Jim Simonson, a director at Northwest Communications in Ray, was elected president of the Association at the conclusion of the organization's 50th annual meeting on December 3 in Bismarck. He succeeds Ron Steinke of Polar Communications. Steinke chose not to run for reelection.

Brenda Volesky of Consolidated Telcom was elected first vice president. She had previously served as the Association's secretary.

Randy Christmann, a State Senator and director at West River Telecommunications Cooperative was elected second vice president. The board of directors then elected Susan Schmutzler of SRT Communications to serve as both secretary and treasurer. Association bylaws do not allow for combining the offices, but directors elected her to both positions.

Twelve North Dakota independent telecommunications companies have filed a complaint against SmartNET, a voice over Internet protocol provider, alleging that the VOIP company is VOIP violating State law by not registering as a telecommunications carrier. SmartNET does business in North Dakota under the CallSmart name.

The rural telecom companies are asking the Public Service Commission to prohibit CallSmart from doing business in the State until it is properly licensed. Those companies allege that CallSmart is avoiding its legal obligation of paying access charges to local exchange carriers, while at the same time using the local switched network to complete long distance calls.

The Federal Communications Commission's (FCC)Wireline Competition Bureau has proposed a universal service contribution factor for the first quarter of 2004 of .087, or 8.7 percent.

If the FCC takes no action regarding the projections of demand and administrative expenses and the proposed contribution factor within a 14 day period after the Public Notice is released, the Wireline Bureau's proposal shall be deemed approved by the Commission. If approved, the Universal Service Administrative Company shall use the contribution factor to calculate universal service contributions for the first quarter of 2004.

The Commission also reminded carriers that they may not mark up Federal universal service line-item amounts above the contribution factor. As a result, carriers are prohibited from recovering through a Federal universal service line item an amount that exceeds the interstate telecommunications charge of 8.7 percent on a customer's bill.

Rocky Mountain Telecommunications Association and Western Rural Telephone Association have merged their operations and have adopted the name of "Western Telecommunications Alliance." Both associations had advocated on behalf of rural telephone companies operating west of the Mississippi River prior to the merger.

Members of the merged group are generally small local exchange carriers serving sparsely populated rural areas, according to a press release distributed at the announcement of the merger. The new association will streamline their advocacy message into a single voice of western telecom providers.

WESTERN WIRELESS ASKS FCC TO ABANDON RATE OF RETURN

The FCC has decided to seek comments on Western Wireless' petition. Comments or opposition to the RM-10822 rulemaking request are due December 19, 2003.

In place of the current system, according to RCR Wireless News, Western Wireless proposes rules to be implemented in 2006 for competitive ETC's (eligible telecommunications carriers), non- rural telephone companies and rural telephone companies owned by relatively large holding companies and that would be phased in during the next six years for small rural companies.

"Rate-of-Return regulation has outlived its time and must be replaced with a more appropriate form of regulation based upon today's competitive environment," said John Stanton, chairman and ceo of Western Wireless. "This petition will help modernize the federal universal service system, bring the full benefits of the telecommunications revolution to rural Americans and eliminate the ongoing distortions and incentives for over-funding the rural telephone companies that permeate the current system."

"Implementation of wireless E911 is several years away in many States, raising the prospect of piecemeal availability of this service across the country for an indefinite number of years to come," said the General Accounting Office.

The Federal Communications Commission has mandated that wireless carriers be ready to deliver Phase II location information to public safety answering points (PSAP) by December 31, 2005. It is estimated the implementation will cost $8 billion over the next five years.

The National Exchange Carrier Association (NECA) has filed evidence with the Federal Communications Commission (FCC) expressing concern that broadband deregulation could slow broadband deployment in rural areas. The FCC is considering a variety of potential deregulatory approaches for the provision of wireline broadband services, some of which could disallow the tariffing and pooling of Digital Subscriber Line (DSL) services.

Several parties, according to NECA, have already filed comments with the FCC expressing concern that classifying broadband services as non-communications could have the unintended effect of reducing access to broadband services in rural areas.

