrier as an eligible
telecommunications carrier" for a designated service area, so long as the requesting carrier meets
the Acts other requirements.s The Act also provides that the service area of a competitive ETC
CETC") shall be that of the ILEC except in the case of a rural ILEC, where the service area of
the CETC may be redefined if both the state and the FCC find it would serve in the public
Interest.
The purpose of the universal service fund is to ensure that rural customers have
access to affordable, reliable, high-quality, safe, and ubiquitous telecommunications service.
The Act requires regulators to evaluate in a deliberate and thoughtful manner whether a
In the Matter of Federal-State Joint Board on Universal Service Report and Order, CC Docket No. 96-45 (ReI.
Mar. 17 2005) ("Order
47 V.C. 9214(e)(2).
47 V.C. 9214(e)(6).
47 V.C 99 214(e), 254(e).
47 V.C. 9214(e)(2).
47 V.C. 9214(e)(5).
7 47 V.C. 9 254.
competitor in a rural market will provide a beneficial alternative to the incumbent, or destabilize
the fragile market, thereby hindering the delivery of universal service by any provider.
In June 2002, the Federal-State Joint Board on Universal Service ("Joint Board"
released recommendations regarding the ETC designation process and high-cost support rules.
The Board recommended that the Commission adopt permissive federal guidelines for states to
consider in state ETC proceedings, including guidelines for minimum ETC qualifications to
assist states in conducting "rigorous proceedings" and guidance for interpreting the public
interest test found in section 214(d) of the Act. 10 In the Order, the Commission refers to and
adopts a majority of the Recommended Decision, and adds some additional guidelines and
federal requirements, to ensure the support will be used only as contemplated by the Act. The
FCC also clarified the criteria it applies to rural ETC service area redefinition proceedings.
Pending the Joint Board's Recommended Decision, the Commission
acknowledged the need for a more thorough ETC designation framework 1 1 Specifically, the
Commission employed more rigorous standards, establishing reporting and other CETC
requirements, in its decisions granting ETC status to Virginia Cellular, LLC ("Virginia Cellular
8 FCC Commissioner Michael Copps recently summarized the plight of rural communities and the Commission
grave responsibility to take special care when devising policies that will affectthis nation s high-cost areas:
Rural carriers face unique and very serious challenges to bring the communications revolution to their
communities. As we move forward on all of our proceedings, including, among others, universal service
decisions. . . we just must do everything we can to make certain that we understand the full impact of our
decisions on rural America. If we get it wrong on these rural issues, we will consign a lot of Americans to
second-class citizenship.
Statement of Michael J. Copps, Commissioner, Federal Communications Commission, before the Subcommittee on
Telecommunications and the Internet of the House Committee on Energy and Commerce, Feb. 26, 2003 , at
Federal-State Joint Board on Universal Service Recommended Decision, CC Docket No. 96-, 19 FCC Rcd
4257, 4258 ~ 2 (reI. Feb. 27 , 2004) ("Recommended Decision
10 Id. ~ 3.
II Order ~ 14.
and Highland Cellular, Inc. ("Highland Cellular ). 12 In order to obtain CETC status, both
Virginia Cellular and Highland Cellular agreed to abide by certain conditions: comply with any
and all minimum local usage requirements adopted by the FCC, offer a number of local calling
plans as part of their universal service offerings, and report annually their progress in achieving
their build-out plans for cellular sites in sparsely populated areas within their licensed service
area but outside their existing network coverage, as well as provide service to requesting
customers in the service areas where they are designated as an ETC.13 In Highland Cellular the
FCC also established the wire center as the minimum geographic service area for a CETC, and
adopted criteria for determining if an applicant would be engaged in creamskimming contrary to
the public interest. Consistent with these decisions, the Order expands upon and adopts in
several areas the strengthened designation process and service area redefinition criteria
developed in Virginia Cellular and Highland Cellular.
II.THE FCC REPORT AND ORDER
The Order Adopts Additional Requirements for the ETC Designation
Process.
Existing Minimum Eligibility Requirements Prior to the Current
Order Are Retained.
