Company Takes Issue With Ruling: Alltell Disagrees With KCC Decision on Universal Service Funds

By Scott Rothschild, Journal-World, Lawrence, Kan.

Sep. 22–TOPEKA — One of the major issues facing rural Kansas has been the need for better telephone and Internet service.

Now a telecommunications company says Kansas regulators have hurt efforts to improve that situation.

In a recent ruling, the Kansas Corporation Commission has prohibited spending Federal Universal Service Funds by eligible telecommunications companies in areas also served by Southwestern Bell Telephone, which is doing business now as AT&T Kansas.

Alltell Communications Inc., a Little Rock, Ark.-based company that serves rural Kansas and 30 other states, says the commission’s order bans “the investment of millions of dollars in federal universal service support in 110 rural communities for the benefit of 718,285 Kansas consumers simply because AT&T also serves those rural communities.” None of those communities are in Douglas County, but many are in the eastern portion of the state, such as Yates Center, Iola and Coffeyville.

Alltell, and several other companies, have filed a motion asking the commission to reconsider its decision. Commissioners are expected to rule on that request later this month.

The Federal Universal Service Fund generally is paid for by telephone customers. The fund is then used to ensure that services and rates in high-cost rural areas are comparable to those in less-costly urban areas.

But in a recent 2-1 decision, the commission said that in areas where AT&T competes with Alltell, that Alltell shouldn’t receive support from the fund because AT&T doesn’t. The commission said rules governing the fund should be competitively neutral, meaning that they don’t unfairly provide an advantage to one provider over another.

But Robert Krehbiel, who recently left the commission to work for Gov. Kathleen Sebelius to oversee gambling issues, dissented.

Krehbiel said the majority’s refusal to allow the funds to flow to the smaller telecommunications company turns the federal policy “on its head and is poor public policy.”

Steve Mowery, Alltell’s vice president for public policy, argued in testimony to the commission that AT&T does receive subsidies from charges “that were implemented during the monopoly era of telecommunications.”

He said the commission’s decision would harm customers “in a misguided attempt to protect (AT&T) from competitors.” And no other state has ruled as the KCC has, he said.

But AT&T says the KCC decision prevents other companies from having an unfair advantage.

James Stidham Jr., associate director of corporate regulatory planning and policy for AT&T, said the commission’s decision prevents the other companies from using funds meant for a high-cost area and diverting that to serve non-high cost areas. Alltell denies that is taking place.

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