Rural phone subsidies to be reviewed
CenturyLink garners $50M to provide service in isolated towns
The Colorado Public Utilities Commission has agreed to review phone coverage and subsidies for rural areas in the state. The end result may be a discontinuation of subsidies for rural landline service and higher rates for rural customers in some areas.
“They want to determine where there is effective competition in the state,” PUC spokesman Terry Bote said. “And where there is, they will eliminate subsidies from High Cost Support (Mechanism) funding.”
Bote said the commission in its decision made Tuesday defined “effective competition” as three or more facilities-based providers in a wire center, which is where phone lines from an area converge at a common switch.
The subsidies currently pay CenturyLink, which is considered the provider of last resort in Colorado, about $50 million a year. The subsidies were created to reimburse providers for delivering service to areas that otherwise would be too expensive to serve.
In these tight budget times, Colorado lawmakers had been planning to begin phasing out the high-cost fund during the last legislative session but the measure was shelved. The Colorado Office of Consumer Counsel has also been pushing for the PUC to review the High Cost Support Mechanism.
But the providers themselves say, despite better technology, Colorado’s mountains are still there.
Establishing wireless or satellite service in remote areas is just as difficult as connecting rural areas always has been, and an end to subsidies could raise prices for rural homes, farms and ranches and businesses, said Pete Kirchhof, executive director of the Colorado Telecommunications Association.
The group represents small, rural telephone companies, including the Farmers Telephone Co. in Pleasant View in Montezuma County as well as the Delta and Nucla-Naturita telephone companies.
CenturyLink said it’s concerned how the PUC will determine the areas that have sufficient competition to phase out subsidies.
“It will make it very difficult, it’s safe to say, for rural Colorado to get affordable, basic telecommunications services,” said CenturyLink spokesman Randy Krause, although he said it’s not clear yet which areas will be affected or how much of a rate increase CenturyLink would have to charge in the areas where subsidies are eliminated. “It shouldn’t be a big concern for towns like Durango and Cortez, but it will be for the outlying areas that surround them.”
Bonnie Petersen, executive director of Club 20, said the decision harms rural efforts to improve broadband service. If the decision includes wireless service as a viable competitor, consumers could pay higher phone rates, Petersen said.
The commission expects to begin its survey of the 208 wire centers in the state in January, a process that is expected to last four to six months, Bote said.
“And, of course, companies can still submit applications for review if they believe there are mitigating circumstances,” he said.
The review may come down to a matter of definitions.
“The definition of basic service is a single voice-grade telephone line,” Petersen said about the PUC. “We need to redefine basic service to say that it includes some level of broadband, which seems appropriate in this day and age considering nearly every person accesses their telecommunication service, which includes some level of data.”
“Just because you’re in a rural area, it doesn’t mean you’re not marketing worldwide,” he said. “Being rural doesn’t mean your business has to be.”
firstname.lastname@example.org The Associated Press contributed to this story