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Subsidy for rural telephone companies under review at Oklahoma Corporation Commission

by Paul Monies Published: July 9, 2013

An annual fee of $37 million that helps subsidize telephone service to rural areas could be paid by all customers if a number of telecom companies and regulators can convince the Oklahoma Corporation Commission to approve changes.

The commission will hear challenges by several wireless companies to a proposed settlement on the matter at 1:30 p.m. Tuesday in Oklahoma City.

On one side are companies that want to abolish the state's High Cost Fund and replace it with a new program that would pull money for the subsidy from Oklahoma Universal Service Fund fees. They include more than 35 rural telephone companies, AT&T Oklahoma, Cox Oklahoma Telecom, Logix Communications, Corporation Commission staff and the attorney general's office.

Wireless companies such as Verizon Communications Inc. and Sprint Nextel Corp. oppose the changes, largely because there has been no audit of the fund since it started in 1996. They said there's no point to continuing the subsidy until regulators can figure out if it's still needed.

Oklahoma's High Cost Fund uses fees tacked on to each minute of a long-distance call from a landline phone to help pay for service in rural areas. But with the rise of wireless phones, texting and calls over the Internet, customers are making fewer long-distance calls from traditional landlines.

Fees for the fund have more than doubled in the last few years to maintain the same level of subsidies, as fewer long-distance calls were being made from landlines. Oklahomans made 2.13 billion minutes of long-distance calls from landlines in 2005. That fell to 882 million minutes in 2012, a drop of nearly 60 percent, according to the fund's administrator.

In testimony filed in the case, Daniel Rhinehart, a witness for AT&T, said keeping the High Cost Fund wouldn't be in the public interest because “it imposes larger and larger burdens on a steadily decreasing set of Oklahoma ratepayers.”

An estimated 30 percent of Oklahoma adults live in households with only wireless phones in 2010, up from 21 percent in 2007, according to the National Center for Health Statistics. About 8 percent of adults were in households with only landline phones in 2010.

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by Paul Monies
Energy Reporter
Paul Monies is an energy reporter for The Oklahoman. He has worked at newspapers in Texas and Missouri and most recently was a data journalist for USA Today in the Washington D.C. area. Monies also spent nine years as a business reporter and...
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