CTIA Urges Okla. Commission to Call It a Day on Connections-Based USF
Another possible increase to the Oklahoma USF surcharge shows the state’s 2021 switch to connections-based contribution was a “total failure,” CTIA claimed Monday. The Oklahoma Corporation Commission at a livestreamed meeting Tuesday considered increasing the Oklahoma USF (OUSF) surcharge to $2.02 per connection. OUSF Administrator Mark Argenbright disagreed with CTIA that the connections-based method is anticompetitive.
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At least two of three Oklahoma commissioners, Chairman Todd Hiett (R) and Commissioner Kim David (R), signaled support for the proposed increase. Despite long-held “reservations” on USF, Hiett thinks the commission is moving in the right direction, he said at Tuesday’s meeting. The chairman directed staff to draft an order that could be voted upon before the end of this month. Expect commissioners to vote on a draft order based on the current proposal at their July 27 meeting, said a commission spokesperson.
The commission is weighing a 10% increase to the OUSF contribution factor just seven months after increasing the surcharge by 61% to $1.85, CTIA wrote in case 2022-000045. “The necessity of another OUSF contribution factor increase so soon after the previous massive increase was approved is unfortunate, but unsurprising given the recent history of the OUSF," which "shows an unrelenting string of proposed surcharge increases, with the current proposal being the sixth proposed increase since March 2020.” Oklahoma switched to a connections-based method in response to claims it would create stability and equity, but it has "produced nothing close" to that, said CTIA: The new amount is more than double the 91 cent surcharge proposed in March 2020.
The commission can't promote telecom competition "while the OUSF continues to levy ever-increasing economic penalties on wireless consumers, including those who have chosen to switch from landline to wireless service, only for the OUSF to redirect their money to the RLECs those consumers have abandoned,” said CTIA. It's not equitable for RLECs to receive $70.7 million in FY 2023 "while wireless consumers are responsible for footing 80% of the bill,” it said. CTIA urged the commission to instead consider returning to a revenue-based contribution method.
Increasing to $2.02 per connection will make "significant headway into eliminating" the state’s current OUSF deficit, said Argenbright at the meeting. With a commission order Tuesday, the deficit could be eliminated in September 2024, he said. The commission could then consider reducing the surcharge, he said. If there currently were no OUSF deficit, the surcharge would be $1.50, he said.
The per-connection method is "anything but anticompetitive," and “we are seeing some stability,” Argenbright said, disagreeing with CTIA. It's more equitable than the revenue-based approach, which allowed wireless companies to determine how much of their revenue was subject to assessments, said the OUSF administrator: The connections method is "equitable across all providers." CTIA is “disingenuous” in how it describes swings in the contribution factor, said Argenbright. The agency considered a 91 cent surcharge while considering the change to connections, but the commission decided to set the first surcharge under the new method at $1.14, he said. The commission then increased the charge one time to $1.85. Also, he noted CTIA didn’t formally oppose the proposed increase to $2.02.
CTIA gave a “misleading” and “dead wrong” description of the situation, said William Bullard, attorney for Consolidated Communications and other rural LECs, in a Tuesday interview before the commission meeting. The change in methodology stabilized OUSF revenue, said Bullard: The number of contributors had been shrinking under the old, revenue-based method. Timing snafus resulted in recent surcharge increases, said Bullard: There were unforeseen delays bringing the $1.14 and subsequent $1.85 rates into effect; both amounts were calculated based on assumptions they would take effect sooner.
Bullard doesn’t expect the surcharge will climb much higher than the $2.02 proposed, he said. Assuming the latest increase takes effect quickly and the deficit is eliminated, the commission may even be able to reduce the surcharge in a year, the attorney said.
“The requested increase is the result of calculating the assessment needed to meet annual budgetary obligations and deficit elimination based on roughly 54 million connections,” the Oklahoma commission spokesperson emailed. The Public Utilities Division (PUD) “believes the per connection assessment is fair and equitable and falls within the legal requirements under which the Fund must operate. PUD’s intent is only to establish an assessment sufficient to properly administer the fund per the legislative mandate. PUD fully anticipates seeking a reduction in the connection assessment after the Fund’s deficit is eliminated.”