"More than 750 rural telephone companies, most with fewer than 5000 access lines, currently offer DSL services through the NECA tariff," according to NECA President Bob Anderson. "If the FCC eliminated the tariffing of DSL services, an action it is now considering taking, continuation of broadband deployment in rural areas might no longer be possible and DSL prices could rise to unaffordable levels.

Broadband deregulation could force rural companies to deal with added administrative burdens, higher investment risks and the potential decline in the amount of Universal Service support they currently receive. Participating in the NECA tariff pools provides the economic stability and security necessary to encourage small rural companies to deploy advanced broadband services, such as DSL."

NECA Services also administers the Universal Service Fund programs in Texas, Oklahoma, Arizona, Arkansas and Puerto Rico. In addition, NECA Services performs the billing and collection services for the Telecommunications Relay Service Program in Connecticut and Hawaii for Sprint.

The Western Wireless ruling is the latest of several rejections by the FCC to delay wireless local number portability until rural issues can be resolved.

Verizon Wireless, which said earlier this year that it would hold off on charging customers any LNP-related fees until after the Novermber 24th mandate, and ongoing LNP costs would be around 10 to 15 cents per customer, reported it has spent $60 million to date on LNP updates to its network, and the additional fee should generate approximately $170 million per year.

Most of Verizon Wireless' competitors have been charging customers LNP-related fees ranging from 32 cents to $1.75 per month.

The FCC said the reorganization does not add or remove functions from the bureau's portfolio.

Starting on November 24th, consumers in the top 100 metropolitan areas were allowed to keep their numbers when switching between wireless carriers or transferring their number from a home phone to a wireless phone. On May 24, 2004, the same rule will become effective for the remainder of the country, including rural North Dakota.

The Minnesota Public Utilities Commission (PUC) has issued a statement saying "the time has come to address the access charge mechanism and its effects upon competition and the delivery of universal service in Minnesota."

PUC Executive Secretary Burl Haar said at the time of the statement that subsidized local rates could inhibit the development of viable competition in the State of Minnesota. Competitors, he said, can't enter local markets where their operating costs are higher than the subsidized rates they need to meet to compete. Also, he noted, that incumbents are hurt by the system because competitors only have incentives to serve high- yield business customers. Finally, high access charges impose a competitive disadvantage on wireline long distance carriers because wireless carriers pay cost-based rates for access services.

TR's State NewsWire reports the Minnesota commission has decided to address whether access rates should be aligned with forward-looking costs and whether to create an explicit universal service funding mechanism. The Commission said it plans to encourage fair competition, "make explicit and publicly transparent the support that helps keep rates affordable," secure a stable and equitable base for universal service funds, and "level the playing field" between wireline interexchange carriers and wireless carriers. The Commission plans to proceed through four different cases related to (1) access charge reform for the common carrier line (CCL); (2) a universal service rulemaking; (3) a universal service cost study; and, (4) access charge reform for switched access.

In addition, the PUC plans to launch a new proceeding "in the ensuing months" to examine the cost of switched access and to determine whether such rates should be aligned with forward- looking economic cost. Mr. Haar said the evidence suggests the switched access element is priced above cost.

The Federal Communications Commission in mid-November adopted new rules to increase participation in the rural health care universal service program, which is currently capped at $400 million annually. The program has long been underutilitized, according to industry sources. In 2001, there were requests for only $14 million in discounts.

BloostonLaw Telecom Update reports the FCC adopted modifications to the program including:

1-Expanding the eligible health care providers to include dedicated emergency departments of rural for-profit hospitals and non-profit entities that function as health care providers on a part-time basis. Both of these groups will be eligible to receive prorated support.

2-Allowing rural health care providers to receive discounts for satellite services even where alternative terrestrial-based services may be available, capping such discounts at the amount providers would have received if they purchased similarly terrestrial-based service.

