Universal Service Reform and Rural Customers:

What You Don’t Know Can Hurt Us All

Lackawaxen Telecommunications Services is concerned — and thinks you should be concerned as well! We say this both as your local telecom service company and as an economic partner in our community, with a stake in the continued prosperity of Wayne and Pike counties. So, what are we concerned about? Well, we’ll tell you.

From the day in 1905 when Lackawaxen Telephone began doing business, we’ve maintained a simple philosophy: to provide a variety of quality services, at an affordable price, to residents and businesses in our area. During all that time, we’ve also operated with the clear understanding that you’re much more than "customers" — you’re our neighbors and friends.

That’s why in this time of tremendous change and upheaval in the nation’s telecommunications network, we want to communicate with you frequently, to provide you information that will help you gain a better understanding of the events affecting independent companies serving areas like ours. More importantly, we want you to be aware of what all this change means to you. As these critical events continue to unfold — both nationally and here in Pennsylvania — you should know where your telecommunications service may be headed.

Many of you have called or stopped by the office to ask about the changes. New national policies and laws, for example, have caused a lot of confusion about how our industry conducts business. We want you to be aware of changes enacted by Congress or ordered by the Federal Communications Commission or the Pennsylvania Public Service Commission. Over the years, we’ve always tried to answer your questions and help you solve your problems. We’ve conducted business this way for as long as we’ve been in business; we don’t intend to change.

Threats to Universal Service

Since the days of FDR, independent phone companies have provided service according to a carefully constructed system of federal and state controls. We were assured of a fair return on our investment; the country was assured of a high-quality national telephone network; and, thanks to universal service, Americans everywhere were assured of comparable telephone service at affordable rates, no matter where they lived.

Now, however, nobody is assured of anything. Technology, competition, and federal and state policy have changed the way telephone service works. We want to help you make some sense of what you’re seeing on television and reading in the newspapers … to give you a clear perspective of how this "reform" on the federal and state levels will affect you individually. As a telecom business, Lackawaxen is well aware of how much these changes will affect us; as your friends and neighbors, we want you to know how much they will affect you.

As customers of an independent telecom company, you should be aware that the breakup of AT&T and the old Bell System back in 1984 brought many important changes. For one, Lackawaxen and other companies serving high-cost, rural areas began to receive "universal service support" and "access charge" revenues from the long-distance companies, such as AT&T and MCI. The access charges compensated us for the long-distance companies using our equipment to bring you long-distance, or toll, service; i.e., for you to make or receive toll calls. The program developed as a result of the national policy commitment to the goal of "universal service," whose purpose is to ensure that all Americans, rural and urban, have access to "comparable service at affordable rates."

We want to make sure you know just how essential universal service support and access charge revenues are to the services we provide and the investments we make — and how those dollars ensure affordable telephone rates for our customers. These programs generate revenue that helps independent companies serving high-cost areas across rural America keep service and rates "comparable" to those in urban areas, where costs are not as high and the population is more densely clustered. For Lackawaxen, and other independents like us, the stakes in the national debate about universal service are high. We continue to rely on that revenue today, based on our costs and investments in switching technologies, distribution cable, and other equipment.

For all independents and Lackawaxen, in particular, a critical aspect of what’s been labeled as "telecom reform" is really the potential reduction or dismantling of universal service support. If these programs fall victim to pro-competitive policy decisions aimed at large, urban markets, the only place for us to make up for the lost dollars is through local revenues. If local rates are to remain affordable in rural, high-cost areas, we have to renew our efforts to convince Congress, the FCC, and Pennsylvania regulators not to force urban-based policies on our rural markets.

Particularly conspicuous in the reform debate, primarily because of the consequences on rural telecom customers, are the ongoing struggles of the long-distance companies, such as AT&T and MCI, and the effects on universal service. There is serious disagreement about how long-distance service should work, how rates should be set, and how universal service should be funded. How these issues are resolved and what it means to you as a user of telecom services are critical. The answers to these questions will affect you, both as telephone customers and, in a larger sense, as members of rural communities whose economic prosperity depends on continued telecom connections.

If any of this information leaves you with questions, please call our staff. If you have ideas or comments — or want to know how you can help ensure that quality service in rural areas survives this "reform" — please call us. More than ever, we need to work together to make sure all of us remain connected as equal partners to the Information Age.