Before the
FEDERAL COMMUNICATIONS COMMISSIONR
Washington, D.C. 20554
In the Matter of )
)
Federal-State joint Board on ) CC Docket No. 96-45
Universal Service )
)
COMMENTS OF THE IOWA UTILITIES B0ARD
The Iowa Utilities Board (IUB) hereby submits the following comments in regard to
universal service, Notice of Proposed Rulemaking (NPRM released March 8, 1996.
SUMMARY
In the NPRM, the FCC seeks comment on the services that should be supported by
the universal service fund, proper support mechanisms, and changes to regulations to
implement the universal service directives of the Telecommunications Act of 1996. The
IUB contends that the universal service fund should be narrowly targeted so only
companies that truly need assistance receive it. The IUB is concerned that the universal
service fund may grow to an unmanageable size while providing unnecessary levels of
support.
The IUB asks recognition of lowa's unique arrangement for bringing advanced
services to schools, libraries, and rural health care providers. We offer experience
concerning aid-to individual low-income customers, and urge the broadening of NECA's
membership to facilitate its administration of the universal service fund.
ACCESS TO ADVANCED SERVICES
The Board wishes to address the issue of affordable advanced services including
internet access. Advanced telecommunications and information services should include
internet services. The Telecommunications Act of 1996, [[section]] 254(b), set up se-,,en principles
for the preservation and advancement of universal service. Two of these principles are
access to advanced services and access in rural and high cost areas.
Rural Iowa consumers have brought it the Board's attention that they must use a tong
distance number to gain access to the internet. Thus, the additional toll charge makes
internet services less affordable. One alternative is subscription to an access provider that
offers an 800 number, but this alternative also entails an additional cost. At the same
time urban consumers are able to gain access to internet services through a local call.
This is in conflict with the principle of comparable or affordable access in rural and high
cost areas. This principle requires the access to "advanced telecommunications and
information services, that are reasonably comparable to those services provided in urban
areas and are available at rates that are reasonably comparable to rates charged for similar
services in urban areas."' Rural customers do not have access to internet services
without having to make a toll call and thus do not have similar services at comparable
rates.
SCHOOLS, LIBRARIES- AND RURAL HEALTH CARE PROVIDERS
The major point the Board wishes to impress upon the Commission as it considers
rules to implement the universal service fund portion of the Act is that Iowa has been the
Telecommunications Act of 1996, [[section]] 254(b)(3).
leader in bringing advanced telecommunications to education and health care in a rural
state. It would be a waste not to build upon the gains alreadv made in providing these
services in our state. The best way to continue and expand the progress in these areas in
Iowa is for the Commission to draft the rules broadly enough to allow the state-run Iowa
Communications Network (ICN), described below, to be considered a
telecommunications carrier eligible to receive reimbursement under [[section]] 254(h)(B)(ii). In
that way, ICN will be treated like all other telecommunications carriers that provide
discounted rates to schools, health care providers, and libraries. Such reimbursement is
permitted under (ii) because reimbursement for services to those end users is available,
notwithstanding the provisions of subsection (e)..." and, therefore, is not limited to
"eligible telecommunications carriers."
As telecommunications regulators in Iowa, we bring a unique perspective to the
universal service principle stated in the Act at [[section]] 254(b)(6) that schools, health care
providers, and libraries should have access to advanced telecommunications services.
Iowa has actively pursued that principle in its public policy, perhaps more aggressively
than any other state, throughout this decade. In 1989, the Iowa Legislature initiated a
program to construct and operate a state-of-the-art fiber optic network to provide distance
learning in classrooms throughout the state. (Iowa Code, chapter 8D). Called the ICN,
state-owned Parts I and 11 were completed in 1994 and provide a point of presence in
each of lowa's 99 counties. State-leased Part III was begun in 1995 and is scheduled to
be completed in 1999. It will connect all high schools in the state, I 00 libraries, and ail
16 Area Education Agencies to the ICN. Following completion of Part 111, 719 sites will
be directly connected to the ICN. ("Iowa Communications Network Impact Studv,"
Economics and Technology, Inc., pp. 10-1 1 [1995]). In 1994, the legislature expanded
the list of authorized users to include hospitals and physician clinics for the purpose of
developing a statewide telemedicine network. (Iowa Code [[section]] 8D. 13 (16) [1995 ]).
The ICLN provides the type of advanced service in Iowa to the exact user group
contemplated in the Act at [[section]] 254(h). Advanced services are alreadv being provided to
schools, health care providers, and libraries at substantial discounts below the cost of
providing the services. Under Iowa Code [[section]] 8D. I 1, fees charged for the use of the
network shall be based on the "'ongoing operational costs of the network only." Costs
calculated in that way include no capital costs and depreciation expense. An example of
the result is full-motion video transmission provided to health care providers at S40.00
per hour, which is the ICN calculation of its operational costs. This is far below the
amounts charged for this service by other telecommunications carriers. Schools receive
an even deeper discounted rate of $5.00 per hour for full-motion video transmission.
