FCC computer programming and transcription errors will cost Alabama phone companies millions in subsidies for serving rural areas this year

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Not sure if this has a y2k component--sounds like it's possible, but none mentioned. However, in a news release, the FCC blamed the changes on earlier computer programming and transcription errors. Wonder how many other locales will find similar errors.

Wrong numbers

Federal miscalculation will cost Alabama phone companies millions in subsidies for serving rural areas this year

02/03/2000 By SEAN REILLY

Capital Bureau


Because of flawed calculations by federal regulators, it turns out that Alabama's two largest phone companies will get some $19 million less than expected this year in subsidies for serving customers in out-of-the-way areas.

Under estimates announced late last year, BellSouth and GTE were supposed to have received $43.7 million and $23.9 million, respectively, this year. The actual figures will be $30 million and $18.9 million, according to recently revised numbers from the Federal Communications Commission.

In a news release, the commission blamed the changes on earlier computer programming and transcription errors.

The potential impact on customers remains to be seen.

Both BellSouth and GTE had already filed plans for spending the money with the Alabama Public Service Commission. They must now rework those documents by Friday, according to a recent PSC order, which also questioned some of the two companies' proposed expenditures.

"It's obviously going to have a pretty big effect," BellSouth spokesman Bill Todd said of the revised figures Tuesday. "Our network engineers and analysts are having to look at what can stay and what can not and what's the highest priority."

A GTE spokeswoman said the company could not comment before its plan is filed with the Public Service Commission.

BellSouth is Alabama's largest local phone company; besides Mobile, it serves such cities as McIntosh, Brewton and Evergreen. GTE covers much of southeast Alabama's Wiregrass region, but also serves south Mobile County and Coffeeville in Clarke County.

Alabama is one of eight states where large phone companies will split an estimated $210 million in federal subsidies this year. The money is designed to ensure that customers in rural, hard-to-serve regions get service comparable to what their urban counterparts enjoy. As the telecommunications industry slowly deregulates, some observers worry that a "digital divide" is looming because of carriers' reluctance to invest in such remote, lightly populated areas. "Deregulation means - almost inevitably - loss for rural people," said Jack Shelton, director of the Program for Rural Services and Research at the University of Alabama. "The bus is not going to stop; the train is not going to stop; the post office is going to be closed."

The reason is that rural regions' low-population density makes them unprofitable to serve. That wasn't a problem when phone companies were regulated monopolies, according to industry experts. In return for providing service to these areas hinterland, they could pass on the costs to other customers through higher rates.

"When you move into a more competitive arena, there's no guarantee that these areas have to be served," said Steve Rockwell, an associate professor in the Communication Department at the University of South Alabama.

The federal subsidy program is supposed to bridge the gap. Funding comes from a "universal connectivity charge" tacked on to phone bills. Despite the lowered estimates, a new federal formula for dividing the money means that Alabama carriers are still in line for a four-fold increase in funding this year. Last year, they received close to $11 million, according to the FCC. This year, their projected stake will be $49 million.

In their plans already submitted to the state Public Service Commission, BellSouth had proposed upgrading its rural network with faster, more up-to-date lines and switches, while GTE wanted to spend some of its share to offset reductions in charges to long-distance companies for accessing its lines.

In the commission's order last week, the three-member panel questioned whether some of those proposals meshed with the intent of the subsidy program. Because federal regulators are confronting the complex issue of access charges elsewhere, the commission recommended that GTE drop that part of its proposal altogether.

The commission also asked both carriers for more explanation of other proposed expenditures. It would not be appropriate, the panel wrote, to use the federal money "for matters that are more akin to preventive or routine maintenance concerns." Todd noted that at this time the commission is simply seeking more explanation for the BellSouth proposals.

) 2000 Mobile Register. Used with permission.


-- Carl Jenkins (Somewherepress@aol.com), February 03, 2000

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