In the Order, the Commission adopts additional requirements for ETC
designations and annual re-certification. The original requirements, which remain in effect
require state commissions and the Commission, when applicable, to review ETC designation
12 Virginia Cellular, LLC Petition for Designation as an Eligible Telecommunications Carrier in the Commonwealth
of Virginia CC Docket No. 96-, Memorandum Opinion and Order, FCC 03-338 (reI. Jan. 22, 2004)
Virginia Cellular ); Highland Cellular, Inc., Petition for Designation as an Eligible Telecommunications
Carrier in the Commonwealth of Virginia CC Docket No. 96-, Memorandum Opinion and Order, FCC
04-37 (reI. Apr. 12, 2004) Highland Cellular
13 Virginia Cellular at ~ 14-15; Highland Cellular at ~~ 15-
applications for compliance with section 214(e)(1) of the Act I4 The Act requires a designated
ETC to offer the services supported by the federal universal service fund throughout the
designated service area IS and to use its own facilities or a combination of its own facilities and
resale of another carrier s service.I6 The competitive carrier need not offer these services before
receiving its ETC designation.I7 The Act also requires the ETC to advertise the supported
services, the associated charges and the availability of Lifeline and Link Up services throughout
the service area for which designation is received. 1 8
The Commission clarifies that the ETC designation framework applies to any type
of common carrier seeking an ETC designation, including wireless and wire line ETC
applicants.I9 The Commission also encourages state commissions to require ETC applicants to
meet these same requirements and to conduct the same public interest analysis outlined in the
Order to all ETC applicants in a manner "consistent with the principle that universal service
support mechanisms and rules be competitively neutral.,,
The Order Establishes Additional Eligibility Requirements.
47 V.C. 9214(e)(1).
IS "The services that are supported by the federal universal service support mechanisms are: (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." Order FN 39
(citing 47 c.F.R. 9 54.101).
16 9 214(e)(1)(A).
17 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-, 15
FCC Rcd 15168, 15172-, ~~ 10-18 (2000), recon. pending (Section 214(e) Declaratory Ruling).
18 See 47 V.C. 9 214(e)(1)(B); 47 C.R. 99 54.405(b) and 54.411(d).
19 Order ~ 17.
20 Order ~ 19.
In addition to the statutory requirements, the Order establishes minimum
requirements for an ETC designation. Minimum requirements "should encourage state
commissions to conduct rigorous reviews ofETC applications, including fact-intensive
analyses.21 Pursuant to the new Commission rules, an applicant must show: (1) commitment
and ability to provide the supported services; (2) the ability to remain functional in emergency
situations; (3) satisfaction of state consumer protection standards and service quality standards;
(4) offering of a local usage plan comparable to the ILEC plan; and (5) ability to provide equal
access if all of other ETCs in the designated area relinquish their designations.22 The specifics of
each minimum guideline are described below.
Commitment and Ability to Provide the Supported Services
It is important for applicants to show the commitment and ability to provide the
supported service because this helps ensure that an ETC applicant is willing and capable to
provide services throughout the service area and able to be the sole ETC if the Commission so
requires.23 For an ETC applicant to demonstrate its commitment and ability, it must meet two
requirements. The Commission encourages states to adopt these two requirements in a manner
consistent with state laws and policies.
(1)Provision of Service Upon Request
First the ETC must provide services to all customers who make a reasonable
request for service within its designated service area. Consistent with Virginia Cellular and
Highland Cellular the applicant must make specific commitments to provide service to
requesting customers. For those instances where the ETC's network covers the potential
21 Recommended Decision ~ 11.
22 Order ~ 20.
23 Recommended Decision ~ 23.
24 I d.
customer, the ETC should provide service immediately.2s Where a potential customer request
comes within the applicant's licensed service area but outside its existing network coverage , if
service can be provided at a reasonable cost, the ETC applicant should provide service within a
reasonable period of time by:
(1) modifYing or replacing the requesting customer s equipment; (2) deploYing a
roof-mounted antenna or other equipment; (3) adjusting the nearest cell tower; (4)
adjusting network or customer facilities; (5) reselling services from another
carrier s facilities to provide service; or (6) emploYing, leasing, or constructing an
additional cell site, cell extender, repeater, or other similar equipment.
(2)Use of Funds for Universal Coverage
Second, the Commission requires an ETC applicant to submit a formal five-year
network improvement plan that demonstrates how universal service funds will be used on a wire
center-by-center basis to "improve coverage, signal strength, or capacity that would not
otherwise occur absent the receipt of high-cost support.27 Any such build-out commitments
adopted by states should be consistent with state line extension policies and carrier of last resort
obligations?8 This showing must also include: (1) "the projected start date and completion date
for each improvement and the estimated amount of investment for each proj ect that is funded
high-cost support"; (2) "the specific geographic areas where the improvements will be made;
and" (3) "the estimated population that will be served as a result of the improvements.29 This
25 Id.
Id. (citing Virginia Cellular ETC Designation Order 19 FCC Rcd at 1571 , ~ 16; Highland Cellular ETC
Designation Order 19 FCC Rcd at 6430, ~ 17).
