BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION In the Matter of: Establishing Universal Service Mechanisms, ) ) ) ) ) ) ) Docket No. UT-9809311(r) COMMENTS OF UNITED STATES CELLULAR CORPORATION United States Cellular Corporation (USCC) submits the following comments on the First Draft Universal Services Rules: A. Adoption of these rules may be premature because of the directive of Senate Bill 6622. Senate Bill 6622 directed the Washington Utilities and Transportation Commission (WUTC) to plan and prepare to implement a universal service program and to report back to the Washington Legislature by November 1998. This legislation did not direct the WUTC to adopt formal rules.According to the schedule established in the docket, the Commission anticipates revising its proposed draft rules by October 9, 1998 and targets December 9, 1998 as the date upon which the Commission considers the rules for adoption. Indeed, Senate Bill 6622 unequivocally states that any Commission program for universal service "shall not take effect until the legislature approves the program." USCC views the legislative directive of Senate Bill 6622 as requiring the Commission to gather information and articulate a policy rationale for the Commission's recommended approach to establishing a universal service program. Development and adoption of these proposed rules does not satisfy that legislative directive. Therefore, as a preliminary concern USCC questions the wisdom of proceeding with haste to adopt rules which cannot become effective without the legislature's approval. Logic and practical experience suggest that the political process will not allow approval of the rules without changes which could be major in nature. Even if the Commission's approach--adoption of universal service rules--satisfies the legislature, commenting parties are disadvantaged in their review of these rules by the lack of explanation for these rules. Such an explanation would have to be embodied in the Commission's report to the legislature, which should explain the policy rationale for the rules. The Commission has called for comment on rules in a vacuum. It is difficult to determine the Commissioner's reasoning or which rules, if any, are responsive to the comments of interested and affected parties. USCC respectfully asks the Commission to stay for now the formal rule-making process or to issue either its explanation of the rules or a draft of its report to the legislature to assist USCC in providing any meaningful comment and analysis. B. Inclusion of Wireless Carriers Is Premature. USCC urges the Commission to wait until its authority to assess universal service charges upon wireless carriers is clarified. As pointed out in USCC's initial comments in Docket No. UT-980311(r) the issue of whether state commissions have the authority to assess wireless carriers for state universal service purposes is pending in several federal appellate courts. In addition, Washington law specifically precludes regulation of wireless carriers. See RCW 80.36.370(b), 80.66.010. Given the uncertainty of whether, and to what extent these proposed rules can apply to wireless carriers under state and federal law, USCC urges the Commission to not include wireless carriers in its proposed rules at this time. The Oregon Public Utility Commission adopted this approach under which wireless carriers do not have to contribute to a state universal service fund and they cannot withdraw from it either. USCC endorses this approach for the Washington as well. C. The Role of Wireless Carriers Is Unclear Under the Proposed Rules. Assuming that the Commission continues to include wireless carriers in their proposed rules, then the wireless carrier's role needs further clarification. The only thing that seems clear is the wireless carrier's obligation to contribute. These rules create only burdens for wireless carriers without any clear opportunities for them. The obligation to contribute must be balanced with the opportunity to withdraw from the universal service fund and vice versa. How this balance would be achieved for wireless carriers is unclear in the proposed rules.For instance, will USF support be calculated based upon only one landline per-line cost under WAC 480-123-380 or will wireless costs be used? Wireless carriers can only be eligible to withdraw from the universal service fund if they are designated as an eligible telecommunications carrier (ETC). However, it is difficult to assess a wireless carrier's ETC obligations because the Commission controls the designation of service areas. WAC 480-123-330(1) states "the Commission shall determine a service area or areas that best promotes competition in telecommunications services." The Commission's determination may not comport with the wireless carrier's actual service area. Thus, a wireless carrier may be reluctant to ask for ETC status if it will be forced to serve areas it cannot or does not plan to serve. US Cellular is also disappointed that, under the rules, competition will be determined by regulation and not customer choice. In addition, the detailed and burdensome reporting requirements of ETCs may discourage wireless carriers from seeking ETC status. The fundamentally competitive nature of the wireless industry with its minimal regulation is at odds with the state regulatory burdens in these rules. To the extent they are consistent with federal USF rules, wireless carriers' concerns might be alleviated. However, the Commission's proposed rules are not parallel to federal USF rules in many respects, (i.e., the definition of intrastate telecommunications revenues in WAC 480-123-170/240 includes some exempt at the federal level). Other problematic proposed rules for the wireless industry are those that could impose regulation upon them contrary to federal (47 U.S.C. § 332) or state law. RCW 80.36.370(b), 80.66.010. These include: • WAC 480-123-060 (setting "affordable rates") • WAC 480-123-290 (billing practices) • WAC 480-123-300 (billing practices) • WAC 480-123-240 (reporting requirements). In sum, the proposed rules do not fully confront and resolve issues which are specific to the wireless industry. They will discourage wireless carriers from seeking ETC status. Thus, wireless carriers and their customers will be contributing to the provision of universal service in Washington but will not have a meaningful opportunity to participate in the benefits of the USF program. USCC urges this Commission to proceed cautiously and slowly before it adopts rules with serious implications for an industry which Congress and the Washington legislature have said is beyond the regulatory authority of this Commission. USCC remains willing to work with the Commission on determining the proper role of wireless carriers in a state USF program which is fair to all carriers and the consumers of the state of Washington. However, these rules fall short of that goal. RESPECTFULLY SUBMITTED this _____ day of September, 1998. UNITED STATES CELLULAR CORPORATION By Eva Marie Wohn, Director - Government Affairs 8410 West Bryn Maur, Suite 700 Chicago, IL 60631-3486 and WILLIAMS, KASTNER & GIBBS PLLC By Judith A. Endejan - Attorney for United States Cellular Corporation WSBA #11016 601 Union Street, Suite 4100 P.O. Box 21926 Seattle, WA 98111-3926