In the Matter of

Federal-State Joint Board on
Universal Service

COMMENTS

CC Docket No. 96-45

The Rural Telephone Finance Cooperative (RTFC) hereby submits its comments on the Federal Communications Commission's Notice of Proposed Rulemaking and Order Establishing a Joint Board released March 8, 1996 in the above mentioned proceeding. This NPRM and Order initiates a rulemaking to accomplish the following: (1) define the services that will be supported by Federal universal service support mechanisms; (2) define those support mechanisms; and (3) otherwise recommend changes to the Commission's regulation to implement the universal service directives of the Act.

RTFC is a privately funded, member-owned, cooperative finance organization that provides financing exclusively to America's rural telecommunications industry. RTFC supplies member rural telecommunications providers with alternative and complementary sources of financing to traditional federal lending sources such as the Rural Utilities Service and the Rural Telephone Bank.

Providing telephone service in rural areas is a costly enterprise and without revenues from the Universal Service Fund (USF), the credit quality of many of our members would be adversely affected. These companies and cooperatives might find themselves having to raise local rates to such levels that their subscribers would begin dropping off the network if the USF were to be reduced or redirected. Therefore in designing the new universal service support program the Commission should build on the base of the current proven support mechanism.

In Paragraph 127 of the NPRM and Order, the Commission seeks comment on the best approach to administer the universal service mechanisms fairly. RTFC believes that the National Exchange Carrier Association (NECA) is staffed with industry professionals, and possesses the body of knowledge and experience necessary to implement the results of this proceeding efficiently and effectively.

NECA's qualifications include the following:

* NECA has significant expertise unlikely to be duplicated and administers current universal service programs (Universal Service Fund [USF], Lifeline, Link-Up America, Interstate Telecommunications Relay Services [TRS] Fund) strictly in accordance with Commission rules.

* NECA has the proven capability to handle large amounts of data and the valuable ability to verify USF data. Their track record of decreasing expenses on a steady basis since inception also shows their commitment to managing funds in the most efficient manner.

* Further, NECA can administer the fund in a fair, competitively neutral manner because 5 members of their Board of Directors are from outside the industry, and include two former State regulators.

In summary, RTFC urges the Commission to reject proposals that would reduce or redirect USF. Instead, the Commission should continue to build on the current successful support mechanism. Additionally, NECA possesses the qualifications necessary to administer the USF.

Respectfully submitted,

RURAL TELEPHONE FINANCE COOPERATIVE

Richard B. Bulman
Senior Vice President
Member Services

2201 Cooperative Way
Herndon, Virginia 22071
(703) 709-6700

April 12, 1996