27 Order ~ 21. ETCs designated by the Commission before the Order will be required to make this showing when
they make their annual certification filing on October 1 2006. Order ~ 20.
28 Order ~ 21.
29 Order ~ 23.
approach allows a fact-specific analysis of the carrier and service area and ensures high-cost
support will be used for the intended purpose, to improve service.
Ability to Remain Functional in Emergency Situations
The ability to remain functional in emergency situations in an important factor for
the public interest. 31 Therefore, an ETC applicant must demonstrate and certify on an annual
basis its ability to remain functional in emergency situations.32 To meet this requirement, an
applicant "must demonstrate that it has a reasonable amount of back-up power to ensure
functionality without an external power source, is able to reroute traffic around damaged
facilities, and is capable of managing traffic spikes resulting from emergency situations.33 The
Commission anticipates that state commissions adopting an emergency functionality requirement
will also identify other geographically-specific factors that are relevant for consideration. The
Commission stated
, "
(iJf states impose any additional requirements, we encourage them to do so
in a manner that is consistent with the universal service principle of competitive neutrality. ,,
Satisfaction of Consumer Protection and Service Quality
Standards
As one of the minimum eligibility requirements, the Commission requires an ETC
applicant to show its commitment to meeting consumer protection and service quality
standards.3S This requirement is consistent with the public interest and "ensure ( s J that consumers
are able to receive an evolving level of universal service that 'tak( es J into account advances in
30 Order ~ 24.
31 Order ~ 26.
32 Order ~ 25.
33 Id.
34 Id.
35 Order ~ 29.
telecommunications, and information technologies and services. ",36 A wireless ETC applicant
meets this requirement by committing to comply with the Cellular Telecommunications and
Internet Association s Consumer Code for Wireless Service.37 For other carriers, the
Commission will review the commitment on a case-by-case basis.38 The Commission
encourages states imposing consumer protection and service quality requirements to do so to the
extent necessary to further universal service goals.39 According to the Commission
, "
state
commissions that exercise jurisdiction over ETC designations may either follow the
Commission s framework or impose other requirements consistent with federal law to ensure
that supported services are offered in a manner that protects consumers.,,40
Significantly, the Commission determines that states also may impose these
consumer protections requirements and other generally applicable, competitively neutral
requirements on wireless carriers.41 While Section 332(c)(3) of the Act preempts states from
regulating the rates and entry of CMRS providers, it specifically allows states to regulate the
other terms and conditions of commercial mobile radio services.
Comparable Local Usage Plan
To be eligible for an ETC designation, an applicant must also "demonstrate that it
offers a local usage plan comparable to the one offered by the ILEC in the service areas for
0rder~28 (citing47V.c. 9254(c)).
37 Id.
38 Id.
39 Order ~ 30.
40 Order ~ 30.
41 Order ~ 31.
42 Order~ 31; 47 V.C. 9332(c)(3).
which the applicant seeks designation.,,43 The Act requires an ETC to provide some local usage
in order to receive universal service high-cost support.44 The Commission declines to adopt a
specific local usage threshold; it will review each applicant's plan on a case-by-case basis to
determine if the service plans are comparable.
While the Commission did not adopt a minimum requirement, it notes that there is
nothing in the rules or orders that would prohibit states from adopting some amount of local
usage.46 The Commission encourages state commissions to compare the ETC' s and the ILEC' s
local usage plan in examining whether the ETC applicant provides adequate local usage pursuant
to the Act. 47
Acknowledgment of Potential Equal Access Obligation
To be eligible for an ETC designation, an applicant must acknowledge that the
Commission may require it to provide equal access if all other ETCs in that service area
relinquish their designations.48 The Act requires the Commission to "permit an eligible
telecommunications carrier to relinquish its designation as such a carrier in any area served by
more than one eligible telecommunications carrier" and gives the Commission the authority to
require the remaining ETC to provide equal access. The FCC will make that determination on a
case-by-case basis.
43 Order ~ 32.
47 C.R. 954.101(a)(2).
45 Order ~ 33.
46 Order ~ 34.
47 Order ~ 34.
48 Order ~ 35; 47 V.C. 214(e)(4).
49 Order ~ 35.
The Commission Clarifies and Interprets the Mandatory Public Interest
Determination.
