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March 1,
2005 Hon.
Ted Stevens, Chairman, Senate Commerce Committee
Hon.
Daniel Inouye, Ranking Member, Senate Commerce Committee
United States Senate
Washington, DC 20515 Dear
Senators Stevens and Inouye: On
behalf of our respective members in thousands of rural communities across America,
we seek an opportunity to join in your ongoing dialogue about telecommunications
policy reform, and to raise one specific issue that requires your immediate attention.
As
you know, four of the nation's largest telephone companies - Verizon, SBC, AT&T,
and MCI - have proposed merging into two even larger corporations. Because these
four companies are the nation's largest providers of long-distance, with a combined
share of 60% of households with such service, they are also the largest contributors
into the federal Universal Service Fund.
Although we are not taking a position on these mergers, we are concerned by the
prospect that such a large portion of the USF revenue base (as much as $2 out
of every $3 now entering the USF, by some estimates) could be generated by just
two companies, especially since one of them was recently sanctioned by the FCC
for illegally withholding millions in USF contributions. This worrisome concentration
of USF revenue is made all the more vivid by the fact that these companies are
aggressively making investments in affluent, urban and large enterprise markets,
while many rural, low-income and small business consumers are struggling to keep
up in the digital economy. We
are not certain how this undesirable situation can be avoided short of reforming
the USF contribution methodology before the mergers are finalized (which may be
unrealistic), or imposing specific, USF-related and/or internal cross-subsidization
conditions on these mergers. But because the USF is so critical to the health
of the rural economy, we encourage you to exercise your full oversight authority
in this matter and ensure the continued stability of the USF if these mergers
proceed. We
have additional ideas on ways to strengthen and modernize rural telecom infrastructure
and the USF, and we look forward to a dialogue with you. Sincerely,
William
Steel
The National Grange President | Cc: | Members
of the Senate Commerce Committee and House Energy and Commerce Committee
Hon.
Kathleen Abernathy, Federal Communications Commissioner
Members of the Federal-State
Joint Board on Universal Service
Lisa Zaina, CEO, Universal Service Administrative
Company |
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