[2] There is support among the commenters for such an approach. See e.g., Comments of Sprint at 4; Comments of AT&T at 16-17; Reply Comments of MCI at 1-2.
[3] As AT&T points out, a higher SLC will be offset, at least partially, by lower long distance rates. See Comments of AT&T at 16.
[4] See Com. Car. Bur., Industry Analysis Div., Monitoring Report, CC Docket No. 87-339 at 12 (May, 1995).
[5] For example, although rural rates are often subsidized, studies have estimated that anywhere between approximately 80% and 93% of rural subscribers would be able to afford the full cost of telephone service. See Carol Weinhaus, et al., Telecommunications Indus. Analysis Project, "What is the Price of Universal Service? Impact of Deaveraging Nationwide Urban/Rural Rates" at 18 (1993) (concluding that 92.7% of rural households could afford the full cost of telephone service); Organization for the Protection & Advancement of Small Tel Cos., "Keeping Rural America Connected: Costs and Rates in the Competitive Era" at ES-6 (1994) (predicting 79.6% of subscribers willing and able to pay the full cost of telephone service). Furthermore, despite predictions to the contrary, subscribership has not declined in the past when local rates have increased. See MTS and WATS Market Structure; Amendment of Part 69 of the Commission's Rules and Establishment of a Joint Board, 59 Rad. Reg. 2d 551 (1985) (concluding that the increase in rates following the divestiture did not reduce subscribership levels).
[6] It is far from clear that lowering rates through subsidies would materially increase subscribership at this point. There are any number of reasons why people do not elect to have phone service, and there is nothing in the record to suggest that all, or even a majority of, the non-subscribing 6% households do not subscribe because they cannot afford to do so.
[7] Studies have found that the Lifeline program, for example, is effective at targeting recipients who need assistance.
See e.g., Thomas Makarewicz, "The Effectiveness of Low-Income Telephone Assistance Programs: Southwestern Bell's Experience," 15 Telecomm. Pol'y 223, 232-36 (1991) (estimating that 80% of Lifeline assistance recipients depend on the subsidy to afford telephone service).
8 47 U.S.C. [[section]] 254(i).
9 See Webster's Ninth New Collegiate Dictionary (1983). The definition taken from the Webster's New World Dictionary referred to in the Notice is similar: "to have enough or the means for; bear the cost of without serious inconvenience."
See Notice at [[paragraph]] 4 n.12.
[10] See 47 U.S.C. [[section]] 214(e).
11 47 U.S.C. [[section]] 214(e)(1)(A).
[12] See Notice at [[paragraph]] 16.
[13] See Comments of TCI at 5-9.
14 See Notice at [[paragraph]] 16. Although the Commission should restrict the list of services eligible for the Section 254(h)(1) subsidy to the core basic services, it should be pointed out that the Commission has the authority under that provision to set a steeper discount for the core services when provided to schools, libraries and rural health care providers than would otherwise apply to other end-users.
See Notice at [[paragraph]][[paragraph]] 78-82.
15 The Comments provide extensive evidence that telecommunications carriers and cable operators are offering or have plans to offer advanced services to schools and libraries at low rates independent of any mandatory subsidy to do so. See Comments of Continental Cablevision at 4; Comments of NCTA at 16; Reply Comments of Pacific Telesis at 11-12; Reply Comments of Ameritech at 19; Reply Comments of AT&T at 23. For example, TCI recently announced that it, in conjunction with other cable companies, would provide free Internet access (via high-speed cable modems) to more than 3,000 schools in 60 communities within the next 12 months.
See "Cable Companies to Give Schools High-Speed Links to the Internet," NY Times (July 10, 1996).
[16] Several commenters in this proceeding have suggested that the Commission refer the complex issues surrounding the provision of universal services to schools, libraries and rural health care providers to a telecommunications advisory board or council consisting of experts in these fields. See Comments of NYNEX at 20; Reply Comments of Pacific Telesis at 14; Reply Comments of AT&T at 22-23; Reply Comments of NCTA at 21.
[17] 47 U.S.C. [[section]] 254(h)(1)(B).
[18] See Detariffing the Installation and Maintenance of Inside Wiring, Memorandum Opinion and Order, 1 F.C.C.R. 1190, 1992 (1986), recon. 3 F.C.C.R. 1719, 1720-1721 (1988).
[19] See McKinsey & Company, Inc., "Connecting K-12 Schools to the Information Superhighway," (report prepared for the National Information Infrastructure Advisory Council ("McKinsey Report")) (1996) at Appendix A.
[20] See e.g., Reply Comments of Southwestern Bell at 11; Reply Comments of Pacific Telesis at 11.
[21] Other commenters have made comparable observations. As noted by NYNEX, "simply making telecommunications services available, without the associated equipment and software and professional training and support, and without an understanding of whether those services will meet the user's needs, would not accomplish the goals of the Act." Comments of NYNEX at 19. See Remarks of Frank J. Gumper, Vice-President, Federal Regulatory Planning, NYNEX, to the Federal-State Joint Board (April 12, 1996); Comments of BellSouth at 17-18.
[22] 47 U.S.C. [[section]] 254(h)(3).
[23] See Letter from Mark Mandell, Senior Policy Advisor, MCI, to William F. Caton, Secretary, Federal Communications Commission, ex parte, at 1, 6-7 (June 6, 1996); Letter from Maurice P. Talbot, Jr., Executive Director - Federal Regulations, BellSouth, to William F. Caton, Secretary, Federal Communications Commission, ex parte (June 6, 1996); Comments of USTA at 7-9; Comments of GTE at 20; Reply Comments of Pacific Telesis at 14; Reply Comments of Bell Atlantic at 1.
