The Impact on Rural America

Successes and Failures of the 1996 Telecommunications Act

Part One

Part Two

Part Three

Afterword

Does the Digital Divide Still Exist?

Appendix

The Impact on Rural America

by Mark Lloyd and Lynne Montgomery

Throughout the negotiations of the 1996 Telecommunications Act the needs of rural America were at the forefront. This was in part because many of the most powerful politicians with a hand in the bill were from states with an abundance of farmers and small towns. Addressing the Senate on the compromise reached with the House version of the bill, Senator Larry Pressler of South Dakota noted:

For the small town hospital, it will mean telemedicine, new devices and investment, where a large hospital can partner with a small hospital in research. For the small business located in a smaller town, it will mean that a small businessman there will be on an equal footing with a bigger businessman in an urban center in terms of access to research and the ability to partner. 1

In addition to the advantages new telecommunications services would bring to small towns and rural areas, legislators also made it clear their intention to provide subsidies, especially to rural areas, to make certain Americans in those small towns could connect to the National Information Infrastructure. As Senator Ernest Hollings of South Carolina said immediately after Sen. Pressler, "Special provisions in the legislation address universal service in rural areas to guarantee that harm to universal service is avoided there." 2

There should be little doubt that rural areas need support and protection. While the national poverty rate in 2000 is 11.3 percent, poverty levels differ depending on where people live. 3 The poverty level in rural areas in 2000 is 13.4 percent (rural is defined as people living outside metropolitan areas -- that is, in the countryside and small country towns). The metropolitan poverty rate differs greatly between suburbs and the inner city. In 2000, the average central city poverty rate was 16.1 percent, twice the rate for the suburbs (7.8 percent). 4 Racial minorities suffer extreme levels of poverty in rural areas, in 1987 for example, 44 percent of rural blacks were poor in comparison to 33 percent of urban blacks. 5 In NTIA's recent report "A Nation Online," data showed that rural blacks and Hispanics were much less likely to have access to the Internet than white or Asian Americans living in rural areas. Twenty-four point four percent of blacks and 29.9 percent of Hispanics living in rural areas had Internet access in their homes com-pared with 51 percent of whites and 68.2 percent of Asian Americans and Pacific Islanders. 6 There are many rea-sons for this poverty in rural areas: concentration of low wage jobs in both farming and manufacturing located in rural communities, 7 lack of educational resources, and limited access to interstate facilities which promote commerce. 8 Academics and legislators suggested that advanced telecommunications could reduce some of the disadvantages which come with living in low density and remote rural communities, while retaining the advantages of living in uncrowded space far away from the noise and pollution of the big cities. 9

Over the past four years, thanks to grants from the W. K. Kellogg Foundation, the Civil Rights Forum on Communications Policy has studied the impact of the 1996 Telecommunications Act on rural America. In addition to the efficacy of the Act's universal service support and competition mechanisms, we looked at the degree to which there were any changes to the lack of voice and information faced by rural Americans as a result of the Act's (or subsequent legislation) policies regarding broadcasting, cable, and satellite services. What follows is a very brief essay on what we have learned.

What the 1996 Telecommunications Act Says

The 1996 Telecommunications Act was clearly informed by a concern for rural America. In an overt way this was set out in the Act's statement of "universal service principles":

Consumers in all regions of the Nation, including low-income consumers and those in rural, insular, and high cost areas, should have access to telecommunications and information services, including interexchange services and advanced telecommunications and information services, that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas. (Emphasis added.) 10

And in a section which was popularly called the "E-Rate" the Act specifies:

(A) HEALTH CARE PROVIDERS FOR RURAL AREAS -- A telecommunications carrier shall, upon receiving a bona fide request, provide telecommunications services which are necessary for the provision of health care services in a State, including instruction relating to such services, to any public or nonprofit health care provider that serves persons who reside in rural areas in that State at rates that are reasonably comparable to rates charged for similar services in urban areas in that State. (Emphasis added.) 11

Even beyond clarifying the protection of universal service support subsidies to rural telecommunications providers, the overall thrust of

the Act was to promote competition in telecommunications markets. Competition was to be achieved through mechanisms which allowed new "competitive" local telephone (exchange carriers) companies (called "CLECs" by an insider culture fond of obscurities) to use the lines maintained by the old-monopoly companies (incumbent local exchange carriers -- "ILECs").

