Before the Federal Communications Commission Washington, DC 20554
In the Matter of Federal-State Board ) CC Docket No. 96-45
on Universal Service )
)
)
REPLY COMMENTS OF
MOBILEMEDIA COMMUNICATIONS, INC.
Gene P. Belardi
Vice President
MobileMedia Communications, Inc.
2101 Wilson Boulevard, Suite 935
Arlington, Virginia 22201
(703) 312-5152
May 7, 1996
Before the Federal Communications Commission Washington, DC 20554
In the Matter of Federal-State Board ) CC Docket No. 96-45
on Universal Service )
)
)
REPLY COMMENTS OF
MOBILEMEDIA COMMUNICATIONS, INC.
I. INTRODUCTION
MobileMedia Communications, Inc. ("MobileMedia"),[1] hereby submits these reply comments in the above-captioned docket.[2] In its opening comments, MobileMedia demonstrated that Section 332(c) of the Communications Act exempts CMRS providers, especially one-way paging companies,[3] from bearing any financial responsibility for costs associated with support for intrastate universal service because one-way paging is not a "replacement" for land line telephone exchange service in any state. This argument was not refuted by a single commenter.
MobileMedia also argued that the Section 254 de minimis exception exempts one- way paging carriers from having to contribute to interstate universal support. Consistent with this proposition, only a handful of commenters mentioned paging, and then only to include paging companies among a laundry list of potential contributors to universal service. This absence of attention serves to underscore that paging companies comprise a very small segment of the overall telecommunications industry and should thus be relieved of any universal service obligations pursuant to the de minimis exception.
Finally, MobileMedia contended that should narrowband paging carriers be required to contribute, such contributions should be kept at a level that is proportionately less than that required of other telecommunications carriers because (1) narrowband paging companies will most likely not receive universal service support, and (2) paging companies generally operate at low (or nonexistent) profit margins when compared to other segments of the telecommunications industry.
II. SECTION 332(c)(3) OF THE COMMUNICATIONS ACT EXEMPTS CMRS PROVIDERS FROM STATE-IMPOSED UNIVERSAL SERVICE OBLIGATIONS
MobileMedia noted in its comments that the 1993 Budget Act revisions to the Communications Act of 1934 granted the Commission exclusive jurisdiction over one-way paging and other types of CMRS. Of particular relevance in this proceeding, Section 332(c)(3) exempts CMRS providers, including one-way paging providers, from state-imposed universal service obligations except "where such services are a substitute for land line telephone exchange services for a substantial portion of the communications within such a State."[4] MobileMedia explained, and several commenters agreed, that one- way paging is not, and never will be, a substitute for land line telephone exchange service in any state and is therefore exempt from state imposed universal service requirements.[5] Moreover, nothing in the Telecommunications Act of 1996 rescinded the 1993 Budget Act's preemption of state regulatory authority to impose intrastate universal service obligations on one-way paging companies.[6] Accordingly, narrowband paging companies are not subject to intrastate universal service obligations.
III. PAGING CARRIERS ARE SUBJECT TO THE DE MINIMIS EXCEPTION AUTHORIZED BY CONGRESS WITH RESPECT TO INTERSTATE UNIVERSAL SERVICE OBLIGATIONS
Section 254(d) states that "[t]he Commission may exempt a carrier or class of carriers from . . . [having to contribute to a universal service support fund mechanism] if the carrier's telecommunications activities are limited to such an extent that the level of such carrier's contribution to the preservation and advancement of universal service would be de minimis." MobileMedia contended in its comments, as did other commenters, that the Commission should exempt those carriers or entities whose profit margins and market share are so small that their contribution would be de minimis. Specifically, Teleport notes that "[i]t would be unreasonable to expect a carrier to contribute to the support fund if such contribution would . . . have no significant impact on . . . the substantiality of the fund itself."[7] Moreover, paging carriers, like providers of unlicensed services, are a class of carriers whose likely contributions to universal service are insignificant, particularly when compared to providers of other interstate services.[8]
As MobileMedia explained in its comments, the 1994 Telecommunications Relay Services Fund ("TRS Fund") contribution of mobile service carriers, a category of providers that includes paging carriers, comprised only .6% of all TRS Fund contributions.[9] Even more revealing, paging carriers, together with competitive access providers, dispatch carriers, operator service providers, pay phone operators and resellers, accounted for just 3% of all telecommunications revenues.[10] These classes of carriers were included in the same category, "Other," because of their relatively small share of total interstate telecommunications revenues.[11] Consistent with Section 254(d) of the 1996 Act, the Commission should therefore exempt narrowband paging carriers from having to contribute toward the cost of interstate universal service because the level of their contribution clearly would be negligible, particularly when compared with the potentially significant costs that would be incurred by paging companies in assessing the amount that must be contributed.
MobileMedia also noted in its comments that Section 332(c)(3) specifically exempts CMRS providers from state-imposed universal service obligations except "where such services are a substitute for land line telephone exchange services for a substantial portion of the communications within such a State." There was support for MobileMedia's assertion that implicit in this standard is Congress' intent that providers of services such as one-way paging, which will never be a substitute for local exchange services, would never be appropriate candidates for universal service contributions on any level.[12]
IV. AT WORST, PAGING CARRIERS SHOULD BE REQUIRED TO CONTRIBUTE PROPORTIONATELY LESS THAN OTHER TELECOMMUNICATIONS CARRIERS
As explained in MobileMedia's comments, equity dictates that any universal service fund contributions imposed on narrowband paging carriers should not be based on a pro rata assessment vis-a-vis other telecommunications service providers. This is because one-way paging service, unlike other telecommunications services, will likely never be eligible for support. Neither the Commission nor any of the commenters suggest that one-way paging is the kind of traditional, dial-tone service constituting one of the "core" services eligible for support.[13] Furthermore, paging carriers' profit margins are low (or virtually non-existent) when compared to other industry segments. Thus, it would clearly be inequitable and discriminatory for the Commission to subject paging carriers to the same pro rata contribution requirement imposed on other segments of the industry whose profit margins are much higher.
V. CONCLUSION
Section 332(c) of the Communications Act exempts one-way paging companies from bearing any financial responsibility for costs associated with support for intrastate universal service. In addition, the de minimis exception set forth in Section 254(d) should exempt paging carriers from universal service contribution requirements for interstate services. To the extent the Commission determines that one-way paging companies must contribute toward the cost of interstate universal service, equity dictates that such contributions be assessed at a lower pro rata level than that required of other telecommunications carriers.
Respectfully submitted,
Gene P. Belardi
Vice President
MobileMedia Communications, Inc.
2101 Wilson Boulevard, Suite 935
Arlington, Virginia 22201
(703) 312-5152
May 7, 1996