Ron Comingdeer, an attorney who represents Terral, said the company is a “carrier of last resort” that has many rural and low-income customers in its service area. Its customer count fell to about 215 in 2012.
“They have an obligation to provide service to those customers,” Comingdeer said.
He said the cost to provide service in Terral's service area is much higher than phone companies that serve urban areas. Wireless service is spotty in Terral's service area, so it's not an option for many of their customers.
“These large companies cross subsidize across their customer base,” Comingdeer said. “They can get enough customers in the cities so they can provide coverage to rural areas.”
The FCC made changes to reimbursements from the federal Universal Service Fund's high-cost program in 2011. It capped per-line payouts at $3,000 and established an annual budget of $4.5 billion. The changes will be phased in over several years.
Terral petitioned the FCC for a waiver from the changes, saying it would lose a combined $1.3 million in federal support from 2012 to 2014.
“Reductions in universal service support at these levels will impact the ability of the company to continue to provide high-quality service to its subscribers,” Terral's president and general manager, Dick Segress, wrote in a June 2012 letter to the FCC.
Segress also said the company was in danger of defaulting on a $4.8 million loan it received in 2011 from the federal Agriculture Department. Proceeds from the loan are being used to convert Terral's copper network to a fiber network capable of providing voice and broadband Internet.
Terral also receives money from the Oklahoma High Cost Fund and the Oklahoma Universal Service Fund, two state programs that are funded from fees on telephone customer bills.
The Oklahoma Corporation Commission is contemplating the elimination of the Oklahoma High Cost Fund, which helps rural carriers provide service under a $37 million annual program funded by surcharges on long-distance calls from landlines.