An April 2010 decision by the FCC to hold universal service fund (USF) subsidies for rural telephone services at current levels was upheld by the DC Circuit Court of Appeals, which dismissed the claims of two state commissions that the FCC’s order failed to ensure that rates for basic rural and urban phone services are “reasonably comparable.” The case at hand was brought to the court by state regulators in Vermont and Maine who argued that the FCC needed to reset its benchmark rate standard in light of statistics showing that basic rural phone services, in some cases, are priced more than 50% higher than the national monthly average of $19 for the same services in more populated areas. In challenging the FCC’s decision, the petitioners faulted the FCC’s reliance on data showing that adoption of the agency’s “reasonably comparable” standard in 2003 spurred phone service deployment in rural areas and that the highcost support mechanism of the USF promoted reasonably comparable rates. Because significant disparities continue to persist with respect to rates and service quality in rural vs. urban areas, the petitioners further argued that the FCC failed in its duty to ensure that rural telecommunications services were reasonably comparable to those offered in urban areas. Proclaiming that the FCC’s decision to leave the USF high-cost mechanism unchanged is “neither arbitrary nor capricious,” a three-judge panel of the DC Circuit concluded that the FCC’s actions were reasonable as an expansion of the high cost portion of the USF targeted for rural services could jeopardize other aspects of the USF such as the E-rate program. For states that require additional high-cost funding, the court further noted that the FCC “has promised to address state-specific issues, like those presented by Vermont and Maine, through the waiver process.” Voicing agreement with the FCC’s contention that “nearly every resident has access to rural telephone service, and any increase in subsidies would require consumers from around the country to pay more for telephone service,” Judge David S. Tatel wrote: “the Commission determined—reasonably in our view—that any reduction in the cost benchmark was unnecessary.”