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CenturyLink challenges Colorado PUC's decision to end $50 million rural phone subsidy program

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CenturyLink (NYSE: CTL) has filed suit in Denver District Court challenging the Colorado Public Utilities Commission's move to eliminate the state's $54 million rural phone service subsidy program.

The telco, which gets about $50 million every year from the Colorado High Cost Support Mechanism (CHCSM) as a provider of last resort (POLR) for voice service, wants the Denver District Court to review the PUC's plans.

"The commission's new 'effective competition' criterion is a legally improper basis for determining CHCSM funding meant to cover the increased provider costs of rural service," CenturyLink wrote in its lawsuit filed on April 11. "The commission's new CHCSM rules will harm CenturyLink by reducing its CHCSM funding and by requiring it to expend significant resources to participate in legally flawed adjudications to maintain funding to which it is legally entitled."

Last December, the Colorado PUC decided to stop paying subsidies for phone service in remote parts of the state. It argued that the growth of competition between service providers in Colorado "no longer justifies subsidies to those providers."

Colorado's lawmakers also have their own ideas about what to do with the funds. State Senate President John Morse (D-Colorado Springs) would like to use them to subsidize broadband service in unserved and underserved communities.

In a draft version of his bill that was obtained by The Denver Post, Morse defined "unserved" areas as those that can't get access to a 4/1 Mbps connection, while an "underserved" community is one where "a substantial number, but not a majority" can't get access to these speeds.

Morse's proposal aims to use the money the PUC says is no longer necessary to subsidize phone service in areas where there are various options for phone service by 2025. Based on estimates the PUC issued last year, the figure would be between $10 million and $20 million.

A similar telecom reform bill, SB-157, was postponed indefinitely last May in the Colorado State Senate Appropriations Committee. 

For more:
- The Denver Post has this article

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