Oklahoma regulators struggle to reform phone subsidy program

The Oklahoma Corporation Commission (OCC) is having a tough time reforming a $37 million telephone fund for rural carriers that was started in 1996 with the intention of keeping basic telephone service affordable in rural areas.

The High Cost Fund oversees the money, which is available to 37 phone companies in the state and which is funded by in-state, long distance calls costing between 3.1 cents and 4.7 cents per minute.

At least one part of the problem is that funding administration "isn't sufficiently transparent" and it's "impossible for the public to find out about how much each phone company is receiving from the fund," OCC Commissioner Bob Anthony told The Oklahoman.

"The gravy train just continues on and somebody's paying for it," Anthony continued. "But the problem is, the minutes of use it's based on just keeps diminishing. If you keep your wireline, your charge is going to keep going up because the base is shrinking."

The rural telcos, of course, feel differently--which is part of the reform stalemate. They're seeking a settlement abolishing the High Cost Fund and allowing rural phone companies to apply for reimbursement under the Oklahoma Universal Service Fund.

That settlement, in turn, is opposed by wireless carriers Sprint (NYSE: S) and Verizon (NYSE: VZ), which claim it just shifts existing problems over to a different funding source.

That's why the issue can't get resolved, said Commissioner Dana Murphy.

"You push on one thing, you've got a lot of unintended consequences somewhere else," she said. "To do our job appropriately, you don't just make a decisions and let whatever happen."

For more:
- the Oklahoman has this story

Related articles:
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Members of Congress seek flexibility in FCC's rural broadband requirements
CenturyLink challenges Colorado PUC's decision to end $50 million rural phone subsidy program

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