Boise Guardian

P.U.C. Should Hang Up On Landline Subsidy

Telephone lineman fixing the traditional telephone line.

With the dwindling number of people using traditional “landline” telephones, the Idaho Public Utilities Commission has doubled a nearly 30 year old surcharge on phone lines to subsidize the Idaho Universal Service Fund (IUSF).

Old-style phone cable required two copper wires for every connection.


The fund was created in 1988 to tax what used to be “The Phone Company.” Back in the day, the company affectionately known as “Ma Bell,” pretty much controlled telecommunications in Southern Idaho. Mountain States Telephone became Mountain Bell which became U.S. West which became Qwest which became Century Link which has lots of wires hanging on poles, but customers are switching to cell phone service and abandoning the landline.

And therein lies the problem. While revenue from the fund has declined from approximately $2 million in 2015 to $1.29 million in 2017, disbursements have held steady: The eight rural telephone carriers that are eligible for fund disbursements have received a total of $1,698,610 every year since 2013.

Absent an increase to the surcharges, the fund would not have been able to meet its obligations in the current fiscal year. It would seem that it is time for the PUC to disconnect, hang up, pull the plug on the subsidy to the small phone companies. With the proliferation of cell service–much of it offered by the small carriers receiving the landline subsidy–a case can no longer be made to have the traditional city users pay to provide phone lines to their country cousins.

Of course the irony is that more people will cut the cord and rely on cell phones as they realize they are paying to keep an outdated system alive, causing a further decline in subsidy revenues.

For the younger set, there was a time when the “Phone Company” provided free “0” for operator assistance which ranged from what we expect today when we call 911 to free “directory assistance” (dial 555-1212) anywhere in the USA and in some cases the world. You could dial a number and get the exact time to set your clock or watch: “At the tone the time will be…”

The numbered buttons on a “modern” pay phone. Try to find one today.


Calls to or from parents and grandparents were often cut short and ended with, “This is long distance, so I am gonna say goodbye now.” Long distance fees could rival today’s “unlimited plans” for cell service. If you called or received a call more than once in the same week the second call was often as not bad news, like a death in the family.

For the entire PUC press release, click.

Faced with declining revenue as Idahoans increasingly abandon land line phone service, state regulators have raised a monthly surcharge on land lines and questioned the sustainability of the Idaho Universal Service Fund (IUSF).
 
The fund was established in 1988 to ensure all Idahoans have access to local telephone service at reasonable rates.
 
This is accomplished by taking revenue collected from a surcharge on land-line users and long-distance call minutes, and distributing it to telecommunications carriers that meet eligibility requirements.
Over the last several years, however, revenue has been insufficient to cover distributions.
 
In the recently completed 2017 fiscal year, for example, the fund collected nearly a half-million dollars less than it distributed.
 
The trend prompted the Commission to raise the monthly surcharge on each residential line to 25 cents (the current surcharge is 12 cents), and to 44 cents for each business line (currently 20 cents), effective Sept. 1.
 
The cost for each minute of a long-distance call is set to increase too, from ½ cent per minute to 0.9 cents per minute.
 
The changes are expected to allow the fund to meet its obligations for the 2018 fiscal year, but the Commission expressed concern that raising the surcharge will cause more Idahoans to abandon their land lines, exacerbating the trend and eventually making the fund unsustainable.
 
To address this, the Commission opened a generic docket to facilitate communication with the general public, telephone company representatives and other stakeholders, with a goal of developing a sustainable approach for the fund in a declining industry where land lines are being replaced with new technology such as cell phones and Voice over Internet Protocol.

“We…find it prudent and necessary to take a hard look at the sustainability and viability of the IUSF,” the Commission said in its order.
 
The IUSF was created through the Idaho Telecommunications Act of 1988 with the goal of maintaining statewide availability of local phone service at reasonable rates in rural areas where the cost of providing service is more costly than in urban areas. 
 
With assistance from the Universal Service Fund, rural telephone companies are able to keep their rates at no more than 25 percent above rates in more urban areas.
 
While revenue from the fund has declined from approximately $2 million in 2015 to $1.29 million in 2017, disbursements have held steady: The eight rural telephone carriers that are eligible for fund disbursements have received a total of $1,698,610 every year since 2013.
 
Absent an increase to the surcharges, the fund would not have been able to meet its obligations in the current fiscal year.
 
A full text of the commission’s order is available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room” and then on “Telecommunications Cases” and scroll down to Case No. GNR-T-17-04.