Eligible Telecommunications Carrier (ETC): Meaning, Facts, Approved List & More

An Eligible Telecommunications Carrier (ETC) is a telecommunications carrier designated by state public utility commissions or the FCC to receive universal service support from the federal Universal Service Fund (USF) [1]. The purpose of the ETC designation is to promote universal service by ensuring that affordable, quality telecommunications services are available to all consumers in all regions of the nation, including rural, insular, and high-cost areas [2].

The concept of ETCs originated from the Telecommunications Act of 1996, which codified the long-standing universal service principles that all Americans should have access to affordable telecommunications services. As part of reforms to achieve these principles, the Act required eligible telecommunications carriers to provide services supported by the USF in rural, insular and high-cost areas in exchange for receiving support from the Fund [3].

Requirements for ETC Status

There are several key requirements that telecommunications carriers must meet in order to be designated as an Eligible Telecommunications Carrier (ETC) and receive universal service support:

Service area requirements – ETCs must offer services throughout their designated service area. They must file maps showing coverage and be able to provide services to customers requesting it. Certain rural carriers have more flexibility in service area definitions. (https://www.cpuc.ca.gov/industries-and-topics/internet-and-phone/service-quality-and-etc/eligible-telecommunications-carrier)

Facilities requirements – ETCs must use their own facilities or a combination of their own and resale of another carrier’s services. They must advertise the availability of supported services. (https://www.usac.org/high-cost/annual-requirements/certify-data-with-54-314/)

Advertising requirements – ETCs must publicize the availability of Lifeline-supported services in a manner reasonably designed to reach those likely to qualify. They must comply with state regulations for advertising Lifeline services. (https://www.usac.org/lifeline/get-started/join-lifeline-as-an-etc/)

Lifeline support offerings – ETCs must offer qualifying low-income consumers Lifeline discounts on voice and/or broadband internet services. They must verify eligibility and enroll subscribers. Discounts can range from $5.25-$9.25 per month depending on state regulations. (FCC Lifeline Program)

Universal Service Fund

The Universal Service Fund (USF) refers to a system of subsidies and fees managed by the FCC that helps provide affordable telecommunication services to low-income households and consumers in high-cost areas, schools, libraries, and rural health care centers. The USF consists of four programs:

• The High Cost Program provides subsidies to eligible telecommunications carriers (ETCs) serving high-cost, rural, and remote areas.
• The Low Income Program assists low-income consumers by providing discounts for phone and internet services through the Lifeline and Link Up programs.
• The Rural Health Care Program provides reduced rates for telehealth and telemedicine services at rural health care centers.
• The E-Rate Program offers affordable telecom and internet access to schools and libraries.

The USF is funded through fees assessed on telecommunications providers, which are typically passed on to consumers as a ‘Universal Service Fee’ on phone bills. ETCs that provide services to high-cost areas can obtain funding from the High Cost Fund portion of the USF. To be designated as an ETC, carriers must meet certain service standards and obligations. So the USF and ETC programs work together to promote universal service.

Sources: https://www.fcc.gov/general/universal-service-fund, https://www.usac.org/about/universal-service/

Applying for ETC Designation

The process for applying for ETC designation varies depending on whether the applicant is a common carrier or a non-common carrier. Common carriers must apply to the FCC, while non-common carriers apply to state commissions.

The application process typically involves submitting detailed information about the applicant’s financial and technical capabilities, a two-year network improvement and maintenance plan, demonstration of ability to remain functional in emergencies, and a description of how consumer protection regulations will be met. Applicants must also submit maps showing current and planned service areas, projected number of customers, and funding requirements (USAC).

The application review process can take 6 months or longer. Some common pitfalls that can delay approval include incomplete applications, insufficient documentation of technical and financial qualifications, failure to demonstrate compliance with all ETC requirements, and service areas that overlap with existing ETCs (ETC Connect).

Once approved, ETCs must complete annual recertification to demonstrate continued compliance. ETCs must also submit annual reports detailing network improvements and actual number of customers served (USAC).

Maintaining ETC Status

Once an ETC has been designated, there are ongoing compliance obligations and regulations that must be followed to maintain that status ¹. Key aspects of maintaining ETC status include:

Compliance with Service Requirements

ETCs must continue to comply with all service requirements outlined by the FCC, including:

• Providing voice and broadband services
• Offering services at just, reasonable and affordable rates
• Allowing consumers to choose Lifeline plans
• Providing equal access to long distance carriers

Annual Recertification

ETCs must complete an annual recertification process demonstrating continued compliance with FCC requirements. This involves submitting forms and data to the Universal Service Administrative Company (USAC) and FCC ².

