Colorado PUC phases out remote telephone service subsidies

Critics say move will drive up consumer costs
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The Colorado Public Utilities Commission's (PUC) recent decision to stop paying subsidies for phone service in remote parts of the state is drawing fire from local telcos and consumer groups who argue the measure will result in higher consumer costs.

PUC members justified their decision by saying that the growth of competition between service providers in Colorado "no longer justifies subsidies to those providers."

Pete Kirchhof, executive director of the Colorado Telecommunications Association, which represents rural independent telcos including Delta and Nucla-Naturita Telephone Company, said taking these subsidies away could lead to higher service prices for rural residents, farmers and businesses.

This measure is just as much of a concern to the state's largest telco, CenturyLink (NYSE: CTL), which receives about $50 million annually from the subsidy program as a provider of last resort (POLR) for voice service.

"It will make it very difficult, it's safe to say, for rural Colorado to get affordable basic telecommunications services," said Randy Krause, a CenturyLink spokesman.

While basic POTS voice service is certainly a big focus of the PUC's decision, Bonnie Petersen, executive director of Club 20, said it could also have implications for wireless and wireline broadband services. She added that the definition of basic telecom service, which only takes into account basic voice service, should also include broadband data.

The issue of providing subsidies for basic voice service in Colorado emerges at a time when federal regulators have been reworking the Universal Service Fund (USF). Last year, the FCC voted to refocus the Universal Service Fund (USF) toward funding new broadband rollouts and placing a cap on calls for a cap on USF payments to rural telcos.

While the FCC maintains that the USF reforms are necessary, rural telco groups including the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO) and the Rural Broadband Alliance argue these measures will drive up prices and not create incentives for their members to invest in new broadband networks.

For more:
- The Gazette has this article

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