For an ETC applicant to be designated as an ETC it must meet the eligibility
requirements explained above and the designation must serve the public interest. The additional
minimum eligibility requirements will assist states in determining that ETC applicants are
capable and willing to service all customers in the designated service area. so Before the
application is granted, however, the Act requires the state commission or FCC determine that the
designation is in the public interest, convenience and necessity. In addition to the statutory
requirements, explained below, the Commission s Order establishes factors to help states
interpret the statutory-mandated public interest test.
Existing Statutory Requirements Are Still in Effect.
Pursuant to section 214( )(2) of the Act, the Commission and state commissions
must determine that an ETC designation is consistent with the public interest, convenience and
necessity. While the Act did not establish specific criteria, the public interest analysis must be
consistent with the "purposes of the Act itself, including preserving and advancing universal
service; ensuring the availability of quality telecommunications services at just, reasonable, and
affordable rates; and promoting the deployment of advanced telecommunications and
information services to all regions of the nation, including rural and high-cost areas.
50 Recommended Decision ~ 37.
51 Order ~ 40; 47 V.C. 9254(b).
The Act treats the public interest determination for an additional ETC in an area
served by a rural carrier differently than an area served by a non-rural carrier. Section 214( e )(2)
requires states to designate more than one ETC in areas served by non-rural carriers, when doing
so is consistent with the public interest; but provides that states "may" designate more than one
carrier in areas served by rural carriers and that the state "shall" find the designation to be in the
pu IC Interest.
The Commission Adopts Additional Factors for the Public Interest
Analysis.
In the Order, the FCC adopts the fact-specific analysis of its prior decisions in
Virginia Cellular and Highland Cellular. In these cases, the Commission explicitly rejected
competition as a sole reason for finding a CETC designation to be in the public interest, holding
that "the value of increased competition, by itself, is not sufficient to satisfy the public interest
test in rural areas.S3 The FCC now will conduct a public interest analysis which will include
two additional tests: a cost-benefit analysis and a creamskimming analysis. The FCC strongly
encourages states to include these two additional tests, at a minimum, to the statutory-mandated
pu IC Interest revIew.
First, the commission will consider a variety of factors in the overall ETC
determination, including the benefits of increased consumer choice and unique
advantages and disadvantages of the competitor s service offering. Second, in
areas where an ETC applicant seeks designation below the study area level of a
rural telephone company, the FCC will conduct a creamskimming analysis that
compares the population density of each wire center in which the ETC applicant
52 Recommended Decision ~ 38.
53 Virginia Cellular at ~ 4; Highland Cellular at ~ 4.
54 Order ~ 41.
seeks designation against that of the wire centers in the study area in which the
ETC applicant does not seek designation.
Significantly, the Commission finds that it must make an affirmative
determination that the ETC designation is the public interest for both rural and non-rural
carriers. 56 The Commission finds the same public interest concerns for ETC applicants in areas
served by rural carriers as those in areas served by non-rural carriers. Therefore, the
Commission determines that many of the same public interest factors should be considered for
both rural and non-rural designations, except that the cream skimming analysis will be performed
only in rural study areas because there is not the same potential for creamskimming in areas
served by non-rural ILECs.s7 Notwithstanding the FCC's adoption of one set of criteria for both
types of carriers, the Commission or state commissions may conduct the public interest analysis
differently, giving varYing weight to factors or reaching different outcomes, because of the
different statutory treatment, explained above.
The Commission will Perform a Cost-Benefit Analysis.
As part of the public interest analysis for areas served by both rural and non-rural
carriers, the Commission will consider and balance (1) the benefits of increased consumer choice
and (2) advantages and disadvantages of particular service offerings in its public interest
determination. 59
55 Order ~ 41.
56 Order ~ 42.
57 Order ~ 42.
58 Order ~ 43.
59 Order ~ 44.
Regarding consumer choice, an ETC designation may be beneficial by providing
choice of service offerings in rural and high cost areas.60 However, increased competition by
itself will not satisfy the public interest test.61 In weighing the advantages and disadvantages of
particular service offerings
the Commission has examined the benefits of mobility that wireless carriers
provide in geographically isolated areas, the possibility that an ETC designation
will allow customers to be subject to fewer toll charges, and the potential for
customers to obtain services comparable to those provided in urban areas, such as
voicemail, numeric paging, call forwarding, three-way calling, call waiting, and
other premium services. The Commission also examines disadvantages such as
dropped call rates and poor coverage.