(ETI Study at 11-12, 45). The Commission's rules should allow for reimbursement
through the universal service mechanisms to the ICN for these and other discounted rates
to schools, health care providers, and libraries.
Attached to these comments as Appendix A are portions of a study prepared in
late 1995 for the Utilities Board by Economics and Technology, Inc. The included
portions provide an overview of the ICN and discussion of the utilization of the ICN by
secondary schools, libraries, and telemedicine users. The Board will be glad to supply a
copy of the entire report if that would be helpful.
SUPPORT FOR LOW-INCOME CONSUMERS
Services to Support: The Board also wishes to discuss the proposed services for
low-income consumers. The list of core services includes "access to operator services."
While this is a valid core service, its inclusion should be meshed with the availability of
toil blocking as an alternative for low-income consumers. As implemented by telephone
companies, toll blocking often restricts access to operator assistance, as well as 800
calling. The Board believes that the rules should be drafted in such a way that toll
blocking, a valuable option to many low-income customers, not be precluded by
mandatory access to operator service.
Determin\ination of low-income eligibility: In any system where support is directed
to individual subscribers, it is important that the determination of eligibility be a
relatively smooth administrative procedure. However, we would discourage the use of a
single review source, unless funding is within the industry's control. The Board has
learned from administering low-income support programs in the natural gas and
electricity industry that eligibility tied to any single federal program creates great
vulnerability. lowa's wintertime energy disconnection procedure hinges on customer
eligibility for the Low-Income Home Energy Assistance Program, which offers assistance
to those whose incomes are at or below 150% of the federal poverty guidelines. As
Congress now threatens to discontinue the program,, we have found it necessary to
establish contingencies that will serve if the program disappears. As an example, for
Link-up eligibility, we allow qualification through any of several assistance programs.
Under Iowa Administrative Code [[section]] 22.18(3)), to be eligible for assistance, an applicant
must:
a. Not be a dependent for federal income tax purposes as
defined in 26 U.S.C. 152 (1986) unless the applicant is more
than 60 years of age;
b. The applicant must be currently eligible (though it is not
necessary that they be participating) for public assistance
under one of the following programs:
(1) Aid to families with dependent children;
(2) Food stamps;
(3) Supplemental Security income;
(4) Title XIX/Medical;
(5) Low-income energy assistance program;
(6) State supplementary assistance.
In addition, an applicant may still qualify for assistance based on evidence of household
income and household size. This income-based self-certification has been helpful in
extending eligibility to the elderly. We recommend allowing multiple eligibility for any
individually targeted support program.
ADMINISTRATION OF THE FEDERAL UNIVERSAL SERVICE FUND
Universal Service Fund (USF) administration on the national level should be
performed by a non-governmental organization in an efficient, fair, and competitively
neutral manner.
National Exchange Carrier Association (NECA) has developed, managed and
administered the current USF funding mechanism since its inception in 1984. During
NECA's administration of the current program, the organization has developed extensive
internal systems, procedures and controls to insure the integrity of data collections,
calculations, and the collection and distribution of funds.
It is very apparent that NECA has a proven track record in the management of
data collections, fund and/or pooling administration in an environment containing
specific rules and responsibilities. NECA has also demonstrated its abilitv to develop and
manage large-scale information and data base systems.
NECA's current membership is limited to only Local Exchange Carriers (LECS)
and is governed by directors elected by the membership. In light of the 1996
Telecommunications Act it is very apparent that a national fund will involve
organizations beyond the current scope of local and interexchange carriers. Should
NECA continue to administer USF funds, the structure of the organization would need to
transform to a membership that involves a representation of all telecommunications
providers.
NECA's USF administration costs are assigned to the current fund using ratios
developed through relationships of total funds or revenues managed to the individual
categories of various funds or revenues. The ratios or factors are applied to total
operating costs to determine an applicable assessment. These administrative fees may not
be representative of actual costs. Administration costs should be based on the actual
costs of the administration process rather than on a percentage of funds managed to
expenses incurred basis.
Under the current USF program, rules related to fund administration lack
safeguard provisions related to fund mismanagement by an administrator. Future
administrative requirements should include performance safeguards with financial
assurances to protect recipients and contributors in the event of fund mismanagement.
CONCLUSION
In conclusion the IUB supports (1) rural customers beina able to access advanced
services such as the internet in the same manner urban customers do; (2) allowing the
state-run ICN to be considered a telecommunications carrier eligible to receive
reimbursement under [[section]] 254(h)(B)(ii); (3)) toll blocking not being precluded by mandatory
access to operator service; (4) eligibility for low-income not be determined by using a
single review source; and (5) NECA should administer the fund providing it is a neutral
entity.
Respectfully submitted,
By:
William H. Smith, Jr., Chief,
Bureau Rate & Safety Evaluation
Allen Kniep Iowa Utilities Board
Attorney Lucas State Office Building
(515) 281-4769 Des Moines, IA 50319
(515) 281-5469