Problems With 2nd FCC Decision

• Political Tensions Within the System

  • Low-cost states vs. high-cost states
  • Local service providers vs. other telecom providers

• Averaging Perpetuates Implicit Support

  • High margin urban customers vulnerable to competition
  • System will be slow to react in crisis

• Creates “Two-Tier” System for Rural Consumers

  • “Rural” Companies

    • Support at 115% of embedded cost

  • “Non-Rural” Companies

    • Support no larger than present
    • Must rely on implicit subsidies

• Perpetuates the Status Quo

  • No more support than present ($125M)
  • No one gets less than present