Additionally, per-line support received by the ILEC should be one of the factors
considered. "High-cost support is an explicit subsidy that flows to areas with demonstrated
levels of costs above various national averages.,,63 Therefore the level of per-line support is a
relevant public interest factor. While the Commission declines to adopt a specific benchmark of
support, it determined where there was a high enough high-cost per-line support
, "
the state may
be justified in limiting the number of ETCs in that study area, because funding multiple ETCs in
such areas could impose strains on the universal service fund.
The Commission will Perform a Creamskimming Analysis for
Areas Served by Rural Carriers.
As part of the public interest analysis for areas served by only rural carriers, the
Commission will apply a creamskimming analysis for ETC applicants seeking designation below
60 Order ~ 44.
61 Order ~ 44.
62
Order ~ 44 (citing See Advantage Cellular ETC Designation Order at ~ 19; Highland Cellular ETC Designation
Order 19 FCC Rcd at 6432-, p~ 23; Virginia Cellular ETC Designation Order 19 FCC Rcd at 1569, ~,-r
, 13).
63 Order ~ 55.
64 Order ~ 55.
the service area level of a rural ILEC.6s The cream skimming analysis will include examining (I)
the population density disparities between the wire centers that the ETC proposes to serve and
the wire centers within the service area that the ETC proposes not to serve, (2) whether the ETC
would be serving the highest density areas, and (3) whether the ILEC has disaggregated its
support.66 This analysis will show when an ETC would serve only lower cost wire centers to the
exclusion of higher-cost areas, because a low population density usually indicates a high-cost
area.
Where the ETC will serve the entire rural area, there is no need to perform a
cream skimming analysis because the ETC is required to serve all wire centers in the service
area.68 Where an ETC applicant proposes to serve a disproportionate share of the higher-density
wire centers in an ILEC's service area, the potential for cream skimming arises.69 Support to the
ETC for each line is based on the ILEC' s average costs for serving the entire service area, unless
the ILEC has disaggregated its support.70 Therefore by serving a disproportionate share of the
high-density portion of a service area, an ETC may receive more support than its actual costs of
serving that wire center.71 "(LJine density is a significant cost driver, (thusJ it is reasonable to
assume that the highest-density wire centers are the least costly to serve, on a per-subscriber
basis.n The ILEC would be obligated to provide service to the remaining high-cost wire
65 Order ~ 48. This analysis will be similar to the analysis employed in Virginia Cellular and Highland Cellular.
66 Order ~ 49.
67 Order ~ 50.
68 Order ~ 49.
69 Id.
70 Id.
71 Id.
72 Id.
centers
, "
while ETCs could target the rural incumbent LEC' s customers in the lowest cost areas
and also receive support for serving the customers in these areas.,,73 Thus, the effects of
creamskimming unfairly harm the ILEC and overburden the universal service fund.
The Commission determines that the review addresses the proposed service area
potential effects of cream skimming and not an ETC's "intent" to creamskim. For example
where an ETC is not licensed to serve the entire area, the effects on the universal service fund
and on the ILEC of only serving a portion of the service area may be the same as
creamskimming.74 In addition, even where a carrier proposes to serve both high and low density
areas, there is still potential for creamskimming effects if the majority of the proposed customers
are in the low-cost, high-density wire centers.7S Creamskimming concerns may be lessoned, but
not diminished, where the ILEC has disaggregated support.
In order to not disproportionately burden the universal service fund and to keep
ILECs from being harmed by creamskimming effects, the Commission strongly urges state
commissions to apply the cream skimming analysis outlined in the Order.77 Additionally, a state
commission s application of such a creamskimming analysis will assist the Commission s review
of ETC petitions seeking redefinition of ILEC service areas.
The Commission Maintains and Augments Annual Certification and
Reporting Requirements.
73 Order ~ 49
74 Order FN 136.
75 Order ~ 50.
76 Order ~ 51.
77 Order ~ 52.
78 Order ~ 48. ETCs may petition the Commission for redefinition of the ILECs service area pursuant to 9 214(e)(5).
Annual certification and reporting requirements regarding an ETCs network and
use of universal service funds ensure that an ETC continues to comply with the ETC designation
requirements and that universal service funds are being used for their intended purpose of
providing rural and high-cost customers with access to affordable telecommunication services.
Current rules require ETCs to certify annually that they are using the received universal service
funds for its intended purposes. In the Order, this requirement is maintained and strengthened.
