In return for support from public funds, it is common for carriers to face public interest obligations. A carrier becomes eligible for federal support, for example, only after demonstrating that it accepts a range of duties, such as to offer and advertise service throughout a “service area.”194
Carriers receiving federal support also must provide specified benefits to low-income consumers.
States typically impose a wide range of duties on supported carriers, although in many cases there is no single legal source in which those duties can be identified. Rather, states typically have
often wireline cables. Thus building a cell site ordinarily doesn’t avoid the cost of building (or
renting from the ILEC) a landline cable to the neighborhood of the customer’s location.
194
A recent innovation in the CAF Order is to allow price cap carriers to select some parts of their service areas to remain unfunded and exempt from public service obligations.
built up those duties incrementally in case decisions. A basic set of duties, pre-dating universal service in most cases, arises from Carrier of Last Resort (COLR) duties. These duties were historically imposed on telephone companies as a condition of providing utility service. Because COLR duties were so comprehensive in scope (and applied so broadly to all telephone companies) Congress and the FCC were not comprehensive in the 1990s when they defined the additional duties of Eligible Telecommunications Carriers (ETCs) that are eligible to receive federal universal service support. Notably, the federal law allowed ETCs to receive support even when they used facilities rented from or resold from other carriers.
COLR duties traditionally fall into five broad categories:195
1. Duty to serve. A COLR must extend retail voice service to any potential customer within its franchise area on request, subject only to reasonable conditions, and in accord with reasonable service quality standards.
2. Line extensions. A COLR must extend its lines throughout its service territory, including un-served and newly built areas, subject to reimbursement by customers for certain construction costs.
3. Exit barriers. A COLR must continue providing service until the state commission grants permission to exit.
4. Other retail benefits. A COLR often is required to provide certain additional economic and service benefits to specified customers and former customers. 5. Carrier-to-carrier duties. A COLR must provide certain interconnection and
wholesale services needed by other carriers.
The most important single duty for universal service is the duty to serve all customers within a designated service area. This means that the supported carrier must provide service to any
customer seeking that service if the provider has nearby facilities. Otherwise, the customer can be required to pay a construction charge. States and carriers vary considerably as to how much a single customer can be required to pay in construction charges.
The Joint Board on Universal Service recently filed at the FCC a table of more than a dozen potential requirements for carriers that might receive federal support for broadband services.196
The Wyoming statute says little regarding the qualifications and obligations of carriers that receive WUSF. It seems to presuppose that wireline telecommunications companies will be eligible
195
Bluhm and Bernt, Carriers of Last Resort: Updating a Traditional Doctrine, National Regulatory Research Institute, 2009, p. 4.
196
FCC, Connect America Fund, WC Docket No. 10-90 et.al. Comments By State Members Of The Federal State Joint Board On Universal Service, filed May 2, 2011.
for support. The only qualification required is that the carrier be a telecommunications provider and have high rates.197 Wyoming’s statutory requirements are more rigorous for wireless companies. The commission may award WUSF support to wireless companies only if they meet statutory criteria, such as to offer and advertise all supported services “throughout” an entire local exchange area and offer unlimited local calling for a flat fee.198
The commission imposes a variety of obligations on supported carriers under authority of state law. Wyoming incumbent carriers, for example, have a “duty to serve,” which has an important exception in the practice of charging for construction of line extensions. Wyoming carriers are allowed to specify requirements for construction charges in their tariffs.
We recommend that Wyoming consider establishing clearly defined public service
obligations of WUSF recipients. These requirements may not be the same for all carriers, but they should be clearly defined for all. Appendix C is a suggested list of broadband requirements drawn from our work with the Universal Service Joint Board.
I. Service Quality and Availability Standards and Incentives
Wyoming should ensure that WUSF-supported providers provide adequate service quality and availability. Service quality was largely overlooked in the 1995 law, perhaps because Wyoming policy makers knew that the Commission had independent authority over voice service quality by ILECs, and that market forces would ensure the quality of competitive services. Service quality is a more important today because the FCC has limited state jurisdiction over broadband, creating great confusion in some areas.