3-Expanding the maximum allowable distance for distance-based charges to equal the distance from the rural health care provider to the city with the largest population in the State, as opposed to the nearest city in the State with a population of 50,000 or more.

4-Providing discounted support for Internet access. Rural health care providers will be eligible for discounts of 25 percent of the monthly cost of Internet access.

5-Modifying the method for calculating discounted services so that rural health care providers can compare the urban and rural rates for functionally similar services as viewed from the perspective of the end user.

The FCC's proposed rulemaking is currently open for comment.

The National Telecommunications Cooperative Association (NTCA), Independent Telephone and Telecommunications Alliance (ITTA), Organization for the Promotion and Advancement of Small Telecommunications Companies, Western Alliance and United States Telecom Association (USTA) are urging the Joint Board to abandon any such primary line limitation proposal when it develops a recommended decision on Universal Service Fund Portability.

In the mid-November letter to the Joint Board, the associations said that a primary line restriction on USF support would:

1-Impede telecommunications network development because it would create uncertainty about network cost recovery;

2-Contradict the 1996 Telecommunication Act's universal service principal of "affordable and reasonably comparable services and rates" and hinder employment opportunities and economic development in fragile rural communities;

3-Fail to be "competitively neutral" because it would favor wireless competitive eligible telecommunications carriers (CETCs) that have not made the investment to ubiquitously serve entire study areas, as rural telecom companies have done; and

4-Be administratively unworkable.

The amount of support for each State is determined by comparing the statewide average cost per line, estimated by the FCC's forward-looking cost model, to a nationwide cost benchmark of the national average cost. Federal support is provided to these non-rural carriers in States with costs that exceed the benchmark. For the year 2002, eight States received $233 million in support.

In its decision, the FCC:

1-Requires the States to compare rates in their rural areas with a nationwide urban rate benchmark to determine whether such rural and urban rates are reasonably comparable;

2-Concludes that a rate review and expanded certification process will induce States to achieve reasonably comparable rates;

3-Reaffirms that comparing statewide average costs to a nationwide cost benchmark appropriately determines high-cost support for non-rural carriers;

4-Defines the statutory terms "sufficient" and "reasonably comparable" more precisely;

5-Modifies the high-cost mechanism for non-rural carriers by basing the cost benchmark--which is used to determine the amount of support--on two standard deviations above the national average cost per line; and

6-Seeks comment in a "Further Notice" on issues related to the rate review and expanded certification process. Additionally, the "Further Notice" seeks comment on whether additional targeted Federal support should be made available to States that implement explicit universal service mechanisms to encourage States to adopt universal service mechanisms that will be sustainable in a competitive environment.

Qwest recently completed a financial restatement that erased $2.5 billion of profits and revenues for 2000 and 2001. The company, according to the Rocky Mountain News, remains under investigation by the Securities and Exchange Commission and the Justice Department.

The company also offered to buy back $2.25 billion of debt at a slight premium. The offer will allow the telco to cuts its debt to about $19 billion and save $100 million in interest a year.

In the past year, Qwest has been allowed to re-enter the long distance market in 13 of the 14 States and expects a ruling on its Arizona application early next month. In the third quarter, Qwest said it added long distance service to 572,000 lines in its local service area.

Qwest said that it had effectively made a $10 billion improvement in its balance sheet in the past year--reducing debt to $21 billion from $26 billion and increasing cost to $6 billion from $500 million. While commentators said the moved helped the company avoid bankruptcy, it also shed one of its most profitable businesses--the telephone directory unit of the company. Profits have come, in part said the newspaper, because Qwest has kept a tight lid on spending, with capital expenditures running less than $1.5 billion for the first nine months. That compares with an initial yearly forecast of $2.5 billion.

Employment now stands at 46,701, down 12 percent from a year ago.

The employees include 5,600 union workers and about 16,000 nonunion managers and administrative staff. The final count far exceeds Verizon's estimate last month that more than 12,000 of the 152,000 workers who were offered the buyout were expected to accept the deal.

