December 30, 1997
SEPARATE STATEMENT OF COMMISSIONER MICHAEL K. POWELL
Re: Fourth Order on Reconsideration, Federal-State Joint Board on Universal Service (CC
Docket No. 96-45), Report and Order, Access Charge Reform, Price Cap Review for
Local Exchange Carriers, Transport Rate Structure and Pricing, End User Common Line
Charge (CC Docket Nos. 96-262, 94-1, 91-213, 95-72).
I write separately to explain the bases upon which I agree with this Fourth Order on
Reconsideration. While I believe that this Commission needs to re-examine some of the central
issues involved in universal service, those issues are not squarely presented in this order.
Rather, this order makes minor adjustments to a universal service framework that, if one assumes
the framework is valid, are themselves relatively unobjectionable. Consequently, I concur in the
actions taken here pending further review of the framework itself.
On previous occasions, I have made clear my support for the universal service programs
that it is this Commission's duty to implement under the Telecommunications Act of 1996. I
wish to reaffirm that support now. The Act requires that the services designated for universal
service support be "available at just, reasonable and affordable rates" in "all regions of the
Nation, including low-income consumers and those in rural, insular and high cost areas." 47
U.S.C. § 254(b)(1), 254(b)(3). Further, the Act requires this Commission to establish programs
whereby schools, libraries and rural health care providers may receive services at discounted
rates. 47 U.S.C. § 254(h)(1). In addition, the Act requires this Commission to ensure that there
are "specific, predictable and sufficient Federal and State mechanisms to preserve and advance
universal service." 47 U.S.C. § 254(b)(5). I wholeheartedly endorse the overall goals of these
statutory provisions, and I know that the public interest will be well-served if we remain faithful
to the intent of these and other provisions in implementing universal service programs.
At the same time, I firmly believe that programs as immense and complex as these, no
matter how worthy, should be subject to a constant and searching scrutiny. Such scrutiny is
critical for a number of reasons. First, because universal service programs will be funded by the
telecommunications industry, in which the Act compels us to promote competition, I believe we
must diligently police the growth of universal service programs, lest such growth imperil carriers'
efforts to bring the benefits of competition and innovation to consumers. In particular, we must
limit carriers' contributions to universal service to the amounts absolutely necessary to fulfill the
universal service statutory mandate. If subsidy programs get out of hand, they can dramatically
raise competitors' costs and skew the economic incentives to enter markets. While in this order
the Commission misses an opportunity to review the assumptions and structural underpinnings of
the Universal Service Report and Order,(1) certain aspects of the order, such as the conclusions
that the schools and libraries program will not fund either the purchase of wide area networks or
internal connections in non-instructional buildings, appear, at least, not to expand the scope of
universal service programs.
Second, because section 254 provides no basis for the Commission to favor certain
classes of recipients over others with respect to the level or timing of universal service support
flows, see generally 47 U.S.C. § 254, I believe that the various recipients of universal service
support are all equally entitled to benefit from such support. I think it is imperative that we not
allow some universal service programs to take priority over others.
Yet this order does not reach some of the more fundamental questions regarding universal
service that were reached by our predecessors, but which the new Commission has not had a full
opportunity to address. I am concerned, for example, that some universal service programs
(schools, libraries and rural health care) will draw on both interstate and intrastate revenues and
provide both interstate and intrastate support, whereas some programs will draw from only
interstate revenues and provide only interstate support (high cost and low income). Similarly, I
am concerned that our current interpretation of section 254(h)(2) and other provisions offers little
guidance or discipline to this agency with respect to the range of "advanced services" (beyond
Internet access and internal connections) that the Commission may ultimately determine must be
supported by universal service subsidies. I do not doubt that the previous Commission felt that
these approaches were reasonable ones, but given the size and importance of these programs, I
feel it is my obligation to turn a fresh pair of eyes to these topics, if only to comfort myself that
my predecessors did, indeed, decide these issues wisely.
As I have stated elsewhere, I am troubled that we are rushing to put in place mechanisms
and procedures for universal service that are premised on prior Commission decisions that will
be under reconsideration, even after this order. I fear that the institutional and analytical inertia
inherent in programs of this magnitude may make it near impossible to turn back some of these
initiatives if it is determined, upon further reflection, that these programs are not fully consistent
with our Congressional mandate. Nevertheless, I look forward to examining universal service
more thoroughly in the context of the Stevens Report, which is due to the Congress in April of
next year, and I urge my colleagues to do the same.
1. 1 Federal-State Joint Board on Universal Service, Report and Order, CC Docket No. 96-45, FCC 97-157, 12
FCC Rcd 8776 (rel. May 8, 1997).