Lifeline reservations

The FCC is expected to vote this week on a $17 million expansion of a carrier-funded program aimed at increasing telephone use by Native Americans.

Though well-intentioned, the FCC initiative is not enough to overcome the many obstacles to phone subscribership on Indian reservations, including the expensive network build, experts said.

Only 47% of Native American households have phones, compared to 94% for the general U.S. population, according to the FCC. On some reservations, the penetration rate is as low as 22%.

A lack of phones leaves people "dangerously isolated from emergency and critical health services," read a report by the Benton Foundation in Washington. More households have TV sets - 98% in 1997 - than phones, FCC figures show.

To increase phone use in underserved areas, FCC Chairman William Kennard proposes to expand the $500 million Lifeline program, begun in 1985 to subsidize low-income Americans' phone bills. The expansion would give 300,000 residents of Indian reservations a credit of $3.50 to $7 off their monthly phone bills. Lifeline currently assists 5.6 million phone subscribers.

Observers said the FCC proposal stems from Kennard's desire to bridge the "landline divide."

"For Kennard, this is a deep commitment, not a political issue," said Paul Glenchur, an analyst at Schwab Washington Research Group.

Congress generally hasn't opposed the Lifeline expansion as a new phone tax, but Rep. Billy Tauzin, R-La., chairman of the House telecommunications subcommittee, opposes the Lifeline expansion "on philosophical grounds," said his spokesman. "If we create this program for Native Americans, what's going to stop the FCC and the White House from expanding it...out of control?" he asked.

The Lifeline expansion would be funded by interexchange carriers, based on their interstate and international revenues. The cost presumably would be passed on to consumers. Some states also make contributions.

The program would help Native Americans because many are poor and can't afford phone service, said Ellen Blackler, special assistant to the chief of the FCC's Common Carrier Bureau.

But the FCC initiative doesn't solve other problems on Indian reservations, said Kade Twist, a Benton Foundation policy associate. The main issue isn't recurring monthly service fees but the high cost of extending phone lines to reservation homes, he said. This buildout can cost carriers $40,000 or more per line, with resulting high hookup fees for customers.

Another problem is that local calling areas on reservations are small. "If you live in an area where your local calling area is small, you incur charges to call people outside your neighborhood," Blackler said. As a result, many Native Americans make expensive toll calls and rack up phone charges they can't pay.

When customers are disconnected for failure to pay, many states cut off long-distance and local service. However, some states such as Pennsylvania allow subscribers to keep local service even if long-distance service is disconnected.

Phone service on Indian reservations isn't always a no-win proposition. Gila River Telecommunications, a tribally owned carrier that serves the Gila River Indian Reservation in Arizona is growing so fast it's having trouble keeping pace with demand."Our construction crews are overwhelmed," said G ila River's general manager Belinda Nelson.

Although its penetration rate is relatively low - about half of all reservation households subscribe - the carrier is expanding to keep up with the community's economic development, Nelson said. Casinos built a few years ago have fostered other projects and more residents and businesses want phones, she said.

Unlike many reservations, Gila River already has a well-developed phone network. The carrier owns a reservation-wide fiber optic network, eight central offices and 3500 access lines.

Still, the cost of extending lines to buildings is high. As a result, Gila River is proposing first-time installation charges of $75 for homes and $125 for businesses and a $1 increase in service rates to $13. The tribal council must approve the fees.

Nelson doesn't expect subscribership to suffer, though, partly because Lifeline reduces monthly bills by $7 for qualified customers.

Though the FCC is considering other initiatives to increase phone subscribership in underserved areas, it hasn't devised more specific proposals, Blackler said. It will hold a training seminar for tribal leaders and carriers in September.

One general idea is to help wireless carriers become more involved in serving Indian reservations, sources said. No states have designated satellite or wireless carriers to participate in Lifeline and other universal-service programs, according to the Benton Foundation.

But Western Wireless, Smith Bagley Inc. and others have applied, Blackler said.

But the jury's still out about whether landline or wireless systems are the best way to go for brand new subscribers. Although landline networks are more expensive to deploy, they are also better bets at this point for dependable access to the Internet and other advanced services.

"There may be some places where the terrain is suitable for wireless," Blackler said. "We're working hard to make sure there are no regulatory barriers for wireless."