Federal funding for rural wireless coverage debated

Published 4:00 am Monday, December 3, 2007

Avion Water sends up to 18 people out in the field at a time, spreading from La Pine to Powell Butte. They keep in touch with the Bend office by cell phone. Most of the time.

In rural areas, the company’s crews often encounter dead spots, according to service manager Mark Kerns. When it happens, the crews switch to backup radios. But Kerns wishes he could just use cell phones. They’re cheaper to maintain, and if they were more reliable, he wouldn’t have to worry about radios. “They’re just an extra deal you have to operate and maintain,” Kerns said.

Cell phone coverage will never blanket 100 percent of the state, says Oregon Public Utilities Commissioner Ray Baum. But he believes cell phone coverage could improve in rural portions of the state if recent recommendations to the Federal Communications Commission are implemented.

Baum, who helped draft the recommendations that were delivered to the commission before Thanksgiving, wants to cap the amount of money the FCC distributes from the $7 billion Universal Service Fund, created by Congress to subsidize phone service in rural areas. Wireless and landline phone customers pay a small amount to the fund every month.

At least one local wireless provider objects to the proposed changes. Chicago-based U.S. Cellular Corp., which has built several cell towers in Central Oregon, says altering the way money is distributed from the Universal Service Fund will slow or stop the building of new cell towers in rural areas.

“What it does is stop companies like us from going in a rural area where there’s not enough population or business activity to sustain the investment in a tower,” said CEO John Rooney. “So when you say you are going to cap the fund, you are making an arbitrary decision to effectively limit wireless access to rural areas.”

Rooney argues such a move would “violate the tenor” of the Telecommunications Act of 1996. The law created the Universal Service Fund with a mandate to make wireless, broadband and telephone services affordable in “high-cost” areas. High cost refers to the cost of infrastructure.

Rooney said it costs $300,000 to build a cell tower and untold more in maintenance costs throughout its life.

Baum supports a cap because he believes the money distributed by the Universal Service Fund subsidizes competition in rural areas, rather than help to build infrastructure.

“Mainly it’s used to get more customers out of small towns,” Baum said of placing towers close to towns where service might already exist, rather than more rural areas lacking service.

Baum, who sits on the Federal-State Joint Board on Universal Service that issued the recommendations two weeks ago, would like to see the fund become an infrastructure-based fund that is allocated to companies that build towers in unserved areas.

The commissioner would prefer to send Universal Service Fund money directly to states, rather than wireless companies. The states would identify areas with poor cellular coverage and then use a competitive process to entice companies to build and operate new cell towers.

“We just want to target the money more effectively … ,” Baum said.

Baum pointed out that wireless companies “have made some incremental improvements in serving some unserved areas with the money they’ve gotten.” But most of the money, Baum said, “has gone to get customers in areas they already would have been.”

Rooney supports reforming the Universal Service Fund but would prefer to see more support for wireless companies and less for landline companies. Compared with regular telephone service, wireless service offers mobility and improves public safety, he said.

“If you’re in the middle of Oregon and your car goes off a cliff, you’re not going to find a pay phone on the side of the road to help you out,” Rooney said.

Rooney also disputes the infrastructure bidding process the recommendations propose because wireless companies use different protocols to run their networks.

Change may not be coming anytime soon, however. The recommendations are just recommendations, Baum said, and the FCC is not required to act upon them. Any recommendations that would become actual rule-change proposals would have to survive challenges, including a public comment period and a vote of the full FCC board of commissioners, he said.

Baum said the commission is not likely to seriously consider the issue until after the 2008 presidential election. A new president would likely alter the makeup of the FCC’s five-member board, and the commission wants to respect that, Baum said.