In the Matter of
Federal-State Joint Board on
Universal Service
FCC 96-93
CC Docket No. 96-45
COMMENTS OF THE
OREGON PUBLIC UTILITY COMMISSION
Under Oregon law, the Oregon Public Utility Commission (OPUC) is responsible for representing the customers of telecommunications utilities in rate, valuation and service matters, in order to protect them from unjust and unreasonable exactions and practices and to obtain for them adequate service at fair and reasonable rates. Part of its responsibility is to represent these customers before officers, commissions and public bodies of the United States. See ORS 756.040.
The Telecommunications Act of 1996 (Act) is one of the most important federal actions that has taken place in recent history with respect to the telecommunications industry, and is expected to have a profound impact on the way the industry operates and on the choices that consumers have available to them. We appreciate this opportunity to provide input, based on our experience in updating Oregon's universal service program.
Prior to the passage of the Act, the OPUC had already taken actions to deal with the new competitive environment in telecommunications, including reviewing its universal service policies. We offer here some of the things we learned and decisions we made as we considered the information we received from the parties to our proceedings. We hope that they will assist the FCC, with input from the Joint Board, to develop a universal service system in which federal and state programs operate in harmony. Our comments are organized according to the paragraph in which the FCC sought comment on the issues raised in the Notice of Proposed Rulemaking.
We have included as attachments to these comments two recent OPUC orders related to universal service: Order No. 93-1133 (Docket No. UM 384), labeled Attachment 1, and Order No. 95-1103 (Docket No. UM 73 1), labeled Attachment 2.
Paragraph 4. Quality Services. The OPUC has determined that service providers must meet minimum service quality standards in order to qualify for universal service support funds. While some parties thought that a competitive environment would result in adequate service quality through the workings of the marketplace, others thought that the telecommunications marketplace is not yet competitive. The service quality standards set by the OPUC are not a requirement for market entry; they are a requirement for obtaining universal service support. Telecommunications providers that wish to obtain state support for universal service must comply with OPUC administrative rules relating to service quality. OPUC's service quality rules may be found in OAR 860-23-005, 860-23-055, 860-34-380, and 860-34-390. A copy of these rules is in Attachment 3.
It would be burdensome on the FCC to enforce service quality requirements for every eligible telecommunications carrier in the country. We suggest that the FCC allow each state to determine service quality standards appropriate to its own circumstances, with the broad guidance that they must, at a minimum be sufficient to enable customers to obtain the services fisted in the FCC's definition of universal service. As we have seen in Oregon especially, companies that do not face effective competition may let their service quality standards slip to an unacceptable level, leading to numerous customer complaints and adverse consequences to economic development. Until the marketplace is competitive enough so that customer demand is sufficient to dictate a reasonable level of service quaility, state action is still needed. States will be in the best position in the future to gauge when the marketplace is ready to function with less regulatory guidance in this area.
Paragraph S. Other principles. The OPUC has adopted design principles for its own residential universal service program that would be useful to consider here. They are:
General. A universal service fund should:1. Be administratively simple and low cost.
2. Provide a minimum amount of support necessary to maintain affordable basic network access service.
3. Require the price of basic service to cover costs prior to applying universal service credits.
Who pays. Universal service should:
1. Be supported by a broad user base.
2. Be as competitively neutral as possible.
Who receives. Universal service should:
1. Maintain affordable basic local exchange service.
2. Promote operating efficiency.
3. Eliminate artificial investment incentives.
(OPUC Order 95-1103, Pages 9-10.)
The OPUC therefore supports the FCC's suggestion that universal service support should be competitively neutral, and that it should be accomplished through the least regulatory method possible. A low-cost, administratively simple program is essential and consistent with the other federal goal of making universal service support explicit.
Paragraph 9. Including services that do not meet all four criteria. The OPUC has found that toll blocking should be included in universal service for low-income customers. The reason for this decision is that some of these customers may wish to ensure that unauthorized charges will not be billed to their account. Their inability to pay such charges might result in their service being shut off. In this case, the resulting advancement of universal service by providing a means for low-income customers to manage their telephone bills outweighs the consideration that a majority of customers have not subscribed to the service. (OPUC Order 95-1103, Page 5.)
