[1]USTA proposed that the core services which should be supported to preserve and advance universal service should initially include: voice grade access (residence and business) to the public switched network to enable a customer to place and receive calls (loop, switching and transport); touch-tone; single party service; white page directory listing; access to operator services and directory assistance and access to emergency services (911/E911). USTA Comments, CC Docket No. 96-45, filed April 12, 1996 at p. 13.

[2]See, Gordon, Kenneth and Taylor, William E., National Economic Research Associates, Comments on Universal Service, Comments of BellSouth, CC Docket No. 96-45, filed April 12, 1996 at Attachment, pp. 16-26. [Dr. Gordon and Dr. Taylor cite numerous studies which show that the Commission's partial rebalancing of rates through the phasing-in of SLCs and the reduction in toll rates beginning in 1985 and ending in 1989 did not harm telephone subscribership. In addition, they cite several studies which explain that of the households disconnected for economic reasons, the reason for disconnection of service was an inability to pay for toll charges.] [hereinafter NERA Comments].

[3]Keystone Arthur Comments, CC Docket No. 96-45, filed April 12, 1996 at p. 4.

[4]USTA estimated that the implicit universal service support requirement is approximately $17 billion, although that does not include the impact of the support from vertical services, business services and geographically averaged pricing. USTA Comments, Amendment of Part 36 of the Commission's Rules and Establishment of a Joint Board, CC Docket No. 80-286, filed October 28, 1994 at Attachment 2. See, also, Monson, Calvin S. And Rohlfs, Jeffrey H., "The 20 Billion Impact of Local Competition in Telecommunications", Strategic Policy Research, July 16, 1993. That study estimated that access and toll services provide a contribution of approximately $20 billion.

[5]Federal Communications Commission, "Trends in Telecommunications", Table 8, May 1994 at p. 13.

[6]U.S. Energy Information Administration, "Household Energy Consumption and Expenditures, 1990" and U.S. Bureau of Labor Statistics, "Consumer Expenditures in 1991", BLS Report 835, December 1992.

[7]Calling scope differences could be reflected by determining a calling scope for each wire center based on the type of wire center calling plan for residence service and the number of working lines in the geographic area of the wire center calling plan. A lower benchmark could be set for smaller calling scopes. States should establish affordability benchmarks which also recognize calling scopes.

[8]Thus, under USTA's plan, assuming that the customer's total expenditure was expected to be $28, the federal affordability benchmark would be set at nationwide interstate average loop cost, i.e., $6.00. If interstate loop costs for a carrier were $10 and the rate was $3.50, a carrier could recover $4.00 from the interstate fund ($10 - $6). The remaining $2.50 would be recovered through rate rebalancing. The remaining $22 of the total expenditure level would be recovered in the intrastate jurisdiction. Thus, if intrastate costs were $40 and the local rate was $15.00, a carrier could recover $18 from an intrastate fund ($40 - $22). Again, the remaining $7.00 would be recovered through rate rebalancing.

[9]This recommendation was priced out by GVNW in its Comments, CC Docket No. 96-45, filed April 12, 1996 at Appendices 1-5.

[10]The classification of inside wire as a telecommunications service could qualify providers such as electricians as telecommunications service providers who would be required to contribute to the universal service funding mechanism.

[11]In addition, only the incumbent, rural telephone company should be eligible to participate in the current USF and DEM weighting programs. There is no need to impose more costs on the interstate jurisdiction by allowing additional carriers to participate in these programs. These programs will help incumbent exchange carriers continue to recover the embedded costs of providing universal service as part of their obligations as carriers of last resort. Other eligible carriers in rural areas should only be eligible to receive funding above a benchmark as discussed above.

[12]A change in the definition of universal service may necessitate a change in the amount of support per line.

[13]Excluding price cap carriers from eligibility for universal service support provides another disincentive for non-price cap carriers to elect price cap regulation.

[14]USTA's plan would freeze current USF and weighted DEM for non-rural telephone companies during the transition and then eliminate these programs for non-rural telephone companies. With only rural telephone companies eligible for USF and weighted DEM thereafter, the cap on USF should be allowed to expire.