In 2008, the FCC adopted an interim cap on high-cost universal service support provided to eligible telecommunications carriers (ETCs). This interim cap is especially problematic for wireless providers that rely on ETC funding for the provision of service in high-cost rural areas. Under the cap, ETCs now receive funding based on the high-cost support levels established in March 2008 and must share this funding with any newly-designated competitive ETCs.

In August 2008, the Rural Cellular Association (RCA) and a group of small wireless carriers filed a Joint Petition for Reconsideration asking the FCC to rescind this interim cap. RCA subsequently withdrew its joint petition and filed suit in the U.S. Court of Appeals for the D.C. Circuit seeking judicial review of the FCC’s interim cap. RCA’s appeal was consolidated for review with other appeals filed by various wireless carriers, and this case is still in the early procedural stages.

Meanwhile, the FCC is poised to vote on comprehensive universal service reform at its meeting scheduled for November 4, 2008. Specifically, the FCC is seeking changes that would restructure the method by which universal service support is calculated and distributed.

The potential impact of the FCC’s proposal on wireless carriers in particular prompted a recent letter to the FCC from Senators Snowe and Collins of Maine. The senators expressed concern that a reduction in funds to wireless carriers could reduce cellular coverage in rural areas and that “inadequately served rural areas will fall farther behind non-rural areas in the basic capacity to meet public safety requirements.” The senators also urged the FCC to “meaningfully fund broadband services and ensure that investment in mobile wireless infrastructure in rural areas is accelerated, not impeded.”