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CenturyLink : Fund that keeps rural phone rates affordable in peril

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01/13/2018 | 11:31pm CET

A 30-year-old state fund that keeps landline phone service affordable for rural Idahoans is in jeopardy as more people drop landlines.

Eight small phone companies that people in Boise and other cities may not know - with names like Rural Telephone Co., Fremont Telecom and Columbine Telephone - share $1.7 million annually. The money comes from surcharges on landline bills and long-distance landline minutes. The subsidies allows the companies to provide basic residential phone service for $25.76 per month. In comparison, CenturyLink, which serves much of Southern Idaho's population centers, charges $25 a month.

But as landlines fade, revenue from the surcharges is fading too. The surcharges don't apply to cell phones and voice-over-internet phones, because the Legislature has never authorized that.

Rural phone service costs more than service in urban areas. The fund was established under the Idaho Telecommunications Act of 1988 to ensure that all Idahoans have access to phone service at reasonable rates, no more than 25 percent higher than CenturyLink and other companies that don't receive a subsidy.

Idaho had 532,000 home landlines and 187,000 business lines in 2000, according to the PUC. By 2017, it had just 152,000 home and 122,000 business lines. Long-distance minutes fell from 302 million to 125 million.

Last fiscal year, the Universal Service Fund collected $500,000 less than it paid out. In response, the PUC doubled the surcharges Sept. 1. Fees rose to 25 cents from 12 cents per month on home lines, 44 cents from 20 cents on business lines and 0.9 cents from 0.5 cents per minute on long-distance calls.

That will carry the fund through the current fiscal year, which ends June 30. But the fund has run low - it ended the last year with an $80,784 balance - and it is unsustainable even with the higher fees, the PUC says.

The commission worries that raising the surcharge will make the problem worse by encouraging more people drop their landlines.

The agency has scheduled two workshops, on Wednesday and Feb. 28, to discuss how to keep the fund solvent. It's meant to facilitate discussion between the commission, industry representatives and the general public, commission spokesman Matt Evans said. While the public is welcome to attend, the commission will not take testimony, he said.

Both workshops, beginning at 10 a.m., will be held at the commission's hearing room at 472 W. Washington St., Boise.

One way to keep the fund solvent could be to impose a surcharge on cell and voice-over-internet phone users. That would require action by the Legislature. Utah and Nebraska are now charging cell-phone users to support similar funds, Evans said.

"We haven't talked about that, but everything is on the table at this point," he said.

People can also participate in the workshops by phone, calling in on a toll-free line at 888-706-6468 and entering the code 4435939 when prompted.

© Copyright © 2018 Post Company, source Newspapers

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Financials ($)
Sales 2017 17 867 M
EBIT 2017 2 221 M
Net income 2017 475 M
Debt 2017 33 529 M
Yield 2017 12,5%
P/E ratio 2017 23,55
P/E ratio 2018 27,31
EV / Sales 2017 2,91x
EV / Sales 2018 2,01x
Capitalization 18 537 M
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Average target price 19,1 $
Spread / Average Target 10%
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Glen F. Post Chief Executive Officer & Director
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