The OPUC urges the FCC and the Joint Board to interpret the four criteria in a way that does not require that every criterion must be met before a service can be included in the definition of universal service. The word "consider' requires only examination of the service with respect to a criterion, not that the criterion must be met.
Paragraph 16. What services to support. The initial group of services to be supported should be small, in order to keep the cost of the program down while any difficulties with implementation are being worked out. The OPUC supports all of the suggested services as a reasonable part of universal service, with the caveat that 91 1 emergency services should be included only where they are available. (OPUC Order 95-1103, page 7.) These services are all consistent with the needs of telephone users in today's society.
Paragraph 17. Additional services to be supported. As discussed earlier, we believe that toll blocking should be available to low-income customers. We also believe that a single directory listing should be included in the definition, and that directory assistance should be accessible. The ability to be called means little if it is difficult for anyone to anyone to discover the telephone number to call in the first place, and the ability to call means little if the caller does not have access to telephone numbers to call. Both of these are included in Oregon's definition of universal service. They are also generally available to telephone subscribers, although some choose not to have their number listed in a directory. The choice of whether or not to be included in a directory should be the same with respect to services subject to universal service support. Oregon includes accessibility to relay services for the hearing and speech impaired in its definition of universal service, as well. Access to EAS and interexchange services should also be supported. Having access to only local service in a rural area with no health care providers accessible by telephone would not be consistent with public health and safety, nor the public interest, convenience, and necessity.
Paragraph 40. Transition period. The OPUC found that a four-year transition period was needed due to a change in universal service funding for carriers supported by the Oregon Customer Access Fund. This change could have been disruptive if accomplished in a shorter period of time. (Order 93-1133, Appendix A.) A waiver and extra universal service support are available where the cost impact on local exchange ratepayers is particularly large. (OPUC Order 93-1133, page 7.) Any transition on a national level would be expected to affect an even more diverse set of interests. It will be difficult to anticipate all of the impacts of any transition in federal universal service funding. A transition period of several years, combined with a waiver process and additional support for companies that experience larger rate effects than others, would provide a useful safety net for companies that experience large effects during the national transition.
Paragraph 50. Services for low-income consumers. Please see our answer to the questions posed in paragraph 17.
Paragraph 51. Toll limitation services. Please see our answer to the questions posed in paragraph 17.
Paragraph 83. Discounts for schools and libraries. Many programs will be available to schools and libraries, including grant programs and discount programs from both state and federal resources. The FCC should have a general policy that the financial support received should not result in anyone paying a rate less than zero - in essence, receiving disposable income - as a result of participation in these programs.
Paragraph 115. Transition period. Please see our response to the questions posed in paragraph 40.
Paragraph 119. Who should contribute. The OPUC recently reviewed the issue concerning who should contribute to universal service support, and decided that all carriers should contribute to the state's universal service fund. Any carrier that incurs costs not incur-red by another carrier could be put at a disadvantage. Further, we found it undesirable to collect a universal service fee directly from consumers, due to the potential for misunderstanding of the charge. Oregon's universal service fund will be funded by assessments on carriers' gross intrastate revenues, net of access payments. We found this mechanism to be the most competitively neutral and administratively simple mechanism suggested during the course of our proceeding. Although they should be included under the OPUC's reasoning in this decision, radio common carriers will be excluded from the assessment because the OPUC currently lacks authority to include them. OPUC is currently pursuing state legislation that would give it the authority to assess the gross revenue fee on radio common carriers, including cellular providers. The definition of radio common carrier would also be updated to include commercial mobile radio service and PCS. (OPUC Order 95-1103, page 10.)
Paragraph 123. Contributions based on revenues net of payments to other carriers. Please see the answer provided above to the questions posed in paragraph II 9.
Paragraph 130. Who should administer - state public utility commissions? States should be allowed to decide whether they prefer to administer universal service funds themselves or have them be administered by a neutral third party. The neutral third party could be an organization that administers the fund for only one state, or an organization that administers the fund for a group of states. The FCC rule, then, need only require that the state regulatory commission notify the FCC as to whom the state has selected as its fund administrator, Including updates if there are any changes.
Respectfully submitted,
Oregon Public Utility Commission
550 Capitol St NE
Salem OR 97310-1380
April 10, 1996
Roger Hamilton
Ron Eachus
Commissioner
Joan H.Smith
Commissioner