https://docs.fcc.gov/public/attachments/FCC-19-32A1.pdf
"In 2011, the Commission adopted a rule aimed at limiting universal service
support received by rural carriers whose rates are below a set minimum rate.1
This requirement is known as the 'rate floor.' If a carrier chooses to charge
its customers less than the rate floor amount for voice service, the difference
between the amount charged and the rate floor is deducted from the amount of
support that carrier receives through the Universal Service Fund (Fund)."
Okay. So the intention of the rate floor was to pay out USF funds in a way that
balanced the needs of the rural community receiving government subsidies, with
how much everyone else would have to pay to support these rural communities,
with our contributions to the USF. Service is more costly to provide in low
density and distant locations. Therefore, it should come as no surprise that
the rate floor might be a little higher than the cheapest service for those in
town. OF COURSE, that can always be adjusted. Lower the rate floor, and end up
charging more to regular customers, to make up the difference with increased
USF. Duh, right?
Now let's get on with the phony-baloney rhetoric we're accustomed to:
"Intended to guard against artificial subsidization of rural end user rates
significantly below the national urban average, the practical effect of this
rule has been to increase the telephone rates of rural subscribers, who are
often older Americans on fixed incomes, lower-income Americans, and individuals
living on Tribal lands. These Americans are some of those least able to afford
the needless rate increases caused by the rate floor."
Bla bla bla simplistic and unnecessary, politically correct, put-them-to-sleep
platitudes.
"After a thorough review of the record evidence, we now eliminate the rate
floor and, following a one-year period of monitoring residential retail rates,
eliminate the accompanying reporting obligations after July 1, 2020. Doing so
ends the de facto federal mandate to needlessly increase telephone service
rates for many rural Americans above those carriers would otherwise assess, and
avoids a further increase from $18 to $26.98 on July 1, 2019-an increase that
would have reduced the affordability of telephone service for rural Americans,
including the elderly, low-income individuals, veterans, and their families.
As a result, we ensure that rural consumers continue to receive quality
services at just, reasonable, and affordable rates, while also ensuring that
rural carriers continue to receive the predictable and sufficient universal
service support needed to serve high-cost areas."
Sorry guys, but providing rural service is not getting cheaper. Quite the
opposite. Anything 5G-related will be more expensive than what we have today.
And the FCC is going to make up the difference how? A mystery. Say one thing,
and then do exactly the opposite. Just what we can expect from this FCC.
"In December 2018, WCB announced that the rate floor calculated using its
current methodology would be $26.98 for 2019. Accordingly, unless the
Commission takes action prior to July 1, 2019, carriers subject to the rate
floor must increase the monthly rates they charge rural Americans to at least
$26.98-a nearly $9 or 49.9% increase-or risk losing the universal service
support they depend on to deploy broadband infrastructure in the farthest
reaches of our country."
So, it only seems obvious that if the rate floor has to be raised by an amount
that is considered "too much," then the only alternative is to increase the
USF, to keep the rate floor lower. He goes on and on pretending that reducing
the rate floor makes phone service cheaper. The same myopic analysis that
pretends that raising the minimum wage gives all low-paid workers a pay hike.
"We disagree with the only commenter that supports maintaining the rate floor.
Although NCTA argues that eliminating the rate floor would skew competition and
increase subsidies at the expense of consumers, we find the opposite to be
true. Rural carriers receiving high-cost loop support can only recover their
operating costs and investments where they face high per-line costs of
providing service. Commission rules already require carriers to use subsidies
to offset demonstrated high costs-not to subsidize below-market rates."
Correct. Those "Commission rules" you just mentioned are the same rules you are
eliminating! That's what the rate floor does!!
"Rather, the rate floor itself skews competition by artificially inflating the
prices that certain carriers may charge-requiring a carrier to charge
abovemarket rates in a town, for example, for fear of losing its support in the
surrounding countryside. Without the rate floor, prices in competitive areas
can freely adjust to competitive levels."
Obviously, if the FCC threatens to reduce USF support, that is indeed what the
telco will do. Same happens with any reduction of the rural service fee to
customers. When the telco has no rate floor to count on, and no increase in the
USF, there are only three options I can see: (1) retain that rate floor anyway,
to make ends meet, or (2) lower the rate to rural customers while raising the
rates to those in town, to make up the difference, or (3) stop providing
service in locations that are too darned expensive to serve. Luckily for the
FCC, it is stopping the reporting requirements, so it can tell the rest of us
that service to rural communities is doing great.
There is simply no "there" there. A few simplistic propaganda slogans about the
underserved communities, with nothing to explain how the telcos can make ends
meet any better than today. At least, give us something concrete.
Bert
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