The buyout, which was not offered to Verizon Wireless' nearly all- nonunion staff of 40,000, was designed to help accelerate cost- cutting in the company's shrinking residential telephone business.

Qwest Communications reported its wireless operations posted a 15.1 percent drop in revenues from $179 million during the third quarter of 2002 to $152 million this year. The decrease was attributed to a decline in customers from 1.1 million last year to 912,000 this year and a decline in average revenue per user from $47 last year to $45 this year.

The company recently announced plans to migrate its wireless customer base to Sprint PCS' network, allowing Qwest to offer both nationwide wireless service under the brand name, as well as Sprint PCS' Vision wireless data service.

The Organization for the Promotion and Advancement of Small Telecommunications Companies' (OPASTCO) Separations and Access Committee adopted a set of principals to guide intercarrier compensation. The organization's board of directors approved the following principals:

1-Maintain three revenue streams to the incumbent carrier--end- user revenues, intercarrier compensation and Universal Service Fund.

2-Eliminate the differences between interstate and State access rate levels, and, to the extent possible, reduce the differences between access, reciprocal compensation, and Internet usage.

3-Develop a compensation plan that recognizes and includes the emerging technology that converges voice, data and video uses of the network.

4-Enhance flexibility of retail pricing and bundling, including expansion of calling plans to a national level.

5-Ensure that Federal Universal Service Fund support is sufficient to achieve its statutory purpose. Provide ubiquitous services at affordable and comparable prices in all regions of the nation.

6-Maintain the principal of receiving sufficient compensation for use of the network.

7-Ensure all services are measurable and billable, thereby decreasing or eliminating measurement problems such as those described as "phathom" traffic.

8-Account for the impact of changes in the switched access compensation of special access services.

9-Ensure that reasonable pricing of transit and transport exists in the wholesale pricing mechanisms.

10-Implement desired changes in a revenue neutral manner and consistent with pooling.

11-If current compensation regimes cannot meet principals 1-10 above, develop a transition plan from the current systems to a future system that also meets these principals.

British motorists are no longer allowed to use hand-held cell
phones while driving under a law that took effect earlier this month and is similar to the restrictions in most other European countries.

In Scotland, police charged one woman with improper use of her mobile phone and issued fines to two other drivers on the first day the law took effect. Police can issue immediate fines of about $50. The fines can rise to as much as $1,700 if the case goes to court.

Most European countries have banned the use of hand-held phones while driving. Hands-free cell phone kits are permitted, the Associated Press reports, but Transport Minister David Jamieson said, "police can use other powers to prosecute a driver if they are distracted by a call on a hands-free phone."

"The vast majority of motorists know that driving and using a mobile phone is dangerous and I hope that today's ban will make the roads safer for everyone," Jamieson said.

Western Wireless launched its OpenDoor wireless Internet access service for its Cellular One customers using the carrier's CDMA2000 1x network in select markets in Iowa, Kansas, Minnesota, South Dakota, Missouri, Montana, Nebraska, New Mexico, Oklahoma and Texas.

The carrier, in a press release, said the service, which uses Qualcomm's BREW platform, is accessible through a number of devices including PC Cards, 1x-enabled handsets or by linking a handset to a laptop computer. Customers signing up for the service before February will receive unlimited data transmission for life for $60 per month, with additional rate plans available at select retail locations.

The Federal Communications Commission's Jonathan Adelstein told members of the industry last week that wireless carriers that receive universal service support should submit to auditing to ensure that the subsidies they receive are being used to upgrade
and improve networks in rural America. Commissioner Adelstein made the remarks at the 21st Annual Telecommunications Policy and Regulation Institute.

RCR Wireless News reports that the wireline industry and some State regulators have called for more direct auditing for the wireless industry. Commissioner Adelstein said following his speech that he has been told by some wireless carriers, which he did not name, that they would be willing to submit greater data to the FCC to ensure that the payments are being used for rural America.

Qwest chief executive Richard Notebaert said last week that it will continue to oppose regulation of voice communications over the Internet. The company has said that it will begin using the technology to carry toll calls in Minnesota.

