Op-Ed on Telephone Service Competition in Rural Alaska

By Representative Ivan M. Ivan

Recently, GCI, Inc. petitioned the Alaska Public Utilities Commission to remove Pacific Telecommunications, Inc.'s (PTI) rural exemption and require PTI to provide enhanced interconnection services to GCI. This petition request was rejected. GCI was seeking to enhance interconnection services to further its ability to compete with PTI for local exchange customers. At this time, GCI is entitled to construct its own local exchange facilities, but they are not entitled to receive from rural telephone companies as it is entitled to receive from a large urban company such as ATU, enhanced interconnection service would have required PTI to offer GCI the use of individual customer lines at rates that would have forced PTI to increase the rates that PTI offers its other customers. The APUC considered GCI's request and decided it was not in the public interest to grant their request.

GCI, unhappy with APUC's decision, asked the legislature to intervene on its behalf, thus House Bill 416 was introduced. I oppose this legislation and support APUC's decision. Rural telephone consumers now benefit in excess of $50 million annually from the federal government for local telephone service. The FCC is planning on reducing this support to rural Alaska by as much as $35 million. The FCC is now reconsidering this decision at the request of the State, APUC and private companies who have all petitioned the FCC.

Also, rural telephone companies are now required to support residential service via higher rates to business customers. Now that competition is allowed in rural areas, existing companies are faced with having to rebalance rates. Approving GCI's request would have undermined the mechanisms that are now in place to support local rates in rural areas before the FCC and APUC can adopt new regulatory structures that would protect and further the services rural consumers now receive.

Congress has delegated to the FCC and APUC, specific duties to provide for competition and to advance universally affordable service throughout the country including rural residential service. These complex goals should be allowed to be pursued by the FCC and APUC. The state legislature should not insert itself into this regulatory process unless there is a compelling reason to do so. At this time, I do not see a compelling reason for the Legislature to intervene in the process being undertaken by APUC to provide for competition and to advance universal service. That is the basis for my opposition to HB 416.

I am concerned that rural consumers continue to be able to receive basic services at affordable rates. The support mechanisms that are now being changed will need to be sufficient, well thought out and used efficiently without imposing unnecessary costs on consumers for duplicative facilities and services. The Legislature is clearly not the best forum to tackle these issues, especially with the FCC and APUC being delegated to make decisions on issues such as the one requested by GCI.

I am also concerned that the smaller rural companies are not competitively disadvantaged by the timing and the substance of future regulatory decisions. Small rural companies now face barriers to entering the long distance market. These companies do not have access to the same dispute resolution as do larger companies. Small rural companies cannot market long distance services without structural separation, They cannot bundle long distance and local service, and they cannot reduce rates without being subjected to drawn out regulatory proceedings. And our small rural companies do not have the same ability that larger players have to resell services and obtain access to unbundled elements. It is my understanding that APUC will be reconsidering its rules that now favor larger companies.