SEPARATE STATEMENT OF COMMISSIONER KATHLEEN Q. ABERNATHY
      
	Re: Federal State Joint Board on Universal Service, CC Docket No. 96-45  
	(rel. Oct. 15, 2002)

      I applaud the Joint Board’s recommended decision that responds to issues raised 
by the remand of the Commission’s non-rural mechanism by the Tenth Circuit in Qwest 
Corp. v. FCC.    Today’s recommended decision responds to the court in several 
important respects.  First, the Commission provides a more rigorous analysis of the cost 
data in the record to establish the cost-based benchmark that triggers support for non-
rural carriers.  Utilizing cluster and standard deviation analyses, the Joint Board 
concludes that a benchmark set at 135% of national average cost is the appropriate trigger 
for federal support.  This conclusion is consistent with the results of a recent General 
Accounting Office study that concluded that current rural and urban rates were not 
appreciably different under our existing universal service support structure.   As a result, 
I do not believe that the case has been made for radically altering the benchmark.  The 
underlying data and the ultimate apparent success of our existing structure counsel a 
more consistent approach.  
      
      Although some have been critical of this data, there is nothing in the record that 
recommends a different result.  Moreover, basing the benchmark on an urban average 
cost would not alone alter the level of support, but it would create a false sense of 
urgency around requiring higher levels of support ? a conclusion unsupported by the 
statistical data or the GAO study.  Our goal is to provide federal support based on costs 
that permit states to set urban and rural rates that are reasonably comparable.  Granting 
support to high-cost states so that their net costs more closely resemble the national 
average is designed to allow them to set rates close to the national average.  In turn, this 
process should result in urban and rural rates that are reasonably comparable.  In contrast, 
a national urban average (a number inherently lower than the national average) would use 
federal support to drive costs down to the lower-than-average urban level without any 
evidence that affordability concerns warrant such a step.  Our paramount goal in this 
proceeding is to ensure reasonably comparable rates ? not to provide federal support to 
reduce the overall rate structure.  Indeed, establishing a massive subsidy to drive rates 
down not only is unsupported by existing data on affordability but also would threaten to 
undermine our ability to provide support to other universal service programs that also 
have significant needs.
      
      Second, the Joint Board has responded to the court’s charge to create a state 
inducement mechanism to ensure that the rates actually paid by consumers are reasonably 
comparable.  By requiring states to provide a certification and data about the 
comparability of urban and rural rates, the Commission ensures that ultimate rates as 
engineered by the state regulators reflect the same equity as the cost analysis and support 
provided at the federal level.  In the event that state action and federal cost-based support 
prove insufficient, we have also created a mechanism for states to make individualized 
showings that modification of the cost benchmark or additional tailored support is 
warranted.
      
      All members of the Joint Board worked extremely hard to develop this process to 
ensure the continued success of the universal service support mechanism for non-rural 
carriers.  We are all deeply committed to this goal.  I look forward to working with my 
colleagues at the FCC and the Commission’s staff to review these recommendations and 
promptly implement a non-rural support mechanism consistent with the Tenth Circuit’s 
directives.   
  258 F.3d 1191 (10th Cir. 2001).   

    United States General Accounting Office, Telecommunications: Federal and State Universal Service 
Programs and Challenges to Funding (GAO-02-187, Feb. 4, 2002) (GAO Report).   I also agree with the 
Recommended Decision that, because of the substantial differences in rate structures among states, it would 
not be feasible to base the support mechanism on rates alone (as opposed to costs) even if the rate survey 
identified greater disparities.  Moreover, if states could obtain additional universal service support for 
carriers merely by manipulating their rate structures, I believe that would invite abuse and ultimately 
frustrate the objectives set forth in the statute.