Decrease in funds could jeopardize rural Nebraskan land lines

Story by Kyle Cummings, NewsNetNebraska

Forty miles of rolling hills, farm land and gravel roads separate Doug Henderson’s home from the nearest populated town of Alliance, Nebraska.

Other than Henderson’s truck, the only thing that runs to his desolate farm house are telephone wires. Henderson, who gets no cell phone reception at his house, depends on his land line.

“I don’t have any source of communication (otherwise),” he said. “I need to order feed, call for parts; it’s the only actual way to get out.”

But Nebraskans like Henderson are now in the minority in the United States. According to a 2010 national study, 12.9 percent of Americans have only land lines.

Graphic courtesy of Sherry Lichtenberg, National Regulatory Research InstituteGraphic courtesy of Sherry Lichtenberg, National Regulatory Research Institute

But as a wave of cellphone usage sweeps across the United States, Henderson’s land line may soon be in jeopardy.

As more people begin to drop land lines, smaller service providers, such as Henderson’s, Mobius Communications, could be in danger of losing money. In Nebraska, Mobius and other small-market providers rely on a Universal Service Fund, which is supported by charging every land line user, regardless of service, a fee, said Nichole Mulachy, legal counsel at the Nebraska Public Service Commission.  The Universal Service Fund is used to distribute to all telecommunication providers in Nebraska to help pay for operations such as running lines and transmitting calls, she said. And because rural providers require the support to stay afloat more than metro areas, they receive a larger chunk of the fund.

Source: Nebraska Public Service Commission; 2012 Annual Report on Telecommunications

Source: Nebraska Public Service Commission.

With more people switching to all-wireless households, though, those funds could soon decrease. From fiscal year 2010 to fiscal year 2011, the Universal Fund dropped from $54.4 million to $53.9 million. To keep the providers that rely on the Universal Service Fund running, Mulcahy said, state legislators eventually will need to take action.

“Many policy decisions, both at the federal and state level, will need to be made in the future regarding Universal Service as the technologies continue to evolve,” Mulcahy said.

If  Mobius would cease operating because of the funding decreases, rural residents like Henderson would have no other option. When he installed his land line years ago, Henderson said, Mobius Communications, was, to his knowledge, the only service provider within reach and the only one willing to provide telephone service up to his standards at his home.

Nebraska was one of the first states to deregulate telecommunications, which began in the 1980s, said Gene Hand,  director of telecommunications at the Nebraska Public Service Commission.

Nebraska is not alone in deregulating land lines, though. So far 28 states have passed bills that deregulate land lines, said Sherry Lichtenberg, principal of Telecommunications Research and Policy at the National Regulatory Research Institute.

But what exactly is deregulation?

Deregulation is basically removing prior restrictions or regulations from a service. The restrictions removed from telecommunications throughout the country are service requirements, Lichtenberg said. Before the switch, some providers were required to install or service land lines within a certain time frame  Now, they are not, and because there are plenty of telecommunication service providers available, if a consumer is unhappy with the service he or she is receiving, they can switch to a different outlet.

What Nebraska passed in 1986, though, has deregulated retail rates, which only allows companies to raise rates if a certain number of customers petition to the Nebraska Public Service Commission, Hand explained. And more recently, in 2012, Nebraska passed a law that allowed service providers in the state to apply to the Nebraska Public Service Commission to modify their service boundaries.

Nebraska Public Service Commissioner Frank E. Landis, like Mulachy, realizes the market is changing and that the needs of rural residents such as Henderson should be taken into account.

“As we watch the move to deregulation, it becomes critically important for the state regulatory commission, especially in more rural states like Nebraska, to remain active on behalf of consumers,” Landis said. “If the trend toward deregulation continues, the commission’s role will continue to be of vital importance.”

For Nebraskans like Henderson, who aren’t experts in deregulation and haven’t closely followed telecommunications trends, the issue is simple: They want to be guaranteed the best service possible.

“I’m looking for the best source,” Henderson said. “That’s my big deal.”

Leave a Reply

Your email address will not be published. Required fields are marked *