CEDAR RAPIDS, Iowa - When it comes to cell phone companies, Iowans have plenty of choices.
The FCC says the 67 wireless carriers in Iowa is more than any other state. It's more than twice as many as Texas, which has the second-most carriers, and about four times as many as Oklahoma, which has the third-most cell phone companies.
Some observers say that Iowa's highly-robust competition in wireless providers could become a casualty of proposals in the FCC's National Broadband Plan to simplify or eliminate a former of support for telecommunications providers in high-cost areas.
Cellular providers that serve remote areas often qualify as CETCs, or Competetive Eligible Telecommunications Carriers, for support under the nation's Universal Service program. All carriers that provide telephone service across state or international boundaries an assessment into a Universal Service fund that supports, among other things, the high cost of providing telephone service to remote and hard-to-reach customers, and service to the hearing impaired. The fund also helps support service to schools and libraries, and to low-income households.
The high cost areas portion of Universal Service typically provides funding to one or two land line phone companies in an area that qualify as Eligible Telecommunications Carriers any number of cell phone companies that qualify as CETCs if they reach into high-cost service areas.
Iowa's Office of Consumer Advocate warned in a recent regulatory filing that changing or eliminating CETC universal service support "could affect the wireless market in Iowa significantly." The caution was in response to an Iowa Utilities Board inquiry on the National Broadband Plan.
The group representing wireless carriers also weighed in, saying the widespread deployment of 3G networks in Iowa is partly due to Universal Service support, but upgrading to high-speed 4G networks will require much more investment. It asked the state to ask that any support funds under the National Broadband Plan provide adequate coverage for wireless 4G broadband upgrades.
Having a crowd of cellular providers is undoubtedly good for Iowa, according to Dave Duncan, president of the Urbandale-based Iowa Telecommunications Association. Having more cellular providers likely keeps prices more reasonable and service quality higher than it might be otherwise.
One reason for Iowa's high number of cellular providers is that Iowa is also a leading state in the number of independent local telephone companies. Iowa has close to 140 independent phone companies, of which roughly half operate cellular businesses either on their own network or in different kinds of partnerships. Many have partnerships with I-Wireless, a cellular provider, due in part to the company's historical roots in its creation by a group of Iowa's independent phone companies.
Iowa is fortunate to have so many cellular providers, according to Dave Duncan, president of the Iowa Telecommunications Association, an industry association based in Ankeny. He says the competition is good for the consumer, but the number of telephone companies and cellular providers receiving universal service can also be surprisingly high in any given area.
In a rural part of Iowa, Duncan said it wouldn't be uncommon for four or five wireless carriers to be receiving Universal Support in addition to the established land line carriers.
That's not all. If three different cellular customers lived in the same residence, Duncan said, it would be possible that all three would count separately for purposes of universal service support. The amount of the payment isn't based on the wireless carriers' cost of serving the customers, Duncan said. Rather, it would be calculated by the FCC based on how much it costs land line providers to serve customers in the same area.
Some wireless carriers objected to major reductions on the universal service support in the National Broadband Plan in their comments to the Iowa Utilities Board.
Duncan sees the proposed reductions as a "mixed bag." He says universal service support has helped foster competition in the state, and some larger providers such as Verizon Wireless and U.S. Cellular clearly don't need it to continue providing service.
On the other hand, Duncan said, some smaller wireless companies might struggle or fail without the subsidies.
Providing a wireless service is important to the viability of some independent telephone companies, Duncan said, because the number of land line customers in some markets has been shrinking as consumers decide to rely solely on their wireless connection.