Specifically, an ETC now must submit annually: (1) progress updates on the
five-year service quality improvement plan and an explanation of why any network improvement
targets were not made, on a wire center level; (2) how much universal service support was
received, how the support was used to improve service quality in each wire center; (3) detailed
information on outages in the ETC's network caused by emergencies; (4) the number of requests
from potential customers in the service area that went unfilled; (5) certification of compliance
with service quality standards and consumer protection rules; (6) certification that the ETC is
offering a comparable local usage plan to the ILEC; (7) certification acknowledging that the ETC
may be required to provide equal access to long distance carriers; and (8) the number of
complaints per 1 000 handsets or lines.
Further, the Commission encourages states to go beyond its guidelines.
According to the Commission, states are most qualified to determine necessary information to
ensure ETCs are complYing with all applicable regulations
, "
including state-specific ETC
eligibility requirements.82 "(SJtate commissions may require the submission of any other
79 Order ~~ 68, 70.
80 Order ~~ 4, 69.
81
See Section III(B), infra.
82 Order ~ 71.
information that they believe is necessary to ensure that ETCs are operating in accordance with
applicable state and federal requirements.
III.STATES SHOULD IMPLEMENT THE FCC'S RULES
The Order Establishes Permissive Guidelines for State ETC Designation
Proceedings and Encourages States to Adopt These Guidelines.
While the Commission declines to mandate state commissions to adopt its ETC
designation requirements, it encourages state commissions to require all ETCs "to meet the same
conditions and to conduct the same public interest analysis outlined in this Report and Order
and to impose the reporting and certification requirements on all ETCs.84 Throughout the Order
the Commission repeatedly addresses state commissions and encourages them to adopt each
specific requirement, consistent with the applicable state and federal laws. The Commission
determines that states should evaluate local factual situations and reach a conclusion in the public
interest and consistent with section 214( e )(2).85 Additionally, states have the authority to
regulate CMRS with generally applicable, competitively natural requirements that do not
regulate rates or entry and that are consistent with the Act.
According to the Commission, states should adopt at a minimum the
Commission s rigorous designation process. It is essential that only fully qualified ETC
83 Order ~ 71.
84 Order ~~ 58, 61.
85 Order ,-r 61.
86 Order ~ 31. While section 332(c)(3) of the Act prohibits states from regulating rates or entry of CMRS providers
it specifically allows states to regulate other terms and conditions for CMRS.
designations are granted so that the ETC is able to serve all customers in a service area.87 The
guidelines will assist states in conducting their public interest analysis consistent with the Act.
When only qualified carriers, capable and committed to providing universal service, receive
funds , the long-term sustainability of the fund is improved and the ETC will be able and willing
to serve all customers in a designated service area.89 Further, the guidelines "allow(J for a more
predictable application process among the states.
The Commission stresses the importance of consistent and uniform standards
because a state commission s ETC designation "can ultimately impact the amount of high-cost
and low income monies distributed to an area served by a non-rural carrier, an area served by one
or more rural carriers, or both.,,91 State decisions have national implications, such as affecting
competition, national strategies of new entrants and the size of the federal fund.92 Clear national
eligibility and certification standards are the most effective way to limit the growth of and
sustain the federal high-cost fund. Only through such national standards can rural consumers be
assured that they will have access to high-quality, affordable local telephone service and only
through such standards can all ETCs properly plan their long-term business and investment
strategies. Rigorous standards also protect against inferior services to those offered by ILECS.
In addition, these guidelines are designed to ensure designation of carriers that are
financially viable, likely to remain in the market, willing and able to provide the
supported services throughout the designated service area, and able to provide
consumers an evolving level of universal service. Moreover, state commissions
that apply these guidelines will facilitate the Commission s review of petitions
87 Order ~ 58.
88
Order ~ 58. See also Recommended Decision ~ 9.
89
Order ~ 58. See also Recommended Decision ~ 9.
90 Order ~ 58. See also Recommended Decision ~ 9.
91 Order ~ 59 (internal citations omitted).
92 Recommended Decision ~ 16; Order ~ 60.
seeking redefinition of incumbent LEC service areas filed pursuant to section
214(e)(5) of the Act.
The Commission emphasizes that consistent guidelines should be applied to all carriers
regardless of the type ofILEC.94 Noting, however, that "the public interest analysis for ETC
applications for areas served by rural carriers should be more rigorous than the analysis of
. '
.c ,,95app Icatlons lor areas serve y non-rura camers.
States Have Discretion to Impose Their Own Requirements Beyond the
Commission s Minimum Eligibility Requirements.
