FCC Says It Won’t Adopt New High-Cost USF Mechanism for Insular Carriers

The FCC decided not to adopt a new high-cost support mechanism for non-rural insular carriers in Puerto Rico. “Telephone subscribership in Puerto Rico is not yet at the same level as in the mainland United States, but the data before us indicate that the gap is closing rapidly and may well be eliminated entirely in the near future,” the commission said in its order. The commission also pointed to increased wireless service as a factor in its decision. Low-income customers in Puerto Rico “increasingly are served by wireless competitive eligible telecom carriers (ETCs),” it said. “Customers of wireless carriers received more than one-third of the total low-income support disbursed to Puerto Rico in 2008."

In 2000, the Puerto Rico Telephone Company petitioned the commission for support based on its embedded costs. In 2005, the FCC considered creating such a mechanism for non-rural insular areas, like Puerto Rico, when telephone subscribership there was below the national average at about 73 percent. By 2008, subscribership jumped to 91.9 percent, the commission said. “The substantial growth in universal service support and the commensurate increase in telephone subscribership represent significant changed circumstances since we issued the notice of proposed rulemaking in 2005."

"FCC to Puerto Rico: Drop dead,” Minority Media and Telecommunications Council President David Honig said in an interview: “The FCC is saying that the community having wireless means they don’t have to have wireline service. But they just gave Wyoming a few million dollars, a state with only half a million people.” The decision sets a bad precedent and violates the equal protection clause, he said.

"More is needed here,” Commissioner Michael Copps said in a statement. The subscribership improvement stated in the order “suggests that the commission’s universal service funds have changed the telecommunications access in Puerto Rico for the better. But better is not good enough for the good people of Puerto Rico. Voice penetration there still falls significantly below the national average."

The FCC also issued an NPRM to address the significant number of low-income consumers who can’t afford line connection charges. It’s considering using the Link-up program to help offset special construction costs, the order said.