FCC’s Martin addresses rural carriers

Following a hired singer’s stirring rendition of "God Bless the USA" at the Western Telecommunications Alliance convention in Dallas today, Federal Communications Commission Commissioner Kevin Martin addressed a range of concerns among rural telecom providers, from access charges for voice-over-IP traffic to changes in universal service fund (USF) policies.

Martin, who began by recalling his youth in rural North Carolina, drew applause from the crowd by asserting his opinion that all telecom competitors should have the same obligations to contribute to the USF. But after the applause, he added, "I’m sad to tell you that that’s not what the commission has said." Martin characterized the current FCC policy as one in which service providers compete for subsidies, a policy Martin said has the potential to create "significant problems" in the event of a shortage of USF money.

When one audience member asked if cable companies could be required to contribute to the USF, Martin warned that it was unrealistic and "not politically viable" to expect any entity to contribute to the fund without eventually drawing from it as well. As an example, he pointed out that rural telcos made the same request of wireless providers a decade ago.

"Once you have people contributing, it’s inevitable that they’ll be able to take [funds] out," Martin said. "I’m not sure if that ends up being a net positive for you all," he added, pointing out that cable companies have surpassed telcos in broadband deployment.

Questions over obligations to the USF dovetailed with those regarding access charges for voice-over-IP traffic. Martin agreed with his fellow panelists--lawyers representing the interests of rural telcos--that the two issues should be linked in policy decisions. One possible answer to the VoIP dilemma, Martin suggested, is to use phone numbers as keys to accessing the public switched telephone network, requiring anyone wanting access to the network to do so using phone numbers, thereby preventing voice-over-IP providers from profiting from the public network without paying their fair share. Collecting $1.16 per month for every phone number would fully fund the current USF budget, he said. "We have the jurisdiction to do that right now." However, such a system would be problematic when applied to corporate PBXs, he added. The FCC has discussed such a system but so far has not endorsed it.

"The commission is trying to come out with an idealistic, long-term solution," Martin said. "That’s why we’re struggling [with the issues]. I don’t think we’ll be able to come up with something that’s sustainable for the next 80 years." Rather, Martin suggested, the FCC should adopt a technology-neutral interim solution (such as the phone number concept mentioned above) that addresses short- and mid-term problems, allowing the government to pursue more permanent solutions under less pressure.

Martin criticized the concept of distributing USF aid in areas served by more than one provider, arguing that such a practice harmfully dilutes the USF. "You’re just diminishing the potential profitability or economic success of any one of [those competitors]," he said, adding that Congress should rectify the problem. But he admitted that the problem stems from the policy direction chosen by the FCC, which urged states to approve a system in which multiple competitors in a given area could be eligible for USF aid. "It’s very hard to shut it off once you’ve started that process," he said.

In a separate panel discussion following Commissioner Martin’s appearance, Gerry Duffy, an attorney working with the WTA in Washington, commented that the WTA should recommend Martin be appointed chairman of the FCC if President Bush is re-elected.

"Mr. Martin’s been a real friend to this industry," Duffy said. "I’d be much more confident we’d get a good answer [to rural carrier concerns]--though maybe not the perfect answer--with Chairman Martin at FCC."