While the provisions of the Telecommunications Act were to be carried out under regulations determined by the expert independent agency (the Federal Communications Commission), Congress was unusually specific regarding the relatively technical issues of inter-connection:

(2) INTERCONNECTION -- The duty to provide, for the facilities and equipment of any requesting telecom-munications carrier, interconnection with the local exchange carrier's network -- (A) for the transmission and routing of telephone exchange service and exchange access; (B) at any technically feasible point within the carrier's network; (C) that is at least equal in quality to that provided by the local exchange carrier to itself or to any subsidiary, affiliate, or any other party to which the carrier provides interconnection; and (D) on rates, terms, and conditions that are just, rea-sonable, and nondiscriminatory, in accordance with the terms and conditions of the agreement and the require-ments of this section and section 252. 12

Congress was also unusually specific regarding certain conditions under which the "incumbent" local telephone companies were to allow competitors access to their system, one such condition is "unbundled access." The purpose of this provision was to make sure that when the competition leased the incumbent's lines they would not be forced to pay for unnecessary equipment and services; in other words, Congress made certain that the competition's access to the incumbent's lines was provided on an "unbundled" basis. The ability of competitors to "cherry pick" from the incumbent local telephone company's databases, signaling systems, poles, ducts, conduits, and rights-of-way would allow true competition over telephone service, and the incumbent would be paid no more and no less than it would pay itself for the same access. Service competition, it was thought, would drive prices down for consumers. 13

Due to the fact that rural areas tend to be left behind in the provision of communications services, the Act in its promotion of "interconnection" and "unbundling" policies sought to protect rural areas and rural telephone companies from competition that could be potentially harmful. Congress gave special attention to rural telephone companies 14 and to the restriction and modification of "interconnection" and "unbundling" policies so as to not burden rural telephone companies. The Act requires the State public utility commissions to determine that an interconnection "request is not unduly economically burdensome, [and] is technically feasible...." 15 In addition, "a local exchange carrier with fewer than 2 percent of the Nation's subscriber lines installed in the aggregate nationwide may petition a State commission for a suspension [of the Act's interconnection and unbundling rules, and the State shall grant such petition, if necessary]"

(i) to avoid a significant adverse economic impact on users of telecommunications services generally;
(ii) to avoid imposing a requirement that is unduly economically burdensome; or
(iii) to avoid imposing a requirement that is technically infeasible; and
(B) is consistent with the public interest, convenience, and necessity. 16

As the FCC interpreted the Act and began implementing the rules, some of the interpretations were found to be damaging to rural areas. The U. S. Court of Appeals for the 8th Circuit decided that "the FCC's rules on the rural exemption eliminated two of the three prerequisites that must be satisfied before a state commission may terminate an exemption, unreasonably interpreted the phrase 'unduly economically burdensome' and impermissibly placed the burden of proof on rural ILECS." 17 Clearly, all branches of the federal government understood the intent to protect rural communities.

