[1] Notice of Proposed Rulemaking and Order Establishing Joint Board, Federal-State Joint Board on Universal Service, CC Dkt. No. 96-45, rel. Mar. 8, 1996 (the "Notice" ). The reply comment date for the Notice was extended to May 7 and then to May 8. See Order, Federal-State Joint Board on Universal Service, CC Dkt. No. 96-45, DA 96-483, rel. Apr. 1, 1996 (granting extension to May 7); Order, Federal-State Joint Board on Universal Service, CC Dkt. 96-45, DA 96-702, rel. May 6, 1996 (denying request for extension but extending reply comment date to May 8 pursuant to 4 C.F.R. [[section]] 1.46).

[2] Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996) (to be codified at 47 U.S.C. [[section]][[section]] 151 et seq. ) (the "1996 Act" ).

[3] Given the importance of universal service issues to the development of competition, the Commission has the power to mandate specific requirements, under both its power to prevent State s from adopting universal service rules that are inconsistent with the federal rules and its power to preempt State regulation that impairs competition. 47 U.S.C. [[section]][[section]] 253, 254(f).

[4] In practice, a competitor will serve any customer only when its expected revenues exceed the cost of serving the customer. If subsidies are not portable, then the expected revenues for subsidized customers will be only the amount the customers pay for service. If subsidies are portable, on the other hand, the expected revenues will be equal to the amount the custo mers pay for service plus the amount of the subsidy. This obviously is a much more attractive proposition.

[5] See }{\f16 Comments of CTIA at 3. One important reason to maintain technology neutrality is to give consumers in rural areas universal service alternatives. While NECA suggests that competition may not be viable in rural areas, that is not the case. Comments of N ECA at 8. Cellular carriers and other CMRS providers can serve rural areas at relatively low cost, so they may be the most logical competitors to rural telephone companies. See Comments of Vanguard at 7-9. In fact, Vanguard alread y serves some rural areas under the Commission' s rules for Basic Exchange Telephone Radio Service.

[6] The Commission should examine LEC claims of subsidy carefully, however, because the LECs have a significant incentive to exaggerate the extent of implicit subsidies. Indeed, there is evide nce that some claimed subsidies, such as the subsidy of residential service, do not actually exist. See Washington Util. and Transp. Comm' n v. U S WEST Communications, Inc. , Dkt. No. US-950200 (Wash. Util. and Transp. Comm' n 1996) at 10 (finding that existing residential local service rate covers costs).

[7] Conference Report at 131.

[8] This is an important distinction, because carriers are entitled to recover only such costs as are consistent with "reasonable investment-backed expectations." See Penn Central Transp. Co. v. New York City , 438 U.S. 104, 124 (1978). Investor expectations normally would be reflected on a company's financial books, not its regulatory books.

[9] For that matter, Vanguard's actual service areas also differ from the actual service areas of the other cellular licensees in its markets.