The Idaho Public Utilities Commission (PUC) has approved an increase effective Oct. 1 in the surcharge that subsidizes the high cost of rural telephone service. What? You did not know that you are helping to pay for rural phone service.
Idaho Code 62-610A requires that “all consumers in this state, without regard to their location, should have comparable accessibility to basic telecommunications services at just and reasonable rates.” This has been interpreted by the PUC as meaning that rural rates for land lines should not exceed urban rates by more than 25 percent, thus necessitating an ongoing regulatory effort to enforce that policy.
The subsidies are administered through the Universal Service Fund, which was established in Idaho by the Idaho Telecommunications Act of 1988. But that was then and this is now. Before the days of the cell phone.
What is now occurring is a steadily decreasing number of residential land lines in the state. The existing $1.65 million fund is insufficient to cover the subsidies paid to Idaho’s eight rural telephone companies. On June 30, payments to eight rural phone companies amounted to $1.7 million, thus the need for a surcharge increase.
Under the PUC ruling, business lines will pay 23 cents a month, an increase from up 19 cents. Customers who have long-distance companies will pay $.004 (four-tenths of a cent) per minute, up from $.0035. That may not sound like much, but percentage-wise, that is 25 percent for residential land lines and 21 percent for business lines. The surcharge on long distance calls will be increasing by 14 percent.
The Idaho PUC reports that in the last year the number of residential land lines has decreased by 8 percent and the number of business land lines has decreased by 1 percent. According to Gene Fadness at the Idaho PUC, this trend is expected to continue as more consumers and businesses switch from traditional land lines to cell phones and VOIP (Voice Over Internet Protocol) systems.
“Residential land lines are dropping precipitously every year as people switch more and more to cellular phones,” Fadness told IdahoReporter.com, “but we still have these eight rural companies that still have somewhat the same needs.”
When asked about the eventual resolution of these two increasingly conflicting realities, Fadness was optimistic about future reforms. “The same circumstances that are affecting universal service across the nation are also affecting Idaho,” he said. “They’re working right now on a national level universal service fund reform to account for the fact that most people will be using wireless technology. The fund itself is being reworked as we speak.”
These reforms do not come without resistance, however. The National Journal Group reports that recent national reforms to the Universal Service Fund by the Federal Communications Commission have sparked a federal lawsuit with 29 petitioners, and even prompted Rep. Jeffrey Landry, R-La., to introduce a bill to “undo” much of the reform.
Fadness explained that unlike land line service, wireless phone service in rural areas is generally still competitive. “There will probably still be choices with cell phones,” he said. “There will be one or two companies that build towers and two or three companies that lease other cell phone company’s towers, so that there is still competition for price where with a land line that does not exist.”
Competition or the lack thereof is the critical factor in determining the level of involvement the Idaho PUC plays in regulating phone rates. “That’s why the PUC sets the rates for land line companies whereas we don’t for wireless,” Fadness said. “It’s getting to be so competitive now that we don’t even set the rates anymore for most the land line companies. The only ones we really do are these small rural ones.”
The eight telephone companies that qualify for USF disbursements include: Albion Telephone Company, Cambridge Telephone Company, Direct Comm of Rockland, Inland Telephone Company of Roslyn, Wash. (serving Idaho customers in Lenore and Leon), Fremont Telecom, Inc. of St. Anthony; Midvale Telephone Exchange, Rural Telephone Co. of Glenns Ferry and Silver Star Telephone Co. of Freedom, Wyo. (serving Idaho customers in the eastern portions of Bonneville and Caribou counties).
Thank you for toning this down from the first version of your story which used only percentages to make the increase sound as eggregious as you could. The bottom line: The increase to residential lines is 3 cents a month, to business lines 4 cents a month.
The story says the PUC “interprets” the Idaho statute to mean that basic residential service in rural underserved and high-cost areas should not be more than 25 percent above what people in urban areas pay. There is no interpretation involved. Twenty-five percent is the standard establised by the federal Universal Service Fund and has been so for years.
The photo tag line says, “Under new rules from the” IPUC …” There are no new rules. The PUC reviews an annual budget report submitted by the administrator of the fund every year at this time. Every Oct. 1, rates are adjusted either up or down depending on how much money is left in the fund. The fund should not have an excess of money in it at the end of the program year. If it does, the per month rate goes down.
Without the universal service fund in place for the past many years, basic landline phone service in rural areas would have been almost cost-prohibitive. In urban areas where there is more density, you have a lot more people paying for telephone infrastructure. In rural areas, you have more infrastructure going greater distance and fewer people to pay. The principle behind the USF is that rural folks should have at least access to basic dial tone in case of emergencies. They do pay more than their urban neighbors, but not so much more to make it cost prohibitive, thus unduly punishing them because of where they live. Idaho, of all places, is one of those states that should appreciate efforts to keep life in rural communities as affordable and vibrant as possible. As the story states, with the availability of cellular and broadband service, the USF is undergoing major reform.
I appreciate many of the stories you do, but this one did not meet your standard. This, in my view, is agenda-driven reporting.
Thank you,
Gene Fadness
Public Utilities Commission
I don’t know if it is a good or bad thing for rural folks. These companies can make it difficult for competition because they can just decide not to lease their cell towers. It has gotten better recently, but we still have the problem of being geographically isolated in terms of how well cell service works and where. We’ve had no land line price competition for years so we’re stuck with whatever they give us for land lines and internet speed. Any subsidies they get does not seem to be trickling down to the consumer. It would be interesting to know what urban land lines cost vs rural land lines for comparison. Of course, urbanites have way more cell phone choices plus cable, etc. I’d love to ditch my land line but i need fax and internet. Where else would i get it?