State Public Utility Commissions are responsible for determining if a rural exemption should be upheld or eliminated. In some cases, the commissioners have not done a great job. For example, according to Jessica Bridges, the Government Affairs Representative for the National Telecommunications Cooperative Association's Rural Telecommunications magazine, "decisions in Iowa and elsewhere terminat[ed] rural exemptions and saddl[ed] rural telcos with the burden of proving that they will be adversely affected by interconnection and uncertainties in rural markets. South Slope Cooperative Telephone Company (Norway, IA), Norway Telecommunications Company, and Heartland Telecommunications Company of Iowa are among the rural telcos that have lost their rural exemptions." 18

In addition to the "interconnection" provisions, the Act also sought to spur competition between industries by allowing telephone companies to provide cable service 19 and by allowing cable companies to provide telephone service. 20 By, in other words, allowing industries to directly compete with each other it was thought that new advanced telecommunications services even to (and, perhaps, especially to) rural areas would follow.

A major difficulty with these rather detailed policies was that the telephone companies which helped to draft them were really opposed to them. Only a few months after the passage of the Act, for example, SBC petitioned a federal court in Wichita Falls, Texas, to rule that interconnection and unbundling provisions of the Act were unconstitutional "takings." The incumbent local phone carriers adopted a strategy of legal action combined with non-compliance (fines against the Bells totaled more than $300 million in 2000), effectively killing off the much hoped for competitive local exchange carriers (CLECs).

As the Economist magazine reported: "Unbundling . . . is dependent on the cooperation of the telecom's incumbent. Regulators in America can impose only puny fines, which incumbents regard as a price worth paying to keep the market to themselves." 21

Have the "Competition Policies" Worked?

The competition policies that were created in the Act generally have not worked to improve service to rural areas. In very remote rural areas, access to telephone service is still spotty. Advanced services are being rolled out unevenly and rural areas are the last to gain access to these services. This is a problem that exists across the United States, from Appalachia to Missouri to New Mexico and California.

The Appalachian Regional Commission finds that competition has not worked and most Appalachian towns are lagging behind in their access to telecommunications services. According to their November 2001 report, Information Age Appalachia, "five years after passage of [the Telecommunications Act of 1996], access to a modern telecommunica-tions infrastructure -- and the benefits it provides" -- is still a problem for Appalachia. 22 Similarly, Billy Jack Gregg, the Director, Consumer Advocate Division of the Public Service Commission of West Virginia, found that "competition isn't really working in rural areas. It is often not economical to have several single land-line systems running to rural areas."

Indian reservations across the United States are traditionally located on rural land and suffer from an even greater lack of telecommunications services than many rural areas. The Act has not done much to change this situation. According to Karen Buller, the Executive Director of the National Indian Telecommunications Institute, "Competition still hasn't done anything in extremely rural areas. It's still a monopoly out there."

Since the Act was passed, Barbara Meisenheimer, the Chief Economist in the area of Telecommunications for Missouri Office of Public Counsel has seen that "overall, especially in Missouri, rural customers have lost services in the anticipation of competition." In her opinion, rural customers in Missouri are worse off than they were before. The problem in Missouri demonstrates the effects of the vague repetition without proof that competition will occur; a supposed belief in the inevitability of competition led over-eager regulators in Missouri to allow GTE, Sprint/ United Telephone and Southwestern Bell Telephone Company to eliminate important services to consumers.

After the 96 Act was passed, the Missouri Public Service Commission decided to eliminate the Community Optional Service (COS) program. COS provided a discounted flat telephone rate for a person to call between two local calling areas. This was especially helpful for rural people who lived in one calling area and worked or went to school in another. The Missouri Office of Public Counsel opposed this order and requested a new proceeding be opened so that customers who would be affected by this decision could have a hearing to state their cases. "There is no competition in rural Missouri to justify the end of a service so highly prized by COS customers," said Public Counsel Martha Hogerty. 23 Despite this request and the more than 100 letters and petitions with over 1,700 signatures received protesting the elimination of COS, the Commission did not grant another proceeding. 24

In the future, Meisenheimer hopes there will be a way to ensure that what was called for in the 96 Act actually happens. She would like to see actual benefits extended to rural customers, not just hope that competition will bring them.

