In the Matter of ) ) Federal-State Joint Board on ) CC Docket No. 96-45 Universal Service ) )
REPLY COMMENTS OF CINCINNATI BELL TELEPHONE
I. INTRODUCTION
Cincinnati Bell Telephone Company ("CBT"), an independent, mid- size local exchange carrier ("LEC"), submits these comments in reply to the numerous comments filed in the above-captioned proceeding.[1] The original NPRM was released as part of the Commission's effort to implement the universal service provisions of the Telecommunications Act of 1996 (the "Act").[2]
In its initial comments, CBT asserted that federal universal service support under the Act should be carefully targeted and should only include specific core functions. As can be seen from the tremendous volume of comments filed with the Commission in this docket, a wide variety of parties are seeking funding through a federal universal service support mechanism. CBT reiterates that this should not be the purpose of a federal universal service mechanism.
With the advent of competition in the local exchange market, the implicit internal subsidies and explicit subsidies that were successful in fostering universal service in a monopoly environment are no longer appropriate. In fact, as pointed out in CBT's comments, competition destroys the traditional support mechanisms. In many instances, new support mechanisms must be developed in order to preserve universal service in a competitive environment. In other instances, programs historically funded through subsidies in existing rate levels must be reevaluated and other types of explicit support must be identified for those programs which continue to serve the public interest. Indeed, there will be a need for incumbent LECs to rebalance rates, as well as pricing flexibility, to remove many of these subsidies in order to be competitive. Further, investments which have historically been made in furtherance of many of the universal service support programs must also be recoverable.[3]
II. SUPPORT FOR RURAL, INSULAR, AND HIGH-COST AREAS AND LOW-INCOME CONSUMERS.
Many states, when addressing issues related to local competition, have also addressed universal service issues, as well as Carrier of Last Resort ("COLR") obligations.[4] CBT has consistently asserted that neither this Commission nor the various state commissions can individually resolve all universal service issues through disjointed processes.[5] The importance of universal service issues is such that a joint effort of state and federal agencies is not only appropriate, but necessary.
While CBT generally supports most of the principles which the Commission has established as the focus for policies designed to preserve and advance universal service, CBT urges the Commission to allow the states to continue to target support for low-income consumers as state authorities are closer to this issue. Federal universal service mechanisms should be limited and should not be focused on providing direct subsidies to low income consumers. Federal universal service assistance should be focused only on the following core services:
a. Single party voice grade access line;
b. Touch Tone Dialing;
c. Blocking for Caller ID;
d. Access to Telecommunications Relay Service;
e. Access to operators and directory assistance;
f. Access to emergency services (E-911)
g. Access to all available interexchange carriers;
h. A white page listing and directory; and
i. Network repair service
High-cost support should be provided for these core services in areas where the cost of providing the service by an eligible carrier, as designated by the state commission, is greater than the rate being charged for the service. However, this support should only continue until such time as competition emerges or subscribership levels reach an appropriate targeted level.
The Commission seeks comment on whether any additional services should be designated as ". . . additional services that would be specifically appropriate for low income users,"[6] as well as what should be its overall obligations and responsibilities with regard to low income customers.[7] CBT asserts that this Commission should continue to permit the states to be the primary locus for decisions regarding the targeting of support to low income customers. This will insure that these subscribers receive adequate basic local service, in that states are in a more advantageous position to discern their constituents' needs. Both Ohio and Kentucky have programs in place which specifically address problems faced by low income customers in maintaining their local telephone service.[8] However, were the Commission to decide to include low income consumers within the reach of a federal universal service support mechanism, such support should only include the core services previously outlined.
In addition, as a result of its current Alternative Regulation Plan ("Alt. Reg. Plan") in Ohio (No. 93-432-TP-ALT), CBT has several ongoing commitments related to universal service. Under the terms of its Alt. Reg. Plan, CBT must meet and report on the following goals related to universal service: (1) the establishment of a Consumer Board to bring telephone service to a greater number of people through an expanded lifeline program; (2) studying the implementation of toll restrictions in lieu of disconnection for nonpayment of charges; (3) increasing the level of participation in the Basic Telephone Service Assistance Program (BTSA); and (4) increasing the awareness of the availability of telephone services designed to assist persons with communications impairments.
The Commission also requested comment on what programs or mechanisms should be instituted at the federal level to insure that some level of local exchange service is available to schools, classrooms and libraries. While CBT agrees that access to telecommunications services are important to schools, classrooms and libraries, CBT believes these issues should be addressed at the state level, rather than by this Commission.[9] For example, Ohio has already established and funded two major programs designated SchoolNet and SchoolNet Plus to achieve the goal of ensuring elementary and secondary schools have access to advanced telecommunications services. The goal of these programs is to wire all classrooms in the state and to provide the hardware necessary to take advantage of advanced telecommunications services.
Nationwide requirements for service or mechanisms to support telecommunications service in schools, classrooms and libraries will not fully address the specific needs which might exist in widely varying geographic contexts. State commissions are better placed to address these specific needs, in that they are better able to determine what are the exact needs of the schools, classrooms and libraries in their territories.
III. CONCLUSION
CBT respectfully requests the Commission to consider these reply comments as it develops possible revisions to universal service funding mechanisms in light of the enactment of the Telecommunications Act of 1996. As the Commission determines which service providers will be eligible to receive universal service assistance and what core services will be supported, CBT urges the Commission to insure that its policy choices do not impose additional burdens on incumbent carriers and provide competitive advantages to new entrants. Further, CBT urges the Commission to adopt a limited and focused universal service support mechanism at the federal level, while leaving to the states the development of support mechanisms which address the unique characteristics of particular service territories and markets.
Respectfully submitted,
FROST & JACOBS
By_______________________________
Thomas E. Taylor
Jack B. Harrison
2500 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
(513) 651-6800
Attorneys for Cincinnati Bell
Dated: May 7, 1996 Telephone Company
0305756.02