March 2, 2004 – A Federal Communications Commission spokesman has confirmed that action by the Public Services Commission has paved the way for Choice Communications to seek eligible telecommunications carrier status from the FCC itself.
Reacting to statements reported in the article "Choice can go to FCC for status determination", the FCC's Michael Balmoris said that Choice can, in fact, seek ETC status from the federal agency now that the PSC has decided that it cannot make such a designation.
(Keithley Joseph. PSC executive director, said on Monday that the commission sent a letter to the FCC on Friday stating that the local body lacked jurisdiction to designate Choice Communications as an eligible telecommunication carrier.)
Further, Balmoris said, if Choice were to secure a federal ETC designation, it would be eligible to apply for the same per-line level of subsidies under the FCC's High Cost Loop program as now is received by Innovative Telephone, currently the sole provider of local telephone service in the territory.
Balmoris also agreed with Choice Communications attorney Maria Tankensen Hodge that Choice's receipt of such federal subsidies would not diminish the amount of those subsidies going to Innovative but rather would constitute additional telephone subsidies to the Virgin Islands. In general terms, the FCC subsidies are granted directly from Washington to each carrier; they are not part of a single allocation to a state or territory such that adding a new carrier would diminish revenues to an existing carrier.
Balmoris is an official of what had been the FCC's Common Carrier Bureau; it recently has been renamed the Wireline Competition Bureau, reflecting the commission's posture in favor of local telephone competition.
The Public Services Commission is the best judge of its own powers, Balmoris said, declining to comment on whether he felt the local agency did or didn't have the authority to grant Choice an ETC designation. The PSC's hearing examiner for the matter, attorney Rosalie Simmonds Ballentine, had told the PSC that it could not issue such a designation because Choice is a federally licensed entity.
As to eligibility for subsidies drawn from the Universal Service Fund charges laid on most mainland telephone users, Balmoris said that Choice would have to go through two processes before it could receive such funds:
It would need to be designated an ETC, then it would have to meet various FCC operational requirements. In other words, Choice would have to file an annual certification that it was meeting FCC standards for telephone service, and it would have to report the number of lines that it was serving.
Balmoris said that as a competitive carrier, Choice, unlike the incumbent carrier (Innovative), would not have to file cost figures to secure the subsidies; it would simply receive payments at the same rate per line that is provided to Innovative.
Some incumbent carriers in other parts of the country have appealed to the FCC to stop providing subsidies at the same rate per line to their competitors, but no action is foreseen on this appeal in the immediate future.
The potential benefits to Choice would be substantial. The monthly High Cost Loop subsidies to Innovative Telephone per line totaled $17.41 per month when last calculated, a little over a year ago, by the Source. (See "Phone company's federal subsidies exceed $33M".)
The High Cost Loop subsidy is only one of the subsidies enjoyed by Innovative; the total level of subsidies per line per month was $41.40 as of February 2003.
The FCC official said that even if the presence of competition were to cause Innovative Telephone to lose customers, it would not adversely affect the total amount of the High Cost Loop subsidy flowing to Innovative.
The pending decision by the FCC on whether to grant ETC designation to Choice Communications is one of three bearing on the issue of local telephone competition in the territory.
Another concerns a lawsuit Choice has pending in District Court appealing the PSC's decision not to lift the rural exemption now held by Innovative Telephone. A rural exemption allows an operating local phone company to refuse — as Innovative has done — to lease its network to competitors at wholesale rates.
Choice's legal brief argues that Innovative is now sufficiently large that it no longer needs such an exemption, and that access by Choice to wholesale rates is needed for meaningful local phone service competition in the islands. This matter first came before the PSC three years ago.
The third relates to Choice's desire for access to a broadband facility called a DS3, a system which permits the rapid transmission of voice messages and other data. Innovative has such a facility; Choice's petition before the PSC, where the issue has been in play for two years, states that Innovative will not lease the DS3 to its competitor.
Thus, three decision-making agencies will have an impact on the question of local telephone competition, or lack thereof, in the Virgin Islands: the Federal Communications Commission, the U.S. District Court for the Virgin Islands, and the Public Services Commission.
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