Just the Facts

Beyond the anecdotal evidence in different states, there is no real demonstration that the 96 Act has increased the availability and attractiveness of service. With regard to telephone penetration, in some states with large poor and rural populations, there have been mixed results about whether telephone service penetration has improved since 1996. In Arkansas, 72.4 % of people making below $10,000 a year had phone service in 1996 and by 2000, 80.3% had obtained telephone service. This eight percent growth is contrasted with the lack of growth in Mississippi where 76.1% of the population making below $10,000 a year had telephone service in 1996 and only 76.7% had service in 2000.

It is still too early to tell what effect the Act has had on the deployment of advanced telecommunications services. As of June 30, 2001, "approximately 4.3 million ...residential customers subscribed to services that meet the Commission's definition of advanced services." 25 This is up from 1.8 million high-speed residential customers reported in the Second Report. 26 "Penetration of advanced services quadrupled from 1.0 percent of households at the end of 1999 to 3.8 percent at the end of June 2001." 27 The FCC Third on Advanced Services revealed that there is at least one advanced telecommunications subscriber in over 90 percent of the most densely populated zip codes while fewer than 40 percent of the most sparsely populated zip codes have at least one high-speed subscriber. This data does not separate between small-business users and residential users, nor does it provide any additional information about the subscriber.

In a separate statement released with the Second Report, former Commissioner Gloria Tristani wrote, "I am troubled about the factors and data that suggest certain populations -- those living in rural areas, the U. S. territories, inner cities and tribal areas, as well as low income consumers and minorities-- are at a heightened risk of not having access to advanced services if left to market forces alone." 28 Former FCC Chairman William Kennard shared her concerns, "our zip code data are so general that they may overstate the level of deployment." 29 Commissioner Michael Copps possesses a similar perspective in his separate dissenting statement released with the Third Report.

[W] ith our data, that zip code might include only large business customers buying facilities that would not be available or affordable to small business or residential customers. It might also include zip codes where only a limited number of customers have access. The majority recognizes these shortcomings, but nevertheless concludes on the basis of he data that deployment is reasonable and timely. By the logic of our current use of these data, rather than counting each zip code with one subscriber as fully connected, perhaps we ought to count each zip code that has one customer without access as not connected. 30

Regina Costa, the Telecommunications Research Director for TURN, a non-profit that performs work on universal service and telecommu-nications issues in California, expresses doubt about how much the Act could really do to encourage the deployment of advanced servic-es. However, she has noted that in "many cases telephone companies do not deploy advanced services [in rural areas] when they could -- or they do a terrible job. For example, in the Sierra Nevada where the timber industry has declined, most people rely on small home-based businesses to generate their income. For these businesses, Internet connections, and ideally high-speed Internet connections, are neces-sary. However, Pacific Bell DSL service is terrible and spotty at best."

Sale of Lines to Small Carriers

Billy Jack Gregg noted that the rural areas served by larger compa-nies are starved for investment. In many cases larger companies have sold off rural access lines wholesale to the small companies. Completed sales and reports of intent to sell have been common since 1996. The intent of the Act was to promote competition, not to have large carriers unload all of their rural access lines. "The desire of large companies to shed rural lines continues unabated." 31 For example: the Afton, Wyoming Exchange was sold by US West to Union Telephone Co. 32 ; the Kansas Exchanges were sold by Sprint to Rural Telephone and Golden Belt Telephone 33 ; and all of GTE's rural Texas exchanges were sold to Valor Telecommunications of Texas L. P. 34

Gregg did find a positive side to the sale of rural exchanges. He has found that the small companies tend give better service and deploy advanced services faster than larger companies. This is because the company has a narrower focus. They often serve one rural area instead of a wide variety of rural, suburban and urban areas. "Our analysis shows that small telephone companies are systematically deploying broadband capability to their residential customers using DSL equipment despite its less than favorable financial characteristics." 35

Options Available to Rural Communities

Rural communities do have some options in gaining access to advanced services and telephone service, including satellite broadband and the potential for municipalities to start their own networks. Satellite broadband can currently serve any area of the country. Unfortunately, it also tends to be prohibitively expensive, typically over $100 a month for service. Gregg states that the new challenge is to "develop another technology that can be provided for less." But he concedes that the only way to make satellite broadband affordable in rural areas is through government subsidies.

