Rural phone boss pans plan

By FRITZ BUSCH

Journal Staff Writer

MINNEAPOLIS -- The real "digital divide" in Minnesota is not between the metro area and rural areas but between rural communities served by independent phone companies and those served by big holding companies.

So said Minnesota Association for Rural Telecommunications Executive Director Randall Young.

He said two-thirds of state communities served by independent phone companies will have advanced technology like DSL by the end of this year's construction season.

Young said rural phone companies can provide basic monthly service for $12 even though it costs them $30 or even over $100 in remote parts of Northern Minnesota.

He said the low monthly basic rates are possible due to access charges, which are paid by long distance companies to local companies for using their network to get to end users.

Young said Gov. Jesse Ventura's telecom plan would reduce access charges from $7 to one cent per minute.

"It would be a huge windfall profit for long-distance companies," Young said. "It would be money that will leave Minnesota that we'll never see again. Long-distance companies don't have a good track record of passing discounts on to customers."

Young said the federal government ordered an access charge reduction recently while AT&T ordered a rate increase two days after that.

The administration would create a universal service fund to make up the difference, funded by a 15 percent tax on everybody's phone bill in the state.

Young said the tax would generate about $250,000 per year in new taxes that would go into an account to support high-cost customers.

"The problem with the tax is that it will politicize affordable rural phone service, because the legislature would have to appropriate the money each year," Young said.

Rural rates will double or triple under the administration plan, according to Young.

"We have been told point blank that we will be forced to raise rural phone company rates so high that it will entice competitors to come into towns," Young said. "I don't think it makes much sense for rural communities."

Steve Roe of Kandilink, a telecom advocacy group, said the technical complexity in regulatory proposals needs to be understood before votes are cast.

Roe said he wondered when the plan will take effect, since it has been on the boards for two years. He also said he would like to see less government meddling in the industry.

Meanwhile, administration plan supporters disagree, saying service will improve in rural Minnesota if they have their way.

They said more high-speed and digital access will arrive when subsidies granted to rural phone companies are gone, bringing in new providers in a previously-monopolized market in which rural companies charged whatever they wanted to.

"The current system is anti-competitive," said Tony Mendoza, assistance commissioner in charge of telecommunications for the state Department of Public Service.

The bill is expected to heat up in the 2001 legislative session next January.