Nemont Explains USF/ICC Issues to Sen. Tester

Facing possible decreases in revenue due to possible policy decisions in Washington D.C., Nemont attempted to make its case the morning of Tuesday, August 9, at its Scobey headquarters with U.S. Senator Jon Tester (D-Mont.) as its guest.

Accompanying Senator Tester to the meeting held in the board room were three of his staff members — Press Secretary Andrea Helling, State Director Dayna Swanson of Missoula and Field Director Penny Zimmerman of Glendive — and local liaison Julie French. They were joined by 29 employees/board members of Nemont and a representative of the Daniels County Leader newspaper.

At issue are possible reforms by the Federal Communications Commission (FCC) concerning the Universal Service Fund (USF) and Inter-Carrier Compensation (ICC).

The reality of the reforms as proposed would be Nemont and Project Telephone revenue would decrease by 13 percent, it read on the power-point screen.

“Thirteen percent doesn’t kill us but it puts us in a position to make some tough decisions,” Nemont’s Jerry Tilley, who conducted the meeting, told Senator Tester. “We could have to cut some jobs.”

Another example presented of the reality of reforms as proposed was Sagebrush Cellular revenues could decrease by as much as 37 percent.

“Either we dramatically change (the model of Sagebrush) or the rest of the company picks up” the slack by subsidizing it, Tilley said.

If the reforms go through, the following could possibly happen:

• could have to raise rates by as much as four times higher;
• reduce expenses, which could mean lost jobs;
• stops forward progress — no broadband for many customers;
• impedes ability to maintain and support current networks.

“We’ll make sure nothing slips through the cracks,” said Senator Tester.

Federal rules provide rural telecom companies and cooperatives with the USF, which reimburses these companies a portion of the costs that they incur to provide service in high-cost rural areas. Mandatory contributions to the USF are made by all companies that provide certain interstate communications service. Rural telecom companies and cooperatives rely on the USF to build and maintain broadband-capable networks throughout the country.

The FCC now wants to extend the success of rural telecom companies and cooperatives to areas served by vastly larger telephone companies. While this goal could be accomplished in ways that continue to ensure broadband for all Americans, the FCC proposes instead to reduce support for rural companies, and redistribute those resources to companies that have not made comparable investments in rural America.

This approach may reach unserved customers of the larger companies, but would make existing network investments of rural telecoms and cooperatives unsustainable; many rural telecom companies and cooperatives would either need to charge unaffordable rates in order to cover costs, or cut spending on broadband deployment and network maintenance.

Since broadband networks support tele-healthcare, tele-education, public safety, and economic activity, the negative impacts would be felt widely throughout communities served by rural telecom companies and cooperatives.Much of Nemont’s past expansion has only been doable because of USF.

Along with the possible reform of USF, the FCC is also looking at reforming Inter-Carrier Compensation (ICC), or the way telephone companies pay each other for the use of their respective lines.

Combined, USF and ICC represent a significant portion of Nemont’s total revenue.

More information on these issues is available on-line at: http://saveruralbroadband.org/

This is a national issue affecting all rural telecommunications providers across the U.S.