2024083Comments.pdf

Comments of the ITA In Response to 2024 Annual IUSF Report – 1

CYNTHIA A. MELILLO (ISB # 5819)
Cynthia A. Melillo PLLC
8385 W. Emerald Street
Boise, Idaho 83704
Telephone: [phone]
Fax: [phone]
E-mail: [e-mail]

Attorney for Idaho Telecom Alliance

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION.

COMMENTS OF THE IDAHO TELECOM
ALLIANCE IN RESPONSE TO 2024
ANNUAL IDAHO UNIVERSAL SERVICE
FUND REPORT

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Case No. GNR – T – 24 - 05

COMMENTS OF THE IDAHO TELECOM ALLIANCE IN RESPONSE TO 2024 ANNUAL
IDAHO UNIVERSAL SERVICE FUND REPORT

Idaho Telecom Alliance (“ITA”), by and through its undersigned attorneys, hereby
submits to the Commission these comments in response to the 2024 Annual Report of
the Administrator of the Idaho Universal Service Fund (“IUSF”). The ITA is an
advocacy group for 14 independent telecommunications companies in Idaho. All
recipients of the IUSF are members of the ITA, and thus the ITA has a direct interest
in the IUSF.
BACKGROUND
In 2017, the Idaho Public Utilities Commission (the “Commission”) increased
ISUF residential line surcharge rates from $.12/line to $.25/line, and business rates
from $.20/line to $.44/line. Rates charged for services were not increased and
RECEIVED
Friday, August 30, 2024
IDAHO PUBLIC
UTILITIES COMMISSION
Comments of the ITA In Response to 2024 Annual IUSF Report – 2

distribution levels remained the same. In that same order, the Commission ordered
that a new docket be opened for stakeholders to get together to explore a possible
legislative change to protect funding of the IUSF given the changing landscape of the
tele communications industry away from traditional landline technology.
The stakeholders group met periodically from 2017 through 2019 and negotiated
legislation to revise the IUSF, largely modeled after Utah’s revised statutes with respect to funding
Utah’s universal service fund. Unfortunately, at the eleventh hour, support for the legislation did
not coalesce and the group has not been able to gather the same momentum it had at that time.
Two participants that were reluctant to agree at that time indicated that the “timing wasn’t right”
and that they were open to revisiting the issue a few years hence. The ITA recognizes the need
for a legislative change to both IUSF contributions methodology and qualification for IUSF
support. ITA is supportive of these legislative changes, and wants to see them pursued but alone
the ITA has not been able to make that happen. In the meantime, Utah’s universal service fund,
as well as the funds in other states that have changed their funding mechanisms, are thriving.
Since 2017, the Commission has elected to maintain surcharge rates and distribution
levels (without any increase in rates charged) at the levels set in 2017. Because residential and
business landlines have continued to decrease, the IUSF is now teetering on the verge of
collapse. If the Commission again elects not to raise surcharge rates and to maintain funding at
the current levels, the IUSF would be insolvent by June 2025.
The ITA, and particularly those members that receive funding from the IUSF, submit these
comments in support of an option with respect to both surcharge rates and distribution levels that
will keep the fund solvent. The ITA further desires the Commission’s assistance with generating
renewed momentum for a change in legislation.
COMMENTS
Many people may believe that the IUSF is no longer needed because there has been an
increase in federal funding for broadband expansion. While there does appear to be a large influx
Comments of the ITA In Response to 2024 Annual IUSF Report – 3

of federal funding, very few ITA members have received any federal grants to date. Yet, ITA
members are some of the most dedicated companies in providing telecommunications to the most
rural parts of Idaho. For instance, in the high-cost rural areas served by ITA members, on average
sixty-one percent (61%) of subscribers are served by fiber to the home, versus the statewide
average of forty percent (40%).
Moreover, many people may believe that the funding received from federal grants is
sufficient to cover the costs of providing telecommunications services thereby making obsolete
the need for the IUSF. Perhaps what those people do not realize is that all funding from federal
sources such as ARPA and BEAD is solely for capital expenses – to allow additional deployment
of broadband facilities in unserved and underserved areas. There is no new federal funding
source for maintaining the equipment and running these advanced networks after it is installed.
The companies that receive IUSF distributions rely on IUSF funds for ongoing operating expenses
to serve the most rural and high-cost customer in Idaho.
As the Commission is well aware, this issue is not simply about the future of traditional
“plain old telephone services.” The networks these companies operate in the most rural areas of
the state are integral not only to the provision of traditional landline and more modern broadband
services in the territories they serve, but also is vital for the wireless and public safety services
that depend on them as well.
ITA members recognize that without a change in legislation, there will always be a delicate
balance between maintaining landline services (and thus maintaining contribution levels to the
IUSF) and setting both surcharge rates and customer rates for services. On the one hand, the
higher the surcharge and service rates, the higher the likelihood of losing subscribers, thereby
hastening the collapse of these systems. On the other hand, given the continuing natural
decrease in landline subscribers as technology changes, without any changes to surcharge and
service rates, the IUSF is still at risk of collapse.
After reviewing the Administrator’s report and recommendations, and considering the state
Comments of the ITA In Response to 2024 Annual IUSF Report – 4

