April 21, 2004

The Honorable Daniel K. Akaka
United States Senate
141 Hart Senate Office Building
Washington, DC 20510

Dear Senator Akaka:

The Federal Communications Commission is currently considering dramatic and ill-conceived changes to the universal service fund that will unfairly shift costs to low income, low volume, and rural consumers. These proposed changes would undermine the fundamental principles of universal access to telephone services that have served as a foundation for our modern economy.

The National Grange opposes efforts to shift funding for universal telephone service from the current revenue based system, to a connection based system with a flat rate for each user. The Grange believes that a flat rate funding methodology is discriminatory against rural and other high cost phone customers. Flat rate funding would be regressive and would be neither "equitable" nor "competitively neutral." In practice it would mean that individual residential consumers would pay the same fee as businesses. Rural residents who are typically low volume callers would pay the same fees as high volume callers.

For these reasons, the National Grange urges you to oppose changes to the Universal Service Fund that would shift the funding for this program from the current revenue based methodology to a flat rate assessment on all telephone customers.

The National Grange is the oldest general farm and rural public interest organization in the United States. Founded in 1867, today the Grange represents nearly 300,000 individual members affiliated with 3000 local, county and state Grange chapters across rural America. More than 70% of all local Grange chapters are located in communities of 2500 persons or less.

Rural residents, living in high-cost and hard to serve areas would be adversely affected by these proposed changes. A connection-based flat USF assessment ignores the long-cherished goals of the universal service program, to bring universal telephone service to all Americans, regardless of their geographic isolation or economic circumstances. Rural communities are already lagging behind in access to advanced telecommunications, which if more widely available, could bring tremendous opportunities in economic development, education, and health care. By all indications, advanced telecommunications services and access to the Internet in rural communities will be even more central to economic life and civic activity in the future than they have been in the past. The connection-based USF fee would not improve this situation and could actually further delay the deployment of advanced telecommunications services to rural America.

The adoption of a connection based system will have a particularly negative impact on the 44% of consumers identified as low volume users who rely on wireless service primarily for safety, security and peace of mind. At least 10 million prepaid wireless service customers, many of whom live in rural communities, would see rate increases, while others will be priced out of the wireless phone market.

The National Grange urges you to oppose efforts to weaken universal telephone service funding by switching to a connections based assessment to fund universal telephone service. We further urge you to support efforts to strengthen our nation's commitment to universal telephone service through continuation of the revenue based collection methodology for funding the Universal Service Fund.

Sincerely,

Leroy Watson, Legislative Director
National Grange of the Order of Patrons of Husbandry