I was recently asked to testify before the U.S. Senate Committee on Commerce, Science and Technology concerning proposed changes to the Universal Service Fund (USF). Congress created the USF to provide carriers with an incentive to build communications networks in sparsely populated rural areas that would otherwise not support investment.

This was a unique and important opportunity for U.S. Cellular. In 2007 alone, wireless providers will contribute over $2.6 billion – or 37 percent of total funding - to the $7 billion fund. Since 1999, more than $22 billion in consumer contributions has been provided to rural landline phone companies across the country that have mature networks, while less than $2 billion has gone to rural wireless carriers over that same time, despite the fact that we have much work to do in building new infrastructure.

The Federal Communications Commission (FCC) is considering reducing the already-limited funding for wireless service in rural communities in North Carolina and across America. Specifically, the FCC is considering a proposal to cap the USF support to wireless carriers. In their haste to enact USF “reform” the FCC may enact this cap within the next few weeks – without fully considering the effect of this decision on rural Americans.

For example, in November 2006, U.S. Cellular completed construction on a new cell tower in Hot Springs, NC, providing the community its first access to wireless service. As part of a statewide network of nearly 400 U.S. Cellular towers, this tower benefits area emergency personnel as well as customers along Interstate 40 and in downtown Hot Springs.

Unfortunately, the FCC wants to cap the funds that make wireless infrastructure development possible. If this cap goes through, the federal funds that would have come into North Carolina to help expand rural networks will be indefinitely delayed. The FCC is expected to impose this cap in the next 4-8 weeks—and its effects on the safety and economic development of rural areas will last for years.

This proposed cap would hit residents of North Carolina especially hard, because while North Carolina’s consumers contribute an estimated $200 million into the federal USF, the state currently draws out only $5 million per year to use on wireless infrastructure development. Since October of 2004, U.S. Cellular has had a petition pending at the FCC to be designated as an Eligible Telecommunications Carrier (ETC) in North Carolina. Designation as an ETC will allow our company to draw from the federal universal service. All funds must be used to construct, improve and maintain our facilities in rural areas within the state. Despite our being qualified, the FCC has not acted on our petition.

Without question, wireless is the future of telecommunications in North Carolina, and we know that residents of rural communities in North Carolina experience similar challenges. Cell phones are no longer luxury items; they are a fundamental necessity. Today, the lack of high-quality wireless coverage in rural areas is a critical public safety issue. First responders, law enforcement, and rural citizens all depend on high-quality coverage to reliably deal with critical safety issues ranging from natural disasters to automotive emergencies to domestic violence. Moreover, E-911 technology will not work properly unless an area has high-quality wireless coverage.

A freeze in funding will also widen the technological gap between urban and rural areas in the state. In addition, a freeze will slow economic development in our rural communities by hampering the state’s ability to attract new businesses and tourists. It also will prevent people already working and living in rural areas from enjoying the same advanced technology and convenience as those in urban areas.

Those who favor a cap fail to acknowledge the real reason for fund growth: Over the past three years, more than ten percent of wireline customers have “cut the cord”; yet federal support to landline companies remains steady at $3 billion per year. That excess, which will only accelerate as consumers continue to choose wireless for their voice communication service, is largely funded by wireless consumers, who see no benefit from USF contributions that flow to wireline networks.

U.S. Cellular has a deep commitment to rural America. The majority of our service areas are sparsely populated and we have built our business on providing high-quality service to all customers, not just those in urban centers.

We are fast becoming a wireless nation, and to provide the best possible service to rural Americans, wireless carriers need a fair share of universal service funding. To this end, U.S. Cellular is supporting Connecting Rural America, a diverse coalition of public safety officials, business leaders and concerned citizens across the country, in an effort to take a stand for rural America. Visit www.connectingruralamerica.org to make your voice heard.

We cannot afford to cap USF funding for wireless customers, because we cannot afford to leave rural America behind.