[2] Almost two hundred fifty comments were filed in this docket in response to the NPRM. OCC has purchased and reviewed some fifty of those comments. OCC has attempted to review a good cross-section of the filed comments. The comments discussed by OCC in these reply comments are listed, along with the short references naming the commenters, in the Appendix hereto. The failure to address any commenter's position, whether in comments reviewed or not, should not be deemed acquiescence in that position.
[3] Issues such as whether to bill carriers for universal service support based on gross or net revenues or number of lines or minutes, and whether there should be a bidding process to establish baseline levels of support, are very important. The space limitations prevent us from addressing those questions in addition to those dealt with herein.
[4] Thus US West's calculation of the amount of universal service funding required (at 10), being based on the Benchmark Costing Model, shares the flaw.
[5] NASUCA's comments in this docket state (at 23) that the "Basic Service Rate Element" should bear no more than 50% of loop costs. "Basic Service Rate Element" is not defined there; we assume that, for consistency with the CC Docket 80-286 comment, that element equates to all local service.
[6] As noted by, e.g., OPC-DC (at 2-6), another key to enhancing universal service is a prohibition on disconnection of local service because of failure to pay long-distance charges.
[7] As pointed out by NECA (at 13), USF costs in 1995 represented only 2.2% of the industry's total unseparated revenue requirement assigned to the loop.
[8] Perhaps the Commission believes that in other areas competition will automatically produce rates that are just and reasonable and affordable. This exaggerates the impact of competition, at least in the short-term.
[9] It should be recalled that telephone service, unlike other utility service, has significant externalities. See Benton at 2; PAW, et al. at 4-5. It is more valuable for society and each customer to be on a network of 100% penetration than one of only 90% penetration.
[10] The explicit legislated nature of the universal service policy also counters CSE's notion (at 6) that "the choice of which services will receive a subsidy involves a type of industrial policy inimical to a competitive market." As the philosopher said, "Not to choose is to choose." Having made the decision that some services may be in need of support (or subsidy), we must choose which those services might be.
[11] Clearly, there are counterbalancing factors which tend to increase the cost of urban service, such as the cost of uprooting urban thoroughfares not present in a rural setting. LCI (at 6, n. 5) says that rates in rural areas "should be allowed to rise to levels comparable to those paid by urban subscribers." In Ohio, no such discrepancy exists, other than the "value of service" differential, which states that the more people who can be reached by a local telephone call, the more valuable the service. This is another reason for looking at the entire bill (including short-haul toll) in assessing whether rates are affordable.
[12] Ameritech is internally inconsistent on this issue. Where Ameritech discusses (at 10-11) how to calculate the subsidy, it is clear that it is not targeted.
[13] PaPUC would include "local service usage" in its definition of universal service. PaPUC at 14. It is unclear whether this is measured or flat rate usage.
[14] AT&T (at 18) also wants below cost access charges to receive funding. AT&T does not explain how this would be consistent with the Act.
[15] CBT (at 12) states that the Ohio low-income program, Telephone Service Assistance ("TSA") "specifically address[es] problems faced by low-income consumers in maintaining their local telephone service." As of June 1994, only 0.08% of CBT's customers were enrolled in TSA. The overall Ohio average was 0.3%. Public Utilities Commission of Ohio, Report to the General Assembly, Telephone Service Assistance Lifeline Program (December 31, 1994), Appendix B. See also TexPUC at 11.
[16] See Section X, infra, for a discussion of why the SLC should not be increased.
[17] CBT (at 4) states that LECs must be able to recover carrier of last resort (COLR) costs (including "undepreciated capital, unamortized cost deferrals, stranded investment, standby capacity, etc."). It is not clear whether CBT is saying that these costs should be recovered through the federal universal service support mechanism. See also GTE at 16, n. 30; NECA at 10, US West at 4. Apart from the general lack of merit of CBT's proposal, nothing in the Act gives any indication that any such "LEC make-whole" provision was contemplated by Congress. See AHTUC at 6-11.
[18] In order for such a requirement to be competitively neutral, the only new entrants into the local market who would be eligible for support would also be those who made themselves subject to rate of return regulation.
[19] MoPSC proposes (at 7-8) that for a transition period the Commission allow funding for carriers who offer less that the complete universal service package. Given how basic the package is, OCC cannot imagine an incumbent LEC not offering the full package; and new entrants who want to receive funding should be required to offer the whole package.
[20] We note that TRA argues (at 9-10) that the Act's apparent requirement that an eligible carrier own some facilities presents an "ideal situation" for regulatory forbearance.
[21] We note with interest the statement of WisPSC (at 4) that the Wisconsin rules prohibit the identification of a separate universal service change on end user bills. If consumers are entitled to know how much of their bills goes to support universal service, then they should also be able to know the details of how much of their bills goes to pay other expenses of the carriers.