Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
Federal State Joint Board on
Universal Service
CC Docket 96-45
Comments of the Iowa Telephone Association
The Iowa Telephone Association (ITA), an association including 153 local exchange telephone
companies in the State of Iowa, offers the following comments in response to the Commission's
Notice of Proposed Rule Making and Order Establishing Joint Board(NPRM) released on March 8,
1996 (Ref. FCC 96-93). Comments offered are on a limited number of subjects raised in the
NPRM although the ITA has a wide interest in the impacts that may occur to end users in the State
of Iowa and to the ITA's member exchange telephone companies as a result of this proceeding.
The State of Iowa is provided telephone service by 153 local exchange telephone companies, the
largest number of telephone companies in any one state in the nation. While there are a three
companies owned by regional and national holding companies, most of the companies in the state
provide service in small areas and communities of the state serving, in most instances, only a few
hundred customers. (The largest small company in the state serves about 8,500 customers.) For the
most part, service areas are rural, many of them with stable or declining populations. Overall
borrowers had digital switches; in 1993 100% of the REA borrowers' exchanges had digital
switches. Furthermore U.S. Census data shows that the percentage of households in Iowa a
telephone in service has increased from 95. 1% in 1985 to 96.8% in 1994. All of these measures
give evidence to the fact that telephone service has improved in Iowa since the Universal Service
Fund and DEM weighting mechanisms have been in effect.
TRANSITIONAL MECHANISMS (Paragraph 40, NPRM
Because of the potential impacts on customers that could result from significant changes in support
flows, the ITA recommends that the Joint Board and FCC fully analyze the alternatives that are
proposed in this proceeding to evaluate the cumulative impacts that individual local exchange
telephone companies will incur from any alternative that it intends to adopt, and its implications on
end user rates from their customers. The ITA strongly recommends that a transitional mechanism
be established to mitigate the financial impacts of any change in funding for USF and DEM
weighting mechanisms over several vears. Such a transitional mechanism seems consistent with
the Act' S requirement that Universal Service mechanisms be predictable.
Telecommunications Carriers to Receive Support for Providing Educational Services
(Paragraph 88)
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4 Data for 1985 and 1993 comes from the 1985 and 1993 Statistical Report Rural Telephone Borrowers prepared by
the United States Department of Agriculture, Rural Electrification Administration, Information Publication 300-4,
Respectively.
5 See Monitoring Rep=, op. cit., Table 1.2.
6 The Telecommunications Act of 1996, Pub. L. No. 104-104, loo Stat. 56 (1996) (to be codified at 47 U.S.C.
7 See Section 254(b)(5) of the Act.
3
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The NPRM notes that reimbursement for discounted services to schools and libraries under
Section 254 (h)(1)(B) must be given to "all telecommunications carriers serving a geographic
area." In developing rules implementing this section the Joint Board and Commission must be
certain to refer to the definitions in the Act to determine eligibility for receipt of such funds.
Specifically the Act defines a telecommunications carrier as:
....any provider of telecommunications services. except that such term does not include
aggregators of telecommunications services (as defined in section 226). A
telecommunications carrier shall be treated as a common carrier under this Act only to the
extent that it is engaged in providing telecommunications services, except that the
Commission shall determine whether the provision of fixed and mobile satellite service
shall be treated as common carriage."[8]
Furthermore the Act specifically defines telecommunications service as:
"...the offering of telecommunications for a fee directly to the public, or to such classes of
users as to be effectively available directly to the public, regardless of the facilities
used."[9]
While carriers providing services for a fee directly to the public thus meet the definition of a
telecommunications carrier, private network providers (such as electric company networks or
corporate networks) and state sponsored private networks (such as Iowa Communications
Network) that do not provide services directly to the public should not be eligible for these
support funds.
Carrier Common Line Recovery (Paragraphs 112-114)
The Commission's discussion in the NPRM suggests that the imposition of charges on
interexchange carriers for the use of the facility from the central office to the subscriber location
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8 Section 3(r)(48).
9 Section 3(r)(50).
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(the local loop) instead of recovering such costs directly from end users could be considered a
"universal service support flow" which might not be consistent with the Act. The Commission's
discussion suggests that commentors argue that "..all costs associated with facilities dedicated to
the use of a single subscriber should be recovered through a flat ... charge assessed on end
users."[10]
The Association does not believe that the "universal service support flow" characterization is
warranted. First of all, in an increasing number of cases, the use of digital loop carrier and loop
concentrators is changing the nature of local loop plant so that an increasing portion of it is not
"dedicated to the use of a single subscriber". The local loop is an essential part of the facilities
necessary for interexchange carriers to originate calls from and terminate calls to their end user
subscribers. To suggest that requiring them to pay some of the cost of using those facilities is a
"universal service support flow" is inappropriate. The Association will leave it other
commentors to explore the question of the economic efficiency of end users charges as opposed
to charges to carriers to recover such costs.
Respectfully Submitted,
J. Kent Jerome
Secretary-Treasurer
Iowa Telephone Association
1601 - 22 Street, Suite 290
West Des Moines, Iowa 50266
515-225-2091
April 10, 1996
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10 NPPM, Paragraph 113.
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