[Congressional Record Volume 144, Number 13 (Monday, February 23, 1998)]
[Senate]
[Pages S857-S858]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     TELECOMMUNICATIONS ACT OF 1996

 Mr. THOMAS. Mr. President, Sunday, February 8 marked the 
second anniversary of the signing of the landmark Telecommunications 
Act of 1996. As we take this opportunity to reflect on the state of 
telecommunications reform, I rise to share my concerns with the 
implementation of a critical provision of the historical law--the 
provision dealing with universal telephone service.
  The Telecommunications Act of 1996 ordered the overhaul of the 
estimated $23 billion in subsidies currently used to fund universal 
telephone service. Congress intended all implicit subsidies to 
universal service to be removed from rates and transferred to a new 
explicit Universal Service Fund to be supported equally by all 
carriers.
  In the face of declining telephone rate support, through federally 
mandated access charge reduction and new competitors targeting the most 
profitable markets and services, a sustainable universal service 
support mechanism is ever more important. I view with great concern the 
Federal Communication Commission's (FCC) current formula for universal 
service support: twenty-five percent of funding from federal sources 
and seventy-five percent from each state.
  Many states, like Wyoming, clearly are not in a position to bear 
seventy-five percent of the universal service burden alone. Universal 
service is a shared state-federal responsibility. The best approach to 
fulfill Congress' intent and ensure affordable phone service in all 
corners of the country is to create a national universal service fund 
that ensures support reaches where it is needed most.
  The fund should be based on interstate and intrastate 
telecommunications revenues and cover one-hundred percent of the 
subsidy needed to keep phone rates affordable for customers in rural 
and high-cost areas. With a national fund, all telecommunications 
service providers would contribute a portion of their revenues to 
support reasonable rates across the country. In other words, service 
providers in more urban, low-cost areas would help support affordable 
phone service in rural, high-cost areas.
  Leaving seventy-five percent of the funding responsibility to the 
states would place a disproportionate burden on consumers, service 
providers and utilities commissions in rural states like Wyoming. Such 
a burden could result in higher phone rates and reduce network 
investment--both of which would have a chilling effect on economic 
development opportunities. Since telecommunications is a vital element 
of commerce, disparate universal service surcharges on communications 
services between states

[[Page S858]]

would divert industries and job growth away from the rural areas that 
need it the most.
  Mr. President, I submit for the Record a letter I wrote with the 
other members of the Wyoming delegation to the FCC on this issue. There 
is still time for the Commission to get this funding problem right. We 
must ensure that all customers across the country continue to have 
access to quality local phone service at affordable rates.
  The letter follows:


                                                  U.S. Senate,

                                    Washington, DC, July 23, 1997.
     Hon. Reed E. Hundt,
     Chairman,
     Federal Communications Commission,
     Washington, DC.
       Dear Chairman Hundt: Reforming our nation's universal 
     service system is a tremendous challenge, and one that will 
     have lasting implications for telephone customers in Wyoming 
     and other rural states. In your work on the Joint Board, we 
     encourage you to protect the interests of rural consumers and 
     create a national high-cost fund that sends support dollars 
     where they are needed most. By doing this, you will fulfill 
     the clear mandate of the Telecommunications Act of 1996 and 
     help sustain a truly national communications system available 
     to all citizens.
       In the face of declining telephone rate support, through 
     federally mandated access charge reductions and new 
     competitors targeting the most profitable markets and 
     services, a sustainable universal service support mechanism 
     is ever more important. We therefore view with great concern 
     the current formula for universal service support: 25 percent 
     of the funding comes from federal sources and 75 percent from 
     the states.
       In Wyoming, with its vast terrain and dispersed and 
     relatively small population, a 75 percent state funding 
     responsibility will have a clear, immediate and detrimental 
     effect on phone rates. Although Wyoming has a universal 
     service funding mechanism, it is beyond the capacity of 
     Wyoming to absorb the huge increases in costs that a 25/75 
     split would create for it. It is clear to us that a federal 
     universal service fund that pays only 25 cents on every 
     dollar of high-cost telephone service will shortchange 
     thousands of Wyoming telephone customers, and millions of 
     others across the country.
       Universal telephone service is a national commitment 
     requiring strong federal support. In that regard, the 
     Telecommunications Act of 1996 envisioned a partnership 
     between the states and the federal government to work 
     together on the nation's telecommunications challenges. We 
     urge you to adopt a national high-cost fund that provides all 
     of the rate support needed to keep Wyoming customers 
     connected to the public telephone network. Only with a 
     national fund available to all high-cost service providers 
     can customers in our state be assured of affordable access to 
     this vital communications link.
       Thank you for your consideration of this matter. We hope 
     you will join us in supporting a cooperative national 
     solution for universal service.
           Sincerely,
     Craig Thomas,
       U.S. Senator.
     Michael Enzi,
       U.S. Senator.
     Barbara Cubin,
       Member of Congress.

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