Record Keeping and Audits

Detailed records must be kept on metrics such as number of subscribers, services offered, network coverage and outages. Companies must comply with audits from USAC and the FCC to ensure accuracy of reported data.

Enforcement

Failure to meet ETC obligations can result in fines, penalties or even loss of ETC designation. The FCC rigorously monitors ETCs to protect Lifeline program integrity.

Case Studies

Two key case studies related to ETC designation are Tracfone and BigBang Digital:

Tracfone, owned by America Movil, received ETC designation to provide Lifeline services in multiple states in 2008-2009. However, in 2021 the FCC revoked Tracfone’s ETC designations due to violations of ETC requirements like failing to report service outages. This demonstrates how ETC status can be lost if providers do not comply with requirements.

BigBang Digital in October 2021 petitioned the FCC for ETC designation in 11 states to provide Lifeline service. The FCC approved this request in early 2022, allowing BigBang to become an ETC and expand access to discounted services. This shows the process a provider must go through to gain ETC status from the FCC.

Current ETCs

There are several hundred companies that have been approved as ETCs across the United States. The full list of approved ETCs by state is available from the FCC here.

Some of the major ETCs include:

• AT&T – Offers wireline telephone and mobile wireless service in many states across the country.
• Verizon – A large wireline and mobile wireless provider operating nationwide.
• T-Mobile – One of the largest mobile wireless carriers with coverage across most of the U.S.
• TracFone Wireless – A prepaid wireless provider and one of the largest ETCs with millions of subscribers.
• CenturyLink – An incumbent local exchange carrier offering wired telephone, DSL, and fiber broadband services in over 30 states.

Smaller regional and rural carriers like Frontier, Windstream, and various cooperatives have also obtained ETC designations in the areas they serve. There are hundreds of approved ETCs in total, ranging from large nationwide providers to small local companies focused on rural markets.

ETC Controversies

ETCs have faced various criticisms and controversies over the years. Some of the main issues brought up include:

Anti-competitive behavior – There have been accusations that some ETCs engage in anti-competitive practices to maintain their monopoly status in rural areas. This prevents other carriers from entering the market.

Waste and fraud – Reports have uncovered cases of ETCs misusing Universal Service funds through inflated costs, unnecessary expenses, and subsidizing non-eligible services. This has led to calls for increased oversight and accountability of ETCs. (Gemini Learn)

Lack of rural investment – Despite receiving subsidies, some argue ETCs have not sufficiently invested in upgrading and expanding service in rural communities. Areas with sparse populations remain underserved.

Market distortion – Critics claim the ETC program distorts the telecom market by providing subsidies to certain carriers. This creates an uneven playing field between ETCs and non-ETCs.

Arbitrary requirements – Controversy has surrounded the initial ETC requirements, which some view as arbitrary thresholds that do not necessarily improve services. The requirements have been criticized as more bureaucratic than purposeful.

While ETCs aim to promote universal service, they have experienced ongoing debates regarding their effectiveness, oversight, and competitive fairness. Striking the right balance between funding essential services while minimizing waste has proven challenging.

Future of ETCs

The future of the ETC program is unclear as debates continue around reforming or replacing it altogether. Some key trends shaping the future of ETCs include:

Declining ETC program funding. The Universal Service Fund that supports ETCs has been declining, putting funding pressure on carriers. Some critics argue the fund structure needs reform to sustainably fund ETCs going forward (Source).

Push for broadband expansion over voice services. With the rise of mobile broadband, there are arguments that USF should shift focus from subsidizing voice to expanding broadband access. This could impact future ETC requirements (Source).

Debate over one vs. multiple ETCs per area. Some argue that having multiple ETCs creates inefficiency and redundancy. There are proposals to limit ETC designations to one per geographic area. However, opponents argue this could reduce competition (Source).

Call for ETC program reform. With changes in technology, some policymakers argue the ETC program needs comprehensive reform, ranging from adjusting requirements to replacing it entirely. The future direction will depend on how reforms take shape.

Conclusions

In conclusion, the Eligible Telecommunications Carrier designation plays a crucial role in promoting universal service by providing support for carriers to offer affordable voice and broadband services in rural, high-cost areas. Key points about ETCs include:

• ETCs must meet service obligations like offering Lifeline discounts to qualify for Universal Service Fund support.
• The FCC and state commissions handle ETC applications and monitor compliance.
• Hundreds of carriers have obtained ETC status, ranging from small rural companies to national wireless providers.
• ETC designations have faced some controversies over accountability and expanding service.
• ETCs will continue adapting to provide modern broadband as technology evolves.

Overall, the ETC program demonstrates the importance of subsidies and partnerships between the FCC, state regulators, and carriers to achieve universal service policy goals. Though not without flaws, ETCs have connected millions of Americans with essential communications services.