April 10, 1998

Separate Statement
of
Commissioner Susan Ness

Re: Report to Congress on Universal Service

Today's Report to Congress reaffirms the institutional commitment of the Commission to the statutory goals of universal service. For me, this is a matter of personal commitment as well.

Americans are a heterogeneous people, but we comprise one nation. Rich or poor, black or white, rural or urban, each of us benefits from the availability of affordable telephone service -- not just for ourselves but for everyone else. That's why Congress made universal service a cornerstone of the Telecommunications Act of 1996, and that's why the Commission has worked so diligently with the state commissions, our partners, to promote telecommunications access for low-income consumers and consumers in remote, insular, and high-cost areas, as well as for eligible schools, libraries, and rural health care providers.

Universal telephone service has long been a national goal, and it is a goal we have generally achieved. Today, having the opportunity to use the telephone network is more essential than ever before for participation in our nation's society, culture, and economy. That's why Congress has so clearly stated its intention that telephone service be ubiquitously available and affordable. To achieve this goal in a marketplace in which additional competition is developing, and desirable, Congress called for universal service support that is "specific," "predictable," "sufficient," "explicit," and collected in an "equitable and nondiscriminatory" manner.

This Report is far from a final answer to all of the questions surrounding universal service. The Commission has devoted a great deal of time to universal service over the past two years, and it will continue to do so in the future. Major issues remain to be worked through, but our work on this Report to Congress has moved us forward.

I have appreciated the opportunity to take a fresh look at these critical issues. Preparation of this Report has afforded all of us an opportunity to concentrate intensively on the vital importance of universal service -- enabling a new group of Commissioners to evaluate, on a fresh record, the decisions of the former Commission members, to assess present circumstances, and to lay the groundwork for the decisions that will be necessary in the future. And, of course, this Report will assist Congress in its oversight of the Commission, and facilitate informed judgments about whether to provide

additional legislative guidance on any of the myriad issues that have arisen in the implementation of the Telecommunications Act of 1996.

High-Cost Support

On universal service support for consumers in high-cost areas, the most important message we are sending today is one of reassurance. Contrary to the impression that may have been created by elements of the decision last May, the Commission does not contemplate diminishing the support that currently is provided from the interstate jurisdiction to maintain affordable telephone service. Although the statute calls for "Federal and State mechanisms to preserve and advance universal service," we don't yet have the answer to all the questions about how best to coordinate the respective roles of the state and federal commissions. But we can and do make clear that this Commission is not contemplating any precipitous action to reduce the high-cost support that is currently supplied by the interstate jurisdiction.

Rural telephone companies will operate essentially under the existing support system for years to come. The large telephone companies will continue to receive many billions of dollars of intrastate and interstate support, though implicit mechanisms will be converted to explicit ones. The specifics need to be worked through in partnership with the states, including universal service "contributor" states and "recipient" states, to forge a mutually agreeable solution that will be enduring. I will redouble my efforts to bring to a successful conclusion the long-pending efforts to forge a workable consensus. In doing so, it is my firm intention to continue to deliberate, and strive for consensus, with state commissioners and staff, through the Joint Board, the NARUC Communications Committee, and all other available channels.

Telecommunications Services and Information Services

This Report has given us an opportunity to review the legal analysis, and the practical consequences, of our prior determinations regarding the statutory definitions of "telecommunications," "information services," and related terms. As a legal matter, the Commission is renewing its determination that the Telecommunications Act should be read to affirm the unregulated status of information services, including Internet access services. I firmly believe that this decision is supported by the statute and the legislative history, and that it has stimulated and will continue to promote desirable investment and innovation. As a practical matter, the Commission has learned that the relationship between information services and telecommunications is symbiotic. The explosion in information services in general, and Internet usage in particular, is stimulating demand for underlying telecommunications services, thereby ensuring the sufficiency of sources for universal service support.

The relationship between telecommunications and information services is a topic that will require further rulemakings or adjudications, for example, to examine such matters as IP-based telephone services (as distinguished from Internet access services which we have not regulated and do not intend to regulate). We need to make sure we have all the facts, and have considered all of the potential ramifications, before we make any particularized determinations. We will also need to consider issues relating to "bundled" offerings that include both telecommunications services and other services. Definitive answers on these topics are not at hand. But, because of the continuing growth of the telecommunications market and the success of the policy of non-regulation of information services, I am confident that it will in fact be possible to (1) safeguard universal service support, including that needed for high-cost areas, and simultaneously (2) avoid stifling the development or deployment of innovative new information services.

Schools, Libraries, and Rural Health Care Providers

This Report does not address the low-income support mechanism, but it is important to note that this mechanism -- like pre-existing high-cost support -- is continuing; in fact, federal support has been increased. Meanwhile, the Commission has launched the new support mechanisms called for by the Snowe-Rockefeller-Kerrey-Exon provisions (Sec. 254(h)) of the statute, for schools, libraries, and rural health care providers. As a result, all phases of universal service support -- high-cost, low-income, and Snowe-Rockefeller -- are now operational.

I remain convinced that implementation of Section 254(h) will bring extraordinary benefits to children, to rural health care patients, and to library patrons across the nation. I know there have been criticisms of certain decisions that have been made in the course of implementing this visionary, but in some respects ambiguous, provision of the law. I stand ready to work with Congress to explain our past decisions, or to assist in assessing alternatives. If new legislative guidance is to be provided, I hope that it can be effectuated without unduly disrupting the plans of thousands of schools, libraries, and rural health care providers across the nation who are eager to seize the opportunities the legislation created.

I look forward to an active and constructive dialogue with Congress, as well as with the state commissions, as we continue our efforts to implement the universal service provisions of the Telecommunications Act of 1996 for the benefit of all.