Notebaert said it would be inconsistent for the Federal Communications Commission to regulate what is known as "voice over Internet protocol" (VOIP) service when similar services, such as telephone via cable connection and wireless phones are not regulated. FCC Chairman Michael Powell was quoted last week following a Commission-sponsored VOIP forum that he was strongly opposed to regulating the emerging technology. "No regulator, either Federal or State, should tread into this area without an absolutely compelling justification for doing so," Commission Powell said.

Following the FCC forum on VOIP on December 1, the Commission said it was considering issuing a notice that it could develop some rules affecting the technology. Those rules, according to the Denver Post, could deal with issues such as 911 service, whether law enforcement should have the ability to eavesdrop on some Internet communications, and whether the technology should be subject to fees for universal service.

Federal Communications Commission (FCC) member Jonathan Adelstein said last week that an industry working group looking at the future of intercarrier compensation should be expanded to take in State and consumer interests as much as possible. State Commissioners in particular, according to TR's State Telecommunications Report, have complained they have been frozen out of the process as the intercarrier compensation forum (ICF) pushes forward with development of a proposal it hopes to file with the Commission.

"It is important that industry work together to try come up with as much of a consensus as they can, Commissioner Adelstein told the Practicing Law Institute in Washington. "It's essential also that we involve State Commissions in this issue because they have a big stake in the outcome."

The Iowa Telecommunications Association, along with other small utilities, has reached a consensus with the railroads in the State over the minimum amount of insurance coverage utilities must carry before crossing railroad right-of-way. Small utilities with fewer than 20,000 customers must carry excess liability coverage of not less than $1 million.

The same small companies are also required to carry railroad protective liability insurance with a combined single limit of $2 million per occurrence and $4 million aggregate for railroad crossings by utilities other than gas pipelines or hazardous materials. All other utilities must carry policies of $4 million per occurrence, $6 million aggregate. The utility must provide proof of insurance coverage before construction.

Negotiations are continuing with the railroads over the standardized specification exhibit utilities must file with the railroad prior to crossing their facilities.

All agreements between the utilities in Iowa and the railroads must be approved by a regulatory agency.

In early November the Federal Communications Commission released its "Telephone Subscribership in the United States" report. The report shows telephone subscribership levels by State, income level, race, age, household size and employment status, according to NTCA.

Among the findings are:

*Telephone subscribership penetration rate in March was 95.2%, up 0.2 percent from the last report.

*The penetration rate was 80.5 percent for households with annual incomes below $5,000, while the rate for households with incomes over $75,000 is 99.3 percent.

*By State, the penetration rates ranged from a low of 90.5 percent in Alabama to a high of 98.5 percent in Maryland.

*By age, penetration rates ranged from 90.4 percent for households headed by a person under 25 to 97.3 percent for households headed by a person between 60 and 64.

*The penetration rate for unemployed adults was 92.5 percent, while the rate for employed adults was 96.7 percent.

Jan. 12:
NDATC Board Meeting
Statewide Boardroom
Mandan, N.D.

Feb. 8-11:
NTCA Annual Meeting
Miami Beach, FL

Feb. 24-26:
Telephone AT&S Conference
Bismarck, N.D.

Mar. 3:
NDATC Board Meeting
Statewide Boardroom
Mandan, N.D.

Mar. 7-9:
NTCA Telecom Executive Forum
Albuquerque, N.M.

Mar. 21-24:
Minnesota Telecom Alliance
Annual Convention
Minneapolis, MN

Mar. 22-24:
NTCA Legislative Conference
Washington, D.C.

April 6:
NDATC Board Meeting
Statewide Boardroom
Mandan, N.D.

April 7-8:
NDTA Annual Meeting
Ramkota Hotel
Bismarck, N.D.

April 25-27:
NTCA PRNEt Spring Seminar
Orlando, FL

May 10-13:
Tri-State Operations Conference
Holiday Inn
Fargo, N.D.