of the IUSF, the ITA would like to present the following option: Raise the surcharge rates to a
rate that could be tolerated in the marketplace and increase service rates to the statewide
weighted average rate, as opposed to 125% of the statewide weighted average rate.
Surcharge rates for residential and business lines have not been raised since 2017. The
ITA believes that spreading a small increase over all subscribers would be tolerated in the
marketplace and would be beneficial both to the IUSF and the companies it supports. In the
options presented by the Administrator, she recommended anywhere from an increase to
$.30/residential line and $.47/business line to $.65/residential line and $1.05/business line. The
lower increases were combined with adjusting funding to meet 125% of the statewide weighted
average rate, and the higher increases were combined with maintaining funding levels with no
adjustment to funding levels. Because ITA is proposing some adjustment to rates as set forth
below, ITA proposes an increase in surcharge rates in an amount the Administrator and the
Commission deem appropriate when coupled with an increase in service rates to the statewide
weighted average.
Rates for services also haven’t been raised since 2017. As stated in the Commission’s
orders each year, this has largely been because it hasn’t been clear what are the true statewide
average rates. The large carriers whose rates generally set the statewide average tend to charge
higher rates for individual services to encourage customers to bundle services where true rates
are not easy or possible to determine. Because of this bundling of services and the accompanying
tendency to overstate the cost of unbundled network elements, the current calculation appears to
be susceptible to overstating the actual statewide weighted average costs on which the IUSF
relies. If the Commission were now to require companies to set their rates to 125% of the already
inflated statewide weighted average rate after eight years without increases, that would result in
an average rate increase of over 42% for residential services and 40% for business services. A
rate increase of that magnitude would surely result in a loss of subscribers. That being said, ITA
believes that the fund recipients should increase rates, but at a rate that would not have such
Comments of the ITA In Response to 2024 Annual IUSF Report – 5

devastating results, especially considering the loss of the $30 credit for internet services under
the Affordable Connectivity Program and loss of Lifeline benefits for voice services as the Lifeline
program is being phased out. Raising rates to the statewide weighted average, rather than 125%
of the statewide weighted average, and adjusting funding as appropriate, would be an acceptable
compromise that recognizes both the need to raise residential and business rates and the need
to protect the fund from losses expected to be associated with large increases
The ITA is hopeful that these increases could keep the IUSF viable in the short
term and give the stakeholders another opportunity to propose legislation to make the IUSF viable
long into the future.
ITA’S RECOMMENDATION
ITA recommends that the Commission adopt rate increases to the statewide weighted
average of $29.17 per residential line and $46.90 per business line. ITA further recommends an
increase in the surcharge rates in an amount the Administrator and the Commission deem
appropriate when coupled with an increase in service rates to the statewide weighted average
The ITA further requests the Commission’s assistance in bringing stakeholders together
and promoting changes to the USF statutes to make the fund viable into the future.

Comments of the ITA In Response to 2024 Annual IUSF Report – 6

RESPECTFULLY SUBMITTED this 30th day of August 2024.

Cynthia A. Melillo PLLC

By: /Cynthia A. Melillo/
Cynthia A. Melillo

Attorney for Idaho Telecom Alliance

Comments of the ITA In Response to 2024 Annual IUSF Report – 7

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 30th day of August 2024, I caused to be served a true
and correct copy of the foregoing by the method indicated below, and addressed to the following:

Monica Barrios-Sanchez, Commission
Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd. Building 8, Suite
201-A
Boise, ID 83714

P.O. Box 83720
Boise, ID 83720-0074
U.S. Mail
Hand Delivered
Overnight Mail
Facsimile
Electronic Mail

/Cynthia A. Melillo/
Cynthia A. Melillo