Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, DC 20554

In the Matter of

Access Charge Reform	)	CC Docket No. 96-262
Price Cap Performance Review for Local Exchange Carriers	)	CC Docket No. 94-1
Low Volume Long Distance Users	)	CC Docket No. 99-249
Federal-State Joint Board on Universal Service	)	CC Docket No. 96-45

FURTHER COMMENTS OF THE ALLIANCE FOR PUBLIC TECHNOLOGY,
THE COMMUNICATIONS WORKERS OF AMERICA
THE NATIONAL ASSOCIATION OF DEVELOPMENT ORGANIZATIONS, ET. AL.

INTRODUCTION

The Alliance for Public Technology ("APT"), the Communications Workers of America ("CWA"), the National Association of Development Organizations ("NADO") and the undersigned organizations ("joint commenters") submit these further comments in support of the modified CALLS Proposal and in response to the Federal Communication Commission's ("FCC's") Public Notice¹ in the above referenced dockets. The Notice seeks comment on whether the FCC should adopt all or some portion of the modified proposal submitted by the Coalition for Affordable Local and Long Distance Service (CALLS) for universal service and interstate access charge reform.

In previous comments to the FCC², APT, CWA and NADO endorsed the original CALLS plan based, in part, on its potential to stabilize universal service funding, which provides affordable telephone service for all consumers.

II. STATEMENT OF INTERESTS

Constituents of APT, CWA, NADO and the organizations represented by this filing, include millions of low income and working families, rural residents, senior citizens, people with disabilities, small business owners, minorities, and other consumers who desire affordable, quality telecommunications services, no matter their income level or place of residence.

The Alliance for Public Technology is a tax-exempt advocacy organization founded in 1988 to promote affordable access to telecommunications and information by all consumers. Almost 300 non-profit groups and individuals comprise APT's membership, which supports the organization's mission:

to make available as far as possible, to all people of the United States, regardless of race, color, national origin, income, residence in rural or urban area, or disability, high capacity two-way communications networks capable of enabling users to originate and receive affordable and accessible high quality voice, data, graphics, video and other types of telecommunications services.³

The Communications Workers of America is the largest telecommunications union in North America. Representing 630,000 workers, CWA is a party to more than 1000 collective bargaining agreements with public and private employers engaged in telecommunications, printing and news media, health care, cable television, general manufacturing, electronics, and gas and electric utilities, among other fields.

The National Association of Development Organizations (NADO) is a public interest group founded in 1967 to provide training, information and representation for regional development organizations in small metropolitan rural communities. It is the largest and leading advocate for a regional approach to community and economic development, including deployment of telecommunications services. NADO's regional development organizations collectively represent about one-third of the nation's population. Therefore, the association's primary goal is to assure all rural citizens have employment opportunities, public services, and a quality of life comparable to other Americans.

Alliance for Small Business Advocacy (ASBA) is an affiliation of small business owners, supporters, and groups that are committed to identifying and working on issues that have or will have a critical impact on small business growth. ASBA was formed as a result of the increasing awareness of the importance of small business to a healthy economy.

Consumer Alliance of the Southeast (CASE) is a regional coalition of consumers, community leaders, and small business owners with members in 12 states, from Texas to Florida.

The Jefferson County Committee for Economic Opportunity was established in 1965 to serve as Jefferson County's Community Action Agency. The agency strives to meet the needs of low-income citizens at the community level. Among its goals are the elimination of poverty at its roots and the empowerment of people through policy formation and program participation.

Justice For All (JFA) is a disability rights organization formed to defend and advance disability rights and programs in Congress. One JFA goal is to work with national and state organizations of people with disabilities to get the word from Washington, D.C. out to the grassroots.

National Association of Commissions for Women (NACW) represents local commissions established to promote the interests of women in cultural, social, and economic fields. NACW supports policies and programs that empower women to make informed choices about all aspects of their lives. NACW has been active in the debate on telecommunications reform, supporting legislative and regulatory initiatives to encourage competition, thereby creating new options and services for women as consumers and in their businesses.