Incentives should also exist to ensure that network equipment is modernized periodically. Switching upgrades are an important topic. In Section I.A.2 above, we reviewed the history of switch modernization in Wyoming. We found that modern and efficient “soft switches” have been installed in some parts of the state served by smaller rate-of-return carriers, while other areas are still served by more obsolete traditional telephone switches, such as the “5ESS” switches that were first introduced almost 30 years ago. These older technologies make it more difficult to install an efficient broadband network. Instead, broadband services are overlaid on older, less capable technologies, and efficiency is reduced. Older switching equipment can also limit the carrier’s ability to install new circuit equipment in remote terminal cabinets.
The authors do not view federal preemption as a barrier to Wyoming adopting its own service quality and availability standards for broadband. Although federal law is widely seen as preempting state regulation of broadband, the scope of that preemption is not yet well defined,
197
Wyo. Stat. Ann. §§ 37-15-501(c). Another statute prescribes that WUSF funds be used to “assist only those customers of telecommunications companies located in areas of this state with relatively high rates for essential services.” Wyo. Stat. Ann. § 37-15-501(c).
198
particularly in the context of conditions on state universal service funding.199 The authors
recommend that Wyoming policy makers ensure that whenever all WUSF supports is used only for services and facilities that have adequate capacity, are reliably operated and are well maintained, as that funded service providers handle service complaints promptly and effectively. Broadband services are particularly difficult to monitor because they can vary from moment to moment in speed, latency and accuracy.
For broadband services, the FCC has adopted helpful new minimum standards and reporting requirements for carriers receiving FUSF. The FCC’s CAF Order established federal standards for broadband networks. For wireline and fixed wireless, the initial minimum broadband speed
requirement for CAF recipients is 4 Mbps downstream and 1 Mbps upstream.200 Requirements on mobile wireless carriers are much lower.201 The FCC will also require supported carriers to offer sufficiently low latency to enable use of real-time applications, such as VoIP.202 These standards provide a useful starting point for Wyoming-specific expectations for supported networks.
Wyoming might be able to simply incorporate some or all of the federal rules without modification. The FCC also established a schedule for expanding broadband facilities, at least for “price cap” ILECs receiving FUSF. These carriers must complete deployment to at least two-thirds of the required number of locations within two years, and all required locations within three years.203 Wyoming policy makers should similarly consider establishing minimum broadband deployment targets for carriers receiving WUSF.
199
Federal claims of sole jurisdiction over broadband are a problem for all the states seeking to promote quality broadband service. Yet many service quality issues are the same for both
broadband and switched services. If a buried cable is cut by a backhoe, a customer will not care whether the cable was a “switched” PSTN network or a packet-based IP network. Similarly, if broadband service is out, the broadband customer has at least as much interest as a voice customer in ensuring that a repair truck is dispatched promptly.
200
CAF Order ¶ 94. The CAF Order contains a table summarizing minimum required broadband performance characteristics at ¶ 105. Many parties commented at the FCC that a 4 Mbps standard would soon be inadequate or is already inadequate for some common applications.
201
Mobile wireless carriers are held to a lower standard, with minimum speed requirements as low as 200kbps downstream and 50 kbps upstream. CAF Order ¶ 146.
202
CAF Order ¶ 96. The FCC also said that any limits on usage (such as megabits per month delivered) must be reasonably comparable to usage limits for comparable broadband offerings in urban areas. Id. ¶ 98.
203
CAF Order ¶ 147. Initially, during “Phase I” of the CAF program, carriers will only be required to deploy broadband to a number of locations equal to the amount it accepts divided by $775. Id. ¶138.
A Wyoming-specific deployment schedule for broadband may turn out to be particularly important since the FCC has allowed price cap carriers to opt out of funding eligibility and the associated public interest requirements. Initially during “Phase I” of the CAF, the FCC will allow price cap carriers to decline support on a wire center and census block basis.204 Later, during “Phase II” of the CAF, the FCC will allow price cap carriers to make state-by-state decision about whether to accept CAF support and the accompanying public interest obligations.205 If any Wyoming price cap carriers should decide to decline federal support in either Phase I or Phase II, Wyoming will face a particularly difficult situation. Any Wyoming-specific broadband deployment goal will likely have to be achieved with less FUSF or no FUSF.206
In short, the CAF Order provides a good starting point for establishing Wyoming-specific service quality and availability standards. In addition, the federal standards are largely implemented through proceedings at the Wyoming Commission to designate federal ETCs and to supervise annual reporting of federal compliance. Since the Commission will likely be engaged in implementing federal standards, it will promote clarity and efficiency to align the state standards and procedures as closely as possible.