Some counties and towns have decided to take matters in their own hands and create their own networks (Municipal Networks) to provide their residents with telephone service, high-speed Internet access and cable service. The towns that built their own municipal network have reaped many benefits especially in rural areas. Households now have phone service and high-speed Internet access that they would have gotten decades from now, and possibly never, if it had been left to market forces alone.

Telephone companies and cable companies are against cities and counties operating their own networks, they argue that municipal networks have advantages that the private companies do not. They complain that municipal networks are able to get bond financing that is tax-exempt for their projects which is less expensive and the government that is licensing the municipal network owns the network. The private companies also fear the loss of business. In areas where municipal networks are operated, private companies have been forced to lower their prices and improve their services in order to keep customers in that area. Some states have banned municipalities from running their own telecommunications business. 36

Universal Service Subsidies

Section 254, the Universal Service section of the Act, sought to help rural communities gain access to telecommunications services, such as getting schools, libraries and rural health care clinics connected to the Internet. According to Barbara Meisenheimer, "some progress was made in the area of rural health care and schools and libraries. Lifeline expanded to some degree but not much." Karen Buller noted that in Indian country, the Act's largest impact is on schools and libraries. Without "E-rate" subsidies most schools and rural health care facilities would not have any connectivity. Last summer, the FCC expanded the guidelines for E-rate funds. The funds can now be used for video conferences; many native schools are applying for funding so they can engage in distance education.

In this same publication, Sean O'Sullivan covers Universal Service in much greater detail. Our focus here will be on the subsidy programs known as Lifeline and Link-Up.

The Lifeline and Link-Up programs provide discounted telephone service to low-income individuals. These subsidies were not changed by the Act. "Nothing in this section shall affect the collection, distribution, or administration of the Lifeline Assistance Program." 37 In the last five years states have begun providing a greater discount to subscribers, but this has had limited impact in rural America for a variety of reasons -- but mainly lack of promotion.

In 1996, the Federal-State Joint Board, in keeping with Congress' intent, determined that all low-income consumers would be well served if they had access to Lifeline/ Link-Up assistance and accordingly provided matching support and, for those states choosing not to provide assistance, sole support with "default means-tested eligibility standards." 38 These programs are extraordinarily important in the lives of poor people who have been able to take advantage of them. They are aptly considered lifelines.

Despite the fact that every state now offers Lifeline and Link-Up programs, some low-income individuals are not receiving Lifeline/ Link-Up assistance because they are not receiving adequate information about the programs. The Civil Rights Forum has consistently found, in each of the states we work in, 39 groups who provide health care, economic, and educational assistance to the poor who are unaware of this program which would get their clients basic telephone service.

Lifeline/ Link-Up information on websites, or in the telephone books, or in the mail sent by telephone companies to current customers, is clearly an insufficient outreach effort. And while the Civil Rights Forum and others are engaged in independent outreach efforts, it is not clear yet that outreach is sufficient. It is clear that automatic enrollment efforts are successful in getting low-income individuals basic telephone service. 40 This is the goal Congress intended. Given the fact that there are models of how this automatic enrollment can work, we strongly recommend the adoption of this model at the federal level, with, perhaps, a waiver, if states propose a reasonable and measurable plan to meet the goals of universal service.

At this time, telephone companies have little incentive to promote the Lifeline and Link-Up programs to those who may be eligible. According to the Code of Federal Regulations, telephone carriers must "publicize the availability of Lifeline service in a manner reasonably

designed to reach those likely to qualify for the service." 41 In many states, telephone companies only advertise the programs in telephone bill inserts and telephone books. While this may let a couple of people know about the programs, this information will not reach the majority of people who are eligible.