To promote the purposes of universal service in a competitively neutral manner
grants of ETC status to competitive carriers must be thoroughly scrutinized and conditioned on
their strong customer commitment and on their provision of services comparable to those offered
by the ILEC. This can be met by adopting the guidelines in the Commission s Order, in
combination with requirements that go above and beyond the guidelines.
State commissions may impose additional requirements consistent with the Act
and the purposes of the universal service fund.96 The Commission s guidelines are consistent
with a holding in the Fifth Circuit that state commissions may impose their own eligibility
requirements in addition to those described in section 214(e)(l).97 According to the Commission
93 Order ~ 60 (citing 47 D.c. 9 214(e)(5); 47 C.R. 9 54.207).
94 Order ~ 59.
95 Order ~ 59.
96 Order ~ 61.
97
Order ~ 61. (citing TOPUC v. FCC 183 F. 3d at 418. The Fifth Circuit Court determined that states may subject
carriers designated as ETCs to eligibility requirements in addition to the eligibility requirements detailed in
section 214( e )( 1) of the Act.).
state commissions will continue to maintain the flexibility to impose additional eligibility
requirements in state ETC proceedings, if they so choose. ,,
In addition to the general prescription to states authorizing imposition of
additional requirements, throughout the Order the Commission addresses state commissions
encouraging them to adopt the Commission s guidelines and clarifYing that states may impose
requirements above and beyond the minimum eligibility requirements for ETC designation
proceedings. For example, even though the Commission did not set a minimum local usage
requirement, it stated that "there is nothing in the Act, Commission s rules, or orders that would
limit state commissions from prescribing some amount of local usage as a condition of ETC
status. ,,99 In the section delineating its consumer protection and quality requirements, the
Commission stated
, "
(aJs with the other requirements adopted in this Report and Order, state
commissions that exercise jurisdiction over ETC designations may either follow the
Commission s framework or impose other requirements consistent with federal law to ensure
that supported services are offered in a manner that protects consumers."IOO Additionally, in the
section describing the requirement to remain functional in emergency situations, the Commission
anticipates that state commissions will also identify other geographically-specific factors that are
relevant for consideration.IOI
Adoption of Rigorous Requirements Above and Beyond the Current
Requirements Is in the Public Interest.
98 Order ~ 61.
99 Order ~ 34.
100 Order ~ 30.
101 Id.
The Current ETC designation process is filled with problems. Some state
commissions have granted CETC designations and redefined rural ILECs' service areas based on
highly inconsistent criteria. Too often, the justifications for such actions fail to meet the public
interest standard established in the Act. As a result, CETCs are presently obtaining state and
federal universal service support based on the lowest possible standard of local exchange service
with no clear benefit to consumers. While they do not undertake the same service commitments
as ILECs , they receive the same support as the ILEC. By contrast, fully-regulated incumbents
are uniquely required to provide high-quality local exchange service and to serve as the carrier of
last resort. In most rural areas, the ILECs' ability to offer this level of service is dependent upon
federal and state high-cost funds. This results in Federal funds that are not being used as
intended by the Act and the universal service fund is overburdened, without increased benefits
for rural customers. The public is harmed and CETCs receive an unfair advantage.
Additionally, in recent years, designations of wireless ETCs in rural areas that cannot support
multiple carriers have caused exponential growth of the high-cost fund and with little or no
added benefit to rural consumers. Wireless ETC designations in rural areas do not attract
competition to these markets. Rural wireline providers are not necessarily losing lines to
wireless carriers, and rural customers are not gaining access to new service offerings once the
wireless carrier becomes an ETC.
While the Commission s guidelines begin to address these problems, state
commissions can and should go beyond these minimum requirements to impose even more
demanding requirements. Adoption of the Commission s new guidelines are only a first step in
ensuring that the present funding system is sustainable in the long term and that the public is
protected.
State Commissions Should Impose These Specific Additional
Req uiremen ts.
State commissions should require CETCs to serve the ILECs
entire study area or receive support based on the ILECs cost
only for the area that CETC seeks to serve.
Under the Commission s Order, even though CETCs may serve a redefined
smaller area than the ILEC's study area, they receive support based on the ILEC's costs, which
are averaged across the entire study area (or zone). This gives a significant competitive
advantage to CETCs by encouraging them to "pick and choose" their service areas within an
ILEC's larger territory, while receiving support based on the ILEC's average costs of serving
both high-cost and low-cost areas within the study area.
