As the Maine Public Utilities Commission starts to evaluate FairPoint Communications’ request for $67.6 million from a state fund used to offset the cost of providing telephone service in high-cost, rural areas, the conversation will inevitably become a much broader one.
The question isn’t only: Is FairPoint entitled to nearly $68 million to fulfill a responsibility it has under state law to provide basic phone service to its entire coverage area — both to profitable and unprofitable areas?
Rather, that question is the spark for an array of policy conversations about how Maine ensures its most rural residents have access to the telecommunications services they need for public safety purposes and for simply getting along in the 21st century.
FairPoint is requesting the nearly $68 million from the Maine Universal Service Fund, an account that currently is set aside for about 20 small companies across the state that serve as the “providers of last resort” in rural areas that competitive providers are resistant to serve. Those small phone companies — with about 150,000 total customers — receive about $8 million to $9 million annually; FairPoint traditionally hasn’t qualified for Maine Universal Service Fund money.
(And although those companies continue to lose traditional landline phone customers, those same companies are also building out their broadband Internet networks. Plus, cellphone service providers largely depend on those existing networks to offer coverage.)
In the end, it’s possible that both the Public Utilities Commission and the Maine Legislature will weigh in on the FairPoint matter. One question that’s likely to be broached is whether Maine should continue to have a “provider of last resort” requirement that ensures all Maine households have access to, at least, basic phone service.
We think it unwise for the state to dispense with such a requirement. For one, it simply wouldn’t be right. All Maine households deserve at least a basic level of affordable telecommunications service for, at a minimum, the ability to call 911 in an emergency.
And if the state were to eliminate that requirement, the companies that offer the service would still be faced with federal requirements that might be impossible to fulfill without the benefit of some state-level support.
A more important question to consider is, what should the requirements be for basic service? Should the basic service requirement simply be phone service, or should all households be guaranteed access to broadband Internet as well?
The Federal Communications Commission in recent years has shifted the focus of its Universal Service Fund to encourage telecommunications companies to expand broadband service to rural areas that aren’t yet connected. FairPoint has started to qualify for some of those grants — from the Connect America Fund — to extend the reach of its broadband services and to increase speeds in some of its existing coverage areas.
Whether Maine includes broadband as part of its basic provider of last resort requirement is a conservation worth having in the Legislature.
As it seeks money from the Universal Service Fund — which all Maine customers pay into through their phone bills — FairPoint rightly points out that it’s subject to a requirement to which competitors such as Time Warner and Comcast are not. They can choose the markets they want to enter and leave them if it becomes unprofitable to serve them.
That consideration might lead the Maine PUC to determine FairPoint is entitled to some level of Universal Service Fund support, if not $68 million. If the PUC makes that determination, it might view any support for FairPoint as an investment from which the state should expect a return. That return might include stipulations that the company extend the reach of its broadband network in exchange for state support and, potentially more importantly, provide higher-speed service in some of the areas it already does serve with broadband.
And, as the PUC decides on FairPoint’s request, it needs to keep in mind that the state’s more than 20 smaller providers of last resort could be preparing to line up next for an increase — though a much smaller one than FairPoint’s $68 million request — in their Universal Service Fund disbursement.
Those smaller providers aren’t yet eligible for the federal Connect America funds that larger providers like FairPoint have received. Without their usual federal funding stream, they’re absorbing the loss of a significant source of support that has traditionally allowed them to serve as providers of last resort in high-cost service areas.
The same question would also apply to those small providers: Should they be required to ensure that broadband reaches Maine’s most remote customers?