As is evidenced by the poor participation in Lifeline and Link-Up in most states, the current promotional activities are inadequate. Lifeline penetration rates are high in states that have additional programs or projects designed to get eligible individuals signed up. Clearly, in order for penetration rates to increase in more states, telephone companies must either be given greater incentives or required to promote Lifeline and Link-Up to a greater extent. Another option would be for the state or federal government to take charge of the promotional activities.

In 2000, the FCC passed an order to increase the Lifeline and Link-Up discounts available to people living on Indian land. According to Karen Buller, "despite the 2000 order ... participation numbers have not increased." 42 Buller attributes this to the fact that telephone companies not promoting the programs. She proposed that the FCC create both incentives and penalties to encourage companies to promote Lifeline.

Voice in Rural America

The provisions of the Act intended to encourage telephone companies to provide competition to cable companies were not fruitful. As the FCC noted in its annual assessment of competition in the market for the delivery of video programming, "incumbent local exchange carriers have largely exited the video business." 43 The hope for improved access to television service rests with the Satellite Home Viewer Improvement Act.

Most urban communities can now receive local television through the large commercial satellite companies. The reason is the Satellite Home Viewer Improvement Act (SHVIA), which was passed into law on November 29, 1999. This law requires the large commercial satellite companies to provide to the 40 largest markets all local television stations available. While this helps provide local television service for some viewers and helps create a stronger competitor to cable, it effectively leaves over half of the country's residents without access to local television via satellite.

The Rural Local Broadcast Signal Act which "authorizes a commission of federal agencies to provide loan guarantees to ventures utilizing satellite technology to deliver local television signals to satellite dish owners in the rural and smaller television markets the commercial satellite companies do not plan to serve" 44 was passed into law in December 2000.

The purpose of this Act was to help the Americans who were left out by SHVIA. Rural communities need access to television stations that broadcast local information for several reasons. On February 9, 2000 the Agriculture Committee's Subcommittee on Department Operations, Oversight, Nutrition, and Forestry held a hearing on the Rural Local Broadcast Signal Act. Representative Bob Goodlatte (R-VA), the sponsor of the bill, indicated that "these consumers will benefit from local news, weather reports, information such as natural disasters or community emergencies, local sports, politics and, yes, including election information as well as other information that is vital to the integrity of communities across the country." 45

Recommendations/ Conclusion

Now that five years have passed, it is clear that rural America still needs more assistance to gain access to telecommunications technologies. Changes could be made to help determine how rural areas are being helped by the Act's provisions and to get telecommunications services deployed to rural customers faster.

As indicated earlier both former FCC Chairman William Kennard and former FCC Commissioner Gloria Tristani expressed concern that advanced telecommunications services were not being deployed in a timely manner to rural areas and the method used to determine the rate of deployment was inadequate. This method which simply identifies the number of subscribers in a zip code is not detailed enough to determine how well advanced services are being deployed. In the future, more specific analysis should be used to paint a more accurate picture of how advanced telecommunications services are being deployed.

To further help rural areas gain access to advanced telecommunications services, it may be necessary to use means other than waiting for the large telephone companies to roll out the services. The rural communities that are gaining access now are served by small telecommunications companies or municipal networks. As mentioned earlier, some states have banned municipalities from running their own telecommunications business. In the interest of improved service and lower prices in rural communities, states should lift these bans and allow municipalities to offer telecommunications services. In the event that this does not occur the federal government should preempt state ability to limit local jurisdictions from providing telecommunications services.

