July 16, 1998

Re: Federal-State Joint Board on Universal Service; (CC Docket No 96-45) .

I concur in today's decision to refer certain matters to the Federal-State Joint Board on Universal Service. For several months, I have advocated seeking Joint Board input for many of the difficult universal service issues that we face as a Commission,⁽¹⁾ and I support asking for such guidance here. I would have preferred seeking guidance on additional issues as well since this referral will necessitate missing the January 1, 1999 implementation deadline for a revised high-cost support mechanism anyway. I concur, however, because I disagree with some of the reasoning in today's Order.

First, it is unclear to me why we distinguish the 254(k) issues from the rest of the issues that are more officially "referred." The majority seems hesitant to refer the section 254(k) issues -- instead of an official recommendation the majority requests mere "input" -- concerning the recovery of joint and common costs, noting that section 254(k) "envisions separate state and federal measures related to the recovery of joint and common costs." Indeed in the original referral Order the Commission stated that: "the explicit use of the language 'the Commission, with respect to interstate services, and the States, with respect to intrastate services,' indicates that Congress intended to give the separate jurisdictions the flexibility to review these issues separately."⁽²⁾ I do not disagree that section 254(k) envisions such a separation,⁽³⁾ but similar language inferring such a separation can also be found in section 254(h)(1)(B) regarding the setting of the discount rate for schools and libraries.⁽⁴⁾ And the language in 254(h)(1)(B) did not prevent the Commission from referring that issue to the Joint Board, from seeking a "recommendation on how the respective State and Federal discount methodologies can be harmonized . . . ,"⁽⁵⁾ or from requiring "states to establish intrastate discounts at least equal to the discounts on interstate services as a condition of federal universal service support for schools and libraries in that state."⁽⁶⁾ While I see no meaningful distinction between providing an official "referral" and asking for "input," I fear that the majority may. I would prefer that the Commission be more consistent in its approach to referring issues with limiting statutory language.

In addition, I am concerned about the reorganization of the issues to be referred. For example, the Joint Board asked to review "the revenue base upon which the FCC should assess and recover provider's contributions."⁽⁷⁾ But, in our reformulation of the issue we have limited it to the high-cost context, while the issue also arises for the schools and libraries and rural health care programs. The analysis of this issue necessarily has legal implications for more than just the high cost fund. Indeed, in reconsidering the issue, the Joint Board will need to decide whether the Commission has jurisdiction to assess on intrastate revenues -- regardless of whether it chooses to exercise that jurisdiction. This decision would obviously impact the schools and libraries and rural health care program's current assessment on intrastate revenues as well. Thus, I am concerned that we may have inadvertently limited the Joint Board's options to a one-way ratchet -- either leave the assessment for high cost on interstate revenues or assess on intrastate revenues as is done for the schools and libraries and rural health care programs. Nevertheless, I concur in today's Order because I believe the Joint Board is free to consider and make recommendations on any issue that they choose; the Joint Board is not bound or limited by this Commission's referral.

As I stated at the FCC's Reauthorization Hearing before the Subcommittee on Communications of the Senate Committee on Commerce, Science, and Transportation, I am disappointed that the Commission is referring some aspects of the high-cost program back to the Joint Board, precipitating a need to miss the January 1, 1999 implementation date, while at the same time moving full steam ahead on other new universal service programs. I am uncomfortable that we are again delaying the resolution of the high-cost universal service issues even as we proceed with the implementation of the schools and libraries program. This discrepancy is not what congress intended or the 1996 Telecommunications Act required. Despite these concerns, however, I fully support referral of these issues to the States who alone may be in a position to find the best answers to the high-cost issues.

7. Letter from the State Members of the Joint Board to William Kennard, Chairman, FCC, CC Docket No. 96-45 (filed June 18, 1998).