CTIA Sues Utah PSC, Says USF Revamp Illegally Hurts Lifeline, Prepaid Wireless

States should be able to shift to connections-based USF contribution to stabilize funds, said the state chair of the Federal-State Joint Board on Universal Service Thursday after CTIA filed its second lawsuit against states making that change. CTIA sued the Utah Public Service Commission Tuesday for its Jan. 1 shift to connections-based contribution, arguing the 36-cent fee violates federal Lifeline requirements and illegally discriminates against prepaid wireless services. CTIA urged the U.S. District Court in Salt Lake City to decide federal law pre-empts the Utah rule and to stop the state commission from enforcing it.

The Utah PSC denied CTIA’s application for rehearing of the USF order last year (see 1712010055). The commission said it doesn’t comment on pending litigation. Earlier this year, CTIA sued the Nebraska Public Service Commission for similarly adopting a connections method, with the association’s brief due May 18 at the Nebraska Court of Appeals. At a Regulatory Commission of Alaska workshop Monday, CTIA warned Alaska commissioners not to adopt connections-based contribution, saying it would violate federal law (see 1804090042).

“I fully support states using their independent decision-making ability to craft solutions to the problem of stable funding for their universal service funds,” said USF Joint Board State Chair Chris Nelson, a South Dakota commissioner. “The telecommunications landscape has dramatically changed since states originally adopted a revenues-based funding methodology. These states have taken proactive steps to stabilize their fund by adopting a connections-based methodology that is easy for consumers to understand, administratively workable, and will provide long term stability.” The FCC should schedule a USF Joint Board meeting to vote on state members’ plan to resolve federal contribution methodology, Nelson added.

"The PSC’s rule is regressive, discriminatory, and could result in Federal USF support being paid directly to the state," a CTIA spokeswoman emailed Thursday. "We want to protect consumers and competitors from illegal and discriminatory charges."

Utah’s USF revamp is inconsistent with the Communications Act, particularly Sections 254 and 332, CTIA said in its complaint (in Pacer). It’s inconsistent with the revenue-based method of federal USF. If an access line produces less than 36 cents in intrastate revenue, it would have to come from interstate revenue or, for Lifeline customers, a federal subsidy, CTIA said. The Utah change is unfair to prepaid wireless providers, which unlike postpaid carriers can’t pass the surcharge through to end users, CTIA said. And it would require prepaid providers to pay the surcharge on a line even in months when it generated no revenue, the association said.

Lifeline customers generate less than 36 cents in intrastate revenue monthly, CTIA said. “Ironically, for the sake of collecting surcharges that are intended to keep rates affordable, the Commission has effectively increased the minimum rate for those most in need of affordable rates -- low-income households enrolled in the Lifeline program -- by effectively increasing the minimum Lifeline service rate in Utah to $0.36,” it said. “This effective floor on Lifeline rates prevents the offering of no-charge, or very low charge, Lifeline wireless service and serves to regulate the rates charged by wireless providers, in contravention of 47 U.S.C. § 332(c)(3)(A)."

It’s illegal for Utah to require wireless providers to increase Lifeline rates to cover the monthly state fee or to impose the state fee as a direct surcharge, CTIA said. It’s also illegal to require wireless providers to pay the 36-cent fee from their $9.25 monthly federal Lifeline support, it said. If carriers must pay “out of their own pockets, or indirectly through charges on other customers, that would be discriminatory … because providers of other services who can pass through the UUSF surcharge to customers will not be similarly required to absorb the monthly UUSF surcharge.”