[24] Letter from Mark Mandell, Senior Policy Advisor, MCI, to William F. Caton, Secretary, Federal Communications Commission, ex parte, at 1, 3 (June 6, 1996); Comments of Wisconsin Dept. of Public Instruction at 2; Comments of American Library Association at (i); Reply Comments of NSBA at 11
[25] See Comments of BellSouth at 19.
[26] See also Comments of USTA at 8; Bell Atlantic at 17; Letter from Maurice P. Talbot, Jr., Executive Director - Federal Regulatory, BellSouth, to William F. Caton, Secretary, Federal Communications Commission ex parte (June 6, 1996); Letter from Whitney Hatch, Assistant Vice President, Regulatory Affairs, GTE Service Corp., to William F. Caton, Secretary, Federal Communications Commission, ex parte, (June 3, 1996).
[27] To the extent that the Commission is seeking comment on its Dial Equipment Minute Weighting and Long Term Support programs in addition to USF, the comments articulated here apply equally to those program as well. Both of those programs are implemented through the Part 36 separations rules and are funded solely by long distance carriers.
28 47 U.S.C. [[section]] 214(e)(1).
29 47 U.S.C. [[section]] 254(d).
[30] The inefficient incentives created by the USF program are especially serious for those carriers in study areas with 200,000 or fewer working loops because they are permitted to receive a larger reimbursement from the USF than carriers in study areas with more than 200,000 working loops. Specifically, carriers in the former category are permitted to allocate 65% of the unseparated cost per loop between 115% and 150% of the national average cost per loop (in addition to the 25% allocation automatically granted), multiplied by the number of working loops, while carriers in the latter category are only permitted to allocate 10% of such costs between 115% and 160% of the national average.
See 36 C.F.R. [[section]] 36.631(c), (d).
[31] A study area is the territory within a state served by a particular carrier. In many cases study areas are the size of an entire state.
[32] See Reply Comments of MCI at 16.
[33] See e.g., Comments of ALTS at 19; Comments of the Wisconsin PSC at 19.
[34] See Amendment of Part 36 of The Commission's Rules And Establishment of a Joint Board, Notice of Proposed Rulemaking and Notice of Inquiry, CC Docket No 80-286 at
[[paragraph]] 75 n. 91 (listing study areas not qualifying for USF support but that nonetheless likely contain high cost areas).
[35] In the Interconnection proceeding, the Commission has determined that forward-looking cost methodologies are the most appropriate bases for determining the cost of providing telecommunications services under the 1996 Act. See FCC News Release, "Commission Adopts Rules To Implement Local Competition Provisions Of Telecommunications Act of 1996 (CC Docket No. 96-98)" at 2 ("Interconnection News Release").
[36] MCI, apparently unable to reach agreement with the other parties with whom it co-sponsored BCM, US WEST, Sprint and NYNEX, has now developed its own model with AT&T, the so-called Hatfield Model.
[37] See Letter from Glenn Brown, Executive Director-Public Policy, US West, Inc. to William Caton, Secretary, Federal Communications Commission, ex parte, at 2 (June 14, 1996).
[38] See National Black Media Coalition v. FCC, 791 F.2d 1016 (D.C. Cir. 1985) (overturning FCC decision to abandon minority preference policy for broadcast licenses because, in reaching its decision, the Commission relied on inadequately disclosed data in violation of Section 4 of the Administrative Procedure Act). See also United States Lines v. Federal Maritime Comm'n, 584 F.2d 519, 534 (D.C. Cir. 1978) ("we have required information in agency files or reports identified by the agency as relevant to the proceeding to be disclosed to the parties for adversarial comment").
[39] See 47 U.S.C. [[section]] 214(e)(1)(A) (requiring each eligible carrier to provide the subsidized services over "its own facilities or a combination of its own facilities and resale of another carrier's facilities").
[40] See id.
[41] The Commission has announced that it will soon commence an access charge proceeding. See Interconnection News Release at 2.
[42] Non-traffic sensitive loop costs primarily include those costs incurred to connect subscribers to the network, i.e., local loop.
[43] Part of the non-traffic sensitive loop costs allocated to the interstate jurisdiction are recovered through the SLC, a charge assessed to local telephone subscribers on a per-line (non-usage sensitive) basis.
[44] See Notice at [[paragraph]] 113.
[45] There is fairly broad support among the commenting parties for a transition period to raise the SLC. See Comments of USTA at 18; Comments of Southwestern Bell at 4-5; Comments of BellSouth at 10-12; Comments of Bell Atlantic at 11-12; Comments of Compuserve at 6-7; Comments of Time Warner at 19-20; Comments of MFS at 22; Reply Comments of GTE at 21-22.
[46] See Amendment of Part 69 of the Commission's Rules Relating to the Assessment of Charges for the Universal Service Fund and Lifeline Assistance, Memorandum Opinion and Order, 4 F.C.C.R. 6134 at [[paragraph]] 5 (1989) ("Lifeline Order"); 47 C.F.R.
[[section]][[section]] 69.116, 69.117. In fact, only those IXCs with .05% or more of the presubscribed lines nationwide contribute to the Lifeline/Linkup program. See Lifeline Order at [[paragraph]] 5.
[47] 47 U.S.C. [[section]] 254(d).