United Homeowners Association (UHA) is a national, nonprofit, membership-based organization that represents the interests of homeowners. UHA has an active communications advocacy program, and has promoted the interests of homeowners in telecommunications to Congress, before the FCC and in the courts.

III. BACKGROUND

In October 1999, APT and the Communications Workers of America (CWA) released a study⁴ outlining the benefits of the access reform plan submitted to the FCC by CALLS. The study concluded that while business customers would be the greatest beneficiaries, consumers at all income levels, regardless of whether they live in urban or rural areas, would also benefit under the plan.

APT, CWA and NADO stated their belief that the original plan:

offers a viable means of stabilizing universal service during the transition to competitively neutral, explicit universal service support mechanisms. Admittedly, the CALLS plan is not a perfect solution, but its creation through arms' length negotiation between long distance carriers and incumbent local phone companies that are more often opponents than proponents in any given matter, is an encouraging development in a rapidly changing telecommunications marketplace.

As new packet switched networks emerge to enable users to avoid long distance charges containing the subsidies now implicit in per minute access charges, the urgent need for reform becomes clearer. Without prompt action, the inevitable collapse of the current access charge regime will undermine universal service funding and threaten the nation's commitment to affordable quality telephone service for everyone. And, unless sustainable universal service support exists for basic telephone service, joint commenters fear that mechanisms cannot develop to ensure that low-income, working, elderly, disabled, and rural residents gain access to advanced telecommunications networks that can improve their education, health care, economic development, and other important aspects of their lives.⁵

APT asked Joel Popkin and Company to evaluate the original plan and to study its consequences for residential consumers, particularly those in rural areas and those with low or moderate income levels. The resulting "Consumer Welfare Study,"⁶ which APT and CWA released in October 1999 and attached to their previous comments, demonstrated that residential consumers at all income levels would realize substantial savings.

The joint commenters, however, strongly urged the Commission to protect low volume phone users and other consumers from bearing a disproportionate share of the proposed line charge increases by ensuring that interexchange carriers cut long distance rates in a manner that maximizes the consumer welfare benefits.

IV. THE MODIFIED PROPOSAL

The joint commenters are pleased that the modified plan responds to their concerns, as demonstrated in an updated study conducted by Joel Popkin and Company. ("The CALLS Plan Revisited: A Quantification of Consumer Benefits," attached hereto as Appendix A). The initial plan proposed reductions in switched access rates, consolidation and changes to the levels of fixed line charges, expansion of Lifeline support for low-income consumers, and establishment of rural caps supported by $650 million in explicit universal service support.

First, the modified plan sets lower caps on the SLC at the outset and then over the five-year plan. By July 2004, the cap will reach $6.50, instead of $7.00 as proposed in the initial plan. This new $6.50 cap provides additional protection for rural consumers.

In addition, two major long distance carriers, AT&T and Sprint, have pledged to offer at least one basic schedule calling plan that does not charge a monthly minimum usage fee. This assurance offers customers who make $3.00 or less in long distance calls each month an opportunity to avoid paying minimum charges. While the repercussions of this pledge will lead to direct benefits to their customers, and possibly competitive responses from other carriers to eliminate their minimum usage charge plans, the attached study does not include these benefits.

To determine the impact of the modified CALLS proposal for residential consumers, APT asked Joel Popkin and Company to update its evaluation. (Attached hereto as Appendix A.) Chief economist Steve Pociask, who conducted the study, reported that the modifications actually strengthen consumer benefits significantly by providing further rate reductions and lowering the cost for consumers who make few long distance calls. Specifically:

• Households at all income levels will experience approximately 4 percent welfare gain from the modified CALLS proposal.
• It represents an increase of $2.2 billion or 41% in consumer welfare benefits when compared to the initial CALLS analysis, and $7.4 billion total annual benefits to residence and business customers.
• Compared to the initial plan, residential consumers should receive an increase in benefits of 54%, mostly due to lower residential subscriber line charge caps.
• A disproportionately higher share of the new benefits are predicted to accrue to rural customers even though they may face slightly higher subscriber line charges and are likely to receive less benefits under CALLS, due to decreases in the subscriber line cap for rural subscribers. For example, urban customers should benefit $0.39 per household per month more than the initial plan predicted. In comparison, a rural customer will see an additional $0.76 per household per month more than the initial plan.
• Residential consumers are predicted to benefit significantly across every major household income group, compared to the initial CALLS study. Furthermore, the variance of benefits across income categories decreased slightly, indicating a more uniform distribution of benefits than previously observed.
• Lastly, businesses are estimated to obtain a 37% increase in benefits, predominantly due to reductions in special access rates that were not included in the initial CALLS plan.

