Cap on subsidies for rural cell towers spurs opposition

PORTLAND – Mainers are mobilizing in opposition to a proposed freeze on federal subsidies for construction of rural cell-phone towers, a move that would slow efforts to fill service gaps in the state.

The Federal Communications Commission is considering a cap on payments from the Universal Service Fund created by Congress more than 10 years ago to subsidize cell-phone service in rural areas that lack enough customers for companies to justify equipment installation costs.

Critics say the change would hit hard at rural states such as Maine, which has about 1,600 “dead zones” in which cell-phone coverage is spotty or nonexistent.

Sen. Olympia Snowe, a member of the Commerce Committee that plans a hearing on the fund Tuesday, vowed to challenge the proposed freeze.

“This is so critical to Maine. I think it’s discriminatory,” said Sen. Olympia Snowe, R-Maine. “We will fight this. It’s horrible.”

US Cellular and Unicel were counting on getting $15 million this year for their work in Maine. Company officials said a funding freeze would prevent construction of five towers a year, each of which costs about $400,000.

Seven companies provide cell-phone service in Maine, where the number of customers has grown from 368,000 in 2001 to 630,000 last year, according to the state Public Utilities Commission.

Jack Rooney, president of US Cellular, plans to testify at Tuesday’s hearing that capping the fund could hurt service in Maine and elsewhere.

“There are large blocks of land where there are very few people and where it is commercially difficult to justify investing hundreds of thousands of dollars in new infrastructure, given the amount of usage that particular tower would get,” Rooney said.

Six of the 12 towers that US Cellular built in Maine last year were funded by the Universal Service Fund. The subsidized towers are in Bingham, Fort Fairfield, Jonesport, Rumford, Bridgton and Sedgwick.

Rooney said the company’s commitment to build 32 towers in Maine in the next two years depend on federal funding.

The fund, which distributed $4 billion last year, is generated by an 11.7 percent tax on all interstate phone calls made from land lines and cellular phones. Since the program began, the fund has distributed $22 billion.

Maine has received more than $40 million to improve Internet access at schools and libraries statewide. About $2 billion nationwide has gone to companies like US Cellular that provide service in rural states.

The subsidy cap was proposed as a response to explosive growth in spending on high-cost equipment for areas that don’t have enough customers to justify the expense, said FCC Chairman Kevin Martin.

The freeze, which would last at least 18 months, “is not an end in itself, but rather signals the need for comprehensive reform,” Martin said.

Gov. John Baldacci and the Legislature have urged Maine’s congressional delegation to protect the federal funding.

Information from: Portland Press Herald, http:///www.pressherald.com