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Guess what? Idahoans subsidize rural phone service under provision in Idaho Code

Guess what? Idahoans subsidize rural phone service under provision in Idaho Code

Parrish Miller
October 1, 2012
October 1, 2012

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).

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