While the Universal Service section of the Act has benefited many rural areas, there is still room for improvement. We concur with the recommendation of National Telecommunications Cooperative Association, and suggest that: "to achieve the Act's clear objectives, the FCC's interim caps on high-cost universal service support must be removed. If the caps are not repealed ... the result may be substantial rate increases for consumers residing in high-cost markets, as carriers affected by the caps will be forced to recover their costs directly from subscribers." 46

In order for the Lifeline and Link-Up to benefit people who qualify, more needs to be done to promote the programs. As the Forum stated in its Comments to the FCC, "in order for penetration rates to increase in more states, telephone companies must either be given greater incentives or required to promote Lifeline and Link-Up to a greater extent. Another option would be for the state or federal gov-ernment to take charge of the promotional activities." 47 In addition, states should increase the range of public assistance programs in the state tied to eligibility for Lifeline and Link-Up so that more people, especially the working poor, can qualify for the programs.

Endnotes

1. UNANIMOUS-CONSENT AGREEMENT, Congressional Record, S687, S687-S689, Feb. 01, 1996.

2. Ibid.

3. See Table 1 at http://www.ssc.wisc.edu/irp/faqs/faq3dir/povtab00-one.htm

4. FAQ: Who is Poor?, Institute for Rural Poverty, University of Wisconsin-Madison, http://www.ssc.wisc.edu/irp/faqs/faq3.htm#end1

5. ERIC Digests, Recent Trends in Rural Poverty at http://www.ed.gov/data-bases/ERIC_Digests/ed335180.html

6. "A Nation Online: How Americans Are Expanding Their Use of the Internet," U. S. Department of Commerce, Economics and Statistics Administration and National Telecommunications and Information Administration, Feb. 2002, http://www.ntia.doc.gov/ntiahome/dn/hhs/ChartH8.htm

7. Favorable Rural Socioeconomic Conditions Persist, but Not in All Areas, Rural Conditions and Trends, Vol. 11, No. 2.

8. Kathleen McMahon and Priscilla Salant, Strategic Planning for Telecommuni-cations in Rural Communities, Rural Development Perspectives, vol. 14, no. 3.

9. Ibid.

10. 47 C. F. R. §254 (b).

11. 47 C. F. R. § 254( h)( 1)( A).

12. 47 C. F. R. § 251( c)( 2)

13. 47 C. F. R. § 251( c)( 3). "The duty to provide, to any requesting telecommunications carrier for the provision of a telecommunications service, nondiscriminatory access to network elements on an unbundled basis at any technically feasible point on rates, terms, and conditions that are just, reasonable, and nondiscriminatory in accordance with the terms and conditions of the agreement and the requirements of this section and section 252. An incumbent local exchange carrier shall provide such unbundled network elements in a manner that allows requesting carriers to combine such elements in order to provide such telecommunications service." Ibid.

14. The Act defined a rural telephone company as a local exchange carrier that: provides common-carrier service to any local exchange carrier study area that does not include either: (i) any incorporated place of 10,000 inhabitants or more, or any part thereof, based on the most recently avail-able population statistics of the Bureau of the Census; or (ii) any territory, incorporated or unincorporated, included in an urbanized area, as defined by the Bureau of the Census as of August 10, 1993; (B) provides telephone exchange service, including exchange access, to fewer than 50,000 access lines; (C) provides telephone exchange service to any local exchange carrier study area with fewer than 100,000 access lines; or (D) has less than 15 percent of its access lines in communities of more than 50,000 on the date of enactment. 47 C. F. R. § 3( 47)( A).

15. 47 C. F. R. § 251 (f)( 1).

16. 47 C. F. R. § 251 (f)( 2)( A)-( B).

17. The Rural Exemption, Preexisting Agreements, and Pricing Network Elements, NTCA, http://www.ntca.org/leg_reg/lrissues/rural.html.

18. Jessica Bridges, The Rural Exemption is Right for Rural America, Rural Telecommunications: The Magazine of Rural Telco Management, Vol. 17, No. 3, May-June, 1998.

19. 47 C. F. R. § 303.