In the initial study of consumer benefits, the CALLS plan produced small, but positive results for rural customers. The modified plan suggests disproportionately higher benefits to rural customers. In addition, customers who make less than $3.00 in long distance calls each month can avoid paying monthly charges. In total, the modified proposal results in additional benefits for every major household income group, regardless of geographic distinction, with consumer welfare increases from $5.3 billion to $7.44 billion per year, 41% more than the initial study. APT fully expects these long distance carriers to honor the commitments they have made in this proceeding to ensure that low-volume users will receive the intended benefits of the CALLS proposal.

V. CONCLUSION

As the Commission evaluates the merits of the modified CALLS plan, joint commenters again ask that it look to the future of the Information Age and remember its obligation to preserve universal service in an era of emerging competition for new and innovative telecommunications services. Basic telephone service is a necessity in today's world, and therefore, it must be affordable and available to everyone.

As it was pointed out initially by APT, CWA and NADO, the benefit to consumers from reductions in inter-exchange access fees is dependent upon how they are passed on to consumers in the context of growing concentration of economic power, which requires greater opening of competition in the inter-exchange market. The Commission must ensure that benefits are not disproportionately distributed to the high end of the market in the offering of calling plans. A fair share of the distribution of benefits must also reach the low end of the market, especially low volume users, and a commitment to such a plan should be made a condition of approval for the CALLS plan.

Joint commenters contend that with the increased commitment to protecting low-income users, the modified CALLS plan would further shield rural and low-income consumers from unreasonable rate increases, increase measurable benefits to households of all income levels, and could facilitate additional long distance rate drops for all residential customers. Accordingly, joint commenters recommend that the Commission adopt the modified CALLS proposal. We continue to view it as an effective plan for achieving universal telephone service, the precursor to the advanced telecommunications service that will be indispensable in the Information Age.

Respectfully submitted,

Donald Vial
Public Policy Chair
Alliance for Public Technology
919 18th Street, N.W., Tenth Floor
Washington, DC 20006

Debbie Goldman
Research Economist
Communications Workers of America
501 Third Street, N.W., Suite 1100
Washington, DC 20001

Aliceann Wohlbruck
Executive Director
National Association of Development Organizations
444 North Capitol Street, N.W., Suite 630
Washington, DC 20001

George Abbott
President
Alliance for Small Business Advocacy
P.O. Box 12029
8616 North 30th Street
Omaha, NE 68112

Lora H. Weber
Executive Director
Consumers Alliance of the South East
P.O. Box 864806
Plano, TX 75086-4806

Theodore Debro
Deputy Director
Jefferson County Committee for
Economic Opportunity
300 Eighth Avenue, West
Birmingham, AL 35204-3039

Fred Fay
Moderator
Justice for All
2054 Main Street
Concord, MA 07142

Patricia T. Hendel, President
National Association of Commissions for Women
8630 Fenton Street, Suite 934
Silver Spring, MD 20910-3803

Jordan Clark
President
United Homeowners Association
655 15th Street, NW, Suite 460
Washington, DC 20005

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¹Public Notice, FCC 00-533, March 8, 2000.

²See Comments of the Alliance for Public Technology, the Communications Workers of America and the National Association of Development Organizations, In the Matter of Access Charge Reform, Price Cap Performance Review for Local Exchange Carriers, Low Volume Long Distance Users, Federal-State Joint Board on Universal Service, November 16, 1999.

³Principles for Implementing the Goal of Advanced Universal Service, Alliance for Public Technology, 1995 at p. 2.