Allowing a CETC to target the lines and customers they wish to serve in this
manner results in a windfall for the CETC and provides no incentive for the CETC to attempt to
provide services to all customers. The potential for cherry-picking in rural markets is further
intensified because state regulators and the Commission will redefine the rural service areas for
CETCs down to the wire center level.
Because CETCs do not have the same costs as the ILECs, or provide comparable
services, state commissions should base support on a CETC's own costs. However, if a state
commission concludes that a CETC is entitled to support based on the ILEC's costs, the state
also should conclude that those carriers should serve the same service area as the ILEC. This
will ensure competitive neutrality as required by the Commission s reading of Section 254 of the
Communications Act of 1934, as amended (the "Act,,I02 In the alternative, if a state
commission does not require the CETC to serve the ILEC' s entire study area, the support
102 12 FCC Rcd 8776, 8801 ~47.
payment should be based on a measurement of the ILEC' s costs only for the area that the CETC
serves.
State commissions should require CETCs to assume carrier of
last resort responsibilities.
Unlike CETCs, ILECs have significant carrier-of-Iast-resort obligations.
Historically, as the carrier-of-last-resort, the ILEC has been expected to provide service to all
customers in the service area even if it is not economically beneficial to do so. In addition, some
states place a ceiling on the rate the carrier-of-Iast-resort can charge for services provided and
limit the carrier s ability to exit a particular market. It is this carrier-of-Iast resort responsibility,
in part, that raises the ILEC's costs above those of competitive carriers. Thus, where a CETC
receives support based on the ILEC' s costs , the CETC should be prepared to step in as the
carrier-of-last resort if required to do so. Only in this way can the Commission and states be
assured that the support is being used to preserve and enhance universal service in rural areas.
State commissions should require ETCs to demonstrate
adequate financial resources.
Consistent with the Recommended Decision, state commissions should evaluate
whether ETC applicants have sufficient financial resources to provide quality service throughout
the service area.1O3 This will ensure that a carrier that receives financial support, is able to
sustain its operations and serve all customers in the designated service area.I04
IV.CONCLUSION
103 Recommended Decision ~ 22.
104 Id.
In the Order, the FCC strengthens current and establishes new rigorous
requirements for ETC designation proceedings under its jurisdiction. The FCC encourages
states exercising jurisdiction over ETC designations to adopt the guidelines outlined in the Order.
By adopting these requirements, the Idaho Public Utilities Commission will begin to address the
problem of a growing universal service fund by ensuring that carriers obtaining ETC
designations are fully qualified, committed and able to serve the designated service area. It will
also assist this commission in complYing with the Federal Act. Additionally, this Commission
should utilize its discretion to impose even more demanding requirements for its ETC
designation proceedings.
Respectfully submitted this 29th day of April, 2005
CENTURYTEL OF IDAHO, INC.
CENTURYTEL OF THE GEM STATE, INC
~U~~
~;)
Calvin K. Simshaw
VP - Assoc. Gen. Counsel
CenturyT el
[phone]
calvin. simshawCfYcenturytel.com
CERTIFICATE OF SERVICE
I hereby certify that an original and 7 copies of the foregoing Comments of
CenturyTel in the Matter ofWWC Holding Co., Inc. D/B/A Celluar-One Seeking Designation as
an Eligible Telecommunications Carrier that may receive Federal Universal Service Support
relating to Case No. WST-05-01 was filed this 28th day of April, 2005, via overnight mail and
a true and correct copy thereof has been served on each of the parties listed below, postage
prepaid.
Rhonda Parisio
Mary Hobson
Stoel Rives LLP
101 S. Capital Blvd. Ste 1900
Boise, ID 83702
Mark J. A yotee
Briggs and Morgan, P .
2200 First National Bank Building
St. Paul, MN 55101
Morgan W. Richards, Jr.
804 East Pennsylvania Lane
Boise, Idaho 83706
Conley E. Ward
Givens Pursley LLP
601 W. Bannock St.
Boise, ID 83701
Idaho Public Utilities Commission
Commission Sec. - Jean Jewell
472 W. Washington St.
Boise, ill 83702-5983
Dan Trampush
Moss Adams LLP
900 Washington St., Suite 700
Vancouver, W A 98660
Dean J. Miller
McDevitt & Miller, LLP
420 W. Bannock St.
Boise, ID 83702
Ingo Henningson
Citizens Telecommunications Company of Idaho, Inc.
4 Triad Center, Suite 200
Salt Lake City, UT 84180
Charles Best
Electric Lightwave LLC
4400 77th Ave
Vancouver, W A 98662