20. Communications Act of 1934, as amended, § 628( g), 47 U. S. C. §548( g).

21. Broadband Blues, The Economist, Jun. 23, 2001.

22. Information Age Appalachia, Report, Appalachian Regional Commission, http://www.arc.gov/programs/distresd/iaapp.pdf Nov. 2000.

23. "Office of the Public Counsel Opposes Abolition of COS Service to Rural Customers," Press Release, Office of the Public Counsel, Oct. 30, 1997.

24. Missouri Public Counsel Asks the Public Service Commission to Postpone Elimination of COS Service as Consumers Protest Ruling, Press Release, Missouri Office of Public Counsel, Dec. 18, 1997.

25. Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps To Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, ¶ 30, CC Docket No. 98-146, Third Report, rel. Feb. 6, 2002 (" Third Report").

Endnotes Continued

26. Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps To Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, CC Docket No. 98-146, Second Report, Aug. 21, 2000.

27. Third Report, ¶ 30.

28. Separate Statement of Commissioner Gloria Tristani, Re: Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps To Accelerate Such Deployment Pursuant to Section 706 of the Telecommunica-tions Act of 1996, CC Docket No. 98-146, News Release, Aug. 3, 2000.

29. Statement of FCC Chairman William E. Kennard on Report on Deployment of Advanced Telecommunications Capability to All Americans, News Release, Aug. 3, 2000.

30. Separate Statement of Commissioner Michael J. Copps, Dissenting, Re: Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps To Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, News Release, Feb. 6, 2002.

31. The Cost of Competition, p. 13, fn. 23, NTCA 21 st Century White Paper Series, December 2000.

32. 10th Circuit Upholds FCC On Voiding Wyoming Law, State and Local Communications Report, Jan. 21, 2000.

33. Sprint to Sell Kansas Exchanges to Rural Telephone, Golden Belt, State and Local Communications Report, Mar. 21, 1997.

34. Exchange Sale Trips Up Western Wireless in Texas, State and Local Communications Report, Jul. 7, 2000.

35. "The Cost of Competition," p. 11, NTCA 21 st Century White Paper Series, December 2000.

36. For more information on Municipal Networks, please see the Forum's article, Lynne Montgomery, "Municipal Networks go the Last Mile, http://www.civilrightsforum.org/cra/municipal.html.

37. 47 C. F. R. § 254( j).

38. Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Recommended Decision, 12 FCC Rcd 87, 303 (1996).

Endnotes Continued

39. The Civil Rights Forum on Communications Policy has spent the last two years working to educate eligible persons and people who work directly with the poor about the Lifeline and Link-Up programs in the Southeastern states. The eight states the Forum has focused on are Florida, Georgia, Maryland, North Carolina, South Carolina, Tennessee, Virginia and West Virginia.

40. Comments of the Civil Rights Forum on Communications Policy, CC Docket No. 96-45, filed Dec. 21, 2001.

41. 47 C. F. R. §54.405( b).

42. Carol Weinhaus, Tom Wilson, Gordon Calaway, et al., Closing the Gap: Universal Service for Low-Income Households, Telecommunications Industry Analysis Project, Aug. 2000.

43. In the Matter of Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, ¶10, CS Docket No. 01- 129, Eighth Annual Report, rel. Jan. 14, 2002.

44. "Goodlatte Satellite Legislation Sent to President -- Signature Expected," http://www.house.gov/apps/list/press/va06_goodlatte/121800.html, Dec. 18, 2000.

45. Testimony of Representative Bob Goodlatte (R-VA) before the Agriculture Committee's Subcommittee on Department Operations, Oversight, Nutrition, and Forestry, Feb. 9, 2000.

46. "Universal Service: A Vital National Policy," NTCA, http://www.ntca.org/leg_reg/leg_issues/univ_serv.html, Mar. 2001.

47. Comments of the Civil Rights Forum on Communications Policy, CC Docket No. 96-45, filed Dec. 21, 2001.

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