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Oklahoma Supreme Court orders Oklahoma Corporation Commission to honor rural phone companies' past reimbursement requests

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File art/Metro Creative Connection
File art/Metro Creative Connection

The Oklahoma Supreme Court this week sent back to the Oklahoma Corporation Commission seven cases with orders to pay reimbursements to two telephone companies.

The court considered as a group the seven cases that involved requests by Dobson Telephone Co. and Medicine Park Telephone Co. for reimbursements from the Oklahoma Universal Service Fund. The corporation commission previously denied those requests.

The Oklahoma Universal Service Fund is administered by Brandy Wreath, director of the Public Utility Division at the corporation commission. The fund is a companion to one created by Congress called the Federal Universal Service Fund.

Both collect assessments from telephone companies’ revenues so they can be used to provide expense reimbursements to companies that provide telephone services to remote and rural areas to keep those services affordable for customers. It also makes payments to libraries, schools and not-for-profit hospitals to help them defer costs to provide internet to those they serve.

In the appealed cases, the companies had sought reimbursements from the fund to defray expenses they encountered either because of required line relocation projects to make way for highway improvements or to replace dollars they previously received from the federal fund, administered by the Federal Communications Commission, to support their ongoing operations.

All the requests were reviewed by Wreath, who in turn recommended reimbursement payments to the parties after records were reviewed (often involving on-site visits, where confidential data was accessible).

Those recommendations were contested by competing phone companies in every case, sending the matters to administrative law judges at the commission for additional reviews.

In some cases, the judges recommended paying what Wreath had proposed, while in other cases, they recommended against paying, citing commission orders as cause.

In all the cases, elected members of the corporation commission voted 2 to 1 against paying the requested reimbursements, with Commissioners Bob Anthony and Todd Hiett on one side and Commissioner Dana Murphy on the other.

Generally, orders issued by the commission stated the companies hadn’t provided sufficient documentation justifying their requests and that the companies had failed to prove the expenditures were necessary to provide primary universal services at reasonable and affordable rates.

But the companies argued in their appeals that commissioners in previous cases had accepted on-site reviews of confidential information by the fund’s administrator as an adequate way to meet standards of proof for reimbursement.

Some justices noted in concurring opinions the commission votes happened in large part due to a belief among a majority of commissioners that the fund isn’t needed, adding they understood Commissioner Anthony even had gone so far in the past to write legislators to ask for the law establishing the fund to be eliminated, stating, “the fund is a bad program that should be repealed.”

Four of the seven cases involved Dobson Telephone Co., which requested reimbursements for expenses it incurred involving highway construction projects where it had been required by Oklahoma’s Department of Transportation to move phone lines from needed rights of way. The other three cases involved Medicine Park Telephone Co.

Wreath recommended:

• Dobson be paid $95,418 to reimburse it for relocation expenses related to construction along U.S. 62 in Lincoln County.

• Dobson be paid $21,794 to reimburse it for relocation costs it had incurred to move lines to clear rights of way for improvements ODOT was making to State Highway 102 and U.S. 62 in Lincoln County.

• Dobson be paid $54,767 to reimburse it for relocation costs it had incurred to move lines to clear rights of way for improvements ODOT was making to U.S. 283 in Roger Mills County.

• Dobson be paid $28,817 to reimburse it for relocation costs it had incurred to move lines to clear rights of way for improvements ODOT was making to State Highway 33 in Roger Mills County.

• Medicine Park Telephone Co. receive $60,707 to reimburse it for 2014 costs and monthly payments going forward of $5,059 to compensate it for dollars it lost when the FCC limited reimbursements it made to rural service providers from its universal fund.

• Medicine Park Telephone be paid $102,629 to reimburse it for 2014 telephone switching service costs and to receive monthly payments of $8,552, going forward, after the FCC eliminated reimbursements for those expenses from its fund.

• Medicine Park receive a $309,017 payment for its 2014 expenses and monthly payments, going forward, of $25,751, to reimburse it for general expenses it had incurred to meet ongoing federal compliance requirements.

While specific language in each of the rulings differed slightly, the supreme court generally agreed with the companies’ assertions that commissioners had, through their rulings, disregarded “the very purpose of the fund to ensure the availability of affordable telephone service to customers in rural and high-cost areas where, absent the subsidies, their provision would be cost-prohibitive.”

Other fund activity

The supreme court’s rulings in those cases aren’t the only news happening this week involving the Oklahoma Universal Service Fund.

On Thursday, an administrative law judge at the commission will take up a request filed by Wreath to increase the percentage of assessment the fund gets from intrastate phone service revenues, starting July 1.

Currently, the assessment the fund gets from revenues is 1.2%.

The administrator calculates the fund will need about $43 million for the state fiscal year that starts July 1, and the assessment will need to be increased to 5.03% to provide needed dollars.

However, Wreath also said this week that estimate doesn’t include at least some of the payments detailed in cases decided by the Supreme Court this week.

Wreath said part of the reason the requested increase is so high is because Oklahoma’s High Cost Fund, originally created by the commission to support changes required to facilitate long distance competition and a previous restructuring of access charges, was abolished by a commission order issued in February.

All phone companies pay required assessments for the Oklahoma and federal funds. However, not all phone companies pass along those charges to customers on their bills, officials said.

Jack Money

Jack Money has worked for The Oklahoman for more than 20 years. During that time, he has worked for the paper’s city, state, metro and business news desks, including serving for a while as an assistant city editor. Money has won state and regional... Read more ›

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