Phone subsidy reform is on the way

The Colorado Public Utilities Commission confirmed plans Monday to move forward with phasing out subsidies to telephone providers in certain isolated parts of the state.

For almost 20 years, the state's High Cost Support Mechanism has expanded landline phone access to rural homes and businesses where infrastructure would otherwise be too costly for private providers. Paid for with phone bill surcharges, the high-cost fund totaled $54 million in 2012, and more than 90 percent went to CenturyLink, the main provider of last resort in Colorado.

Some state lawmakers have argued that the high cost fund is outdated in the age of cellphones and alternative means to get phone service, like Voice Over Internet Protocol. A Senate bill to phase out the subsidies gradually by 2025, meanwhile shifting a portion to broadband development, stalled in committee in May.

Last month, the PUC indicated it would eliminate subsidies in areas deemed to have adequate market competition between providers. But the commission only published a written order on the new policy this week.

The PUC will begin a six-month review process in January to determine where "effective competition" exists. After initially indicating it would define "competitive" as three or more providers in a given service area, the PUC ultimately left room for maneuvering with the more ambiguous "multiple providers", spokesman Terry Bote told The Denver Post.

It remains to be seen whether Montezuma County will be affected.

"The commission has not yet made any determinations. This is the first step," Bote said. "There will be plenty of opportunity for folks to provide input or comment in the next round of talks in 2013."

The Colorado Telecommunications Association, a group that represents 25 small carrier operations including Pleasant View-based Farmer's Telephone Company, is opposed to the decision.

In a statement, executive director Pete Kirchhof said he fears CTA members' "ability to provide quality telephone service at an affordable price for rural Colorado residences, farms and ranches, businesses and critical community services, is in serious jeopardy."

For its part, CenturyLink isn't too keen, either.

"Essentially there are a lot of open questions around the order," said Jim Campbell, regional vice president for regulatory and legislative affairs. "I think those areas the PUC decides are effectively competitive are going to encompass a lot of rural customers that have no alternative."

Campbell expressed concern about the large size of certain wire centers - geographical regions served by a central switch office. If a small portion was considered competitive, it might entail removing subsidies from the whole wire center, including the rural corners, he said.

Campbell gave Southwest Colorado as an example: the wire center around Cortez encompasses 1,032 square miles, of which cable landlines serve only 25 square miles.