A $37 million surcharge on long-distance calls from landlines that helps rural telephone companies provide service is outdated and should be abolished, Oklahoma Corporation Commissioners heard Tuesday.
Wireless companies, landline companies, rural telephone companies and several regulators all agreed the state's High Cost Fund should be eliminated. But they differed sharply on how to make up the difference for the subsidy during a two-hour hearing in Oklahoma City.
The three-person Corporation Commission took the matter under advisement and will issue a decision later. Commissioners were asked to approve a revised settlement agreement signed by more than 35 rural telephone companies, AT&T Oklahoma, Cox Oklahoma Telecom, Logix Communications, commission staff and the attorney general's office.
The settlement would abolish the High Cost Fund and set up a process for rural telephone companies to claim support from Oklahoma Universal Service Fund fees added to most landline and wireless customer bills.
The commission established the High Cost Fund in 1996 to ease the transition for rural phone companies amid greater competition in the telecommunications industry.
Money for the High Cost Fund comes from fees of between 3.1 cents and 4.7 cents added to each minute of a long-distance call made from landlines in Oklahoma. But customers are making fewer long-distance calls from landlines, choosing instead to use wireless phones, texts or calls over the Internet. Since the surcharge is set at $37 million each year, fewer customers are paying higher fees for the same level of support.
Bill Humes, who represented the attorney general's office on behalf of consumers, said the settlement wasn't perfect. It does abolish the High Cost Fund, which the attorney general's office has had concerns with for several years. He said the fund hasn't been fully audited since it started and it may be duplicating services supported by the Oklahoma Universal Service Fund.
“As with any settlement agreement, there are imperfections,” Humes said. “If everyone hates it, it must be some sort of good settlement.”
Wireless companies such as Verizon Communications Inc. and Sprint Nextel Corp. said they weren't involved in the settlement negotiations. Their attorneys questioned why rural telephone companies still needed support based on formulas that gave them an inflated rate of return.
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“It is not reasonable, fair or sound policy to burden millions of wireless and wireline customers with surcharges of this magnitude in the absence of clear and succinct evidence that it is necessary to do so to subsidize service that is substantially below market rates to fewer than 200,000 wireline customers.”
An attorney representing Verizon