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 SEPARATE  STATEMENT  OF 
 COMMISSIONER  KEVIN  J  .  MARTIN 

 Re:  Multi-  Association  Group  (MAG)  Plan  for  Regulation  of  Interstate  Services  of 
 Non-  Price  Cap  Incumbent  Local  Exchange  Carriers  and  Interexchange  Carriers, 
 Second  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  CC 
 Docket  No.  00-  256 

 I  write  separately  to  explain  my  reservations  with  this  Order  and  why  I 
 nevertheless  join  in  approving  it.  I  am  sympathetic  to  the  calls  of  many  rural  carriers  to 
 seek  more  comment  before  moving  forward  on  this  item.  Having  seen  the  Commission 
 fail  to  reach  these  issues  for  years  despite  the  pleas  of  the  carriers,  it  seems  somewhat 
 ironic  that  the  Commission  feels  it  necessary  to  do  so  now,  when  the  carriers  would  like 
 the  Commission  to  wait. 

 Nevertheless,  after  careful  consideration,  I  am  convinced  that  growing  disparities 
 between  the  access  rates  of  rural,  rate-  of-  return  and  other,  price-  cap  carriers  should  be 
 addressed  sooner  rather  than  later.  These  disparities  can  create  problems  in  conjunction 
 with  our  rate  averaging  and  rate  integration  policies,  which  require  IXCs  to  charge  rates 
 in  rural  and  high  cost  areas  that  are  no  higher  than  rates  they  charge  in  urban  areas  and  to 
 charge  comparable  rates  in  each  State.  See  47  U.  S.  C.    254(  g);  Policy  and  Rules 
 Concerning  the  Interstate,  Interexchange  Marketplace,  Report  and  Order,  11  FCC  Rcd 
 9564,    9,  20,  52.  As  a  result,  IXCs  that  serve  rural  and  high  cost  areas  must  charge 
 higher  rates  to  all  of  their  customers  than  IXCs  that  do  not  serve  such  areas.  As  rate 
 disparities  grow,  the  pressure  for  IXCs  to  stop  serving  rural  and  high  cost  areas  also 
 grows;  IXCs  will  either  lose  money  serving  these  rural  areas  or  will  be  forced  to  charge 
 higher  rates  in  low  cost  areas  than  their  competitors.  Without  Commission  action,  I  fear 
 that  these  rate  disparities  may  lead  IXCs  to  exit  rural  and  high  cost  markets  altogether, 
 causing  great  harm  to  rural  America.  This  Order,  in  reforming  the  access  rate  structure  of 
 largely  rural  rate-  of-  return  carriers,  reduces  these  growing  disparities  and  begins  to 
 address  this  problem. 

 I  also  note  that  I  have  some  concerns  with  the  Commissions  policy    adopted 
 long  before  this  Order    of  using  universal  support  as  a  means  of  creating  competition 
 in  high  cost  areas.  I  am  hesitant  to  subsidize  multiple  competitors  to  serve  areas  in  which 
 costs  are  prohibitively  expensive  for  even  one  carrier.  This  policy  may  make  it  difficult 
 for  any  one  carrier  to  achieve  the  economies  of  scale  necessary  to  serve  all  of  the 
 customers  in  a  rural  area,  leading  to  inefficient  and/  or  stranded  investment  and  a 
 ballooning  universal  service  fund.  It  is  thus  with  real  pause  that  I  sign  on  to  an  Order  that 
 may  further  this  policy. 

 I  will  continue  to  examine  these  issues  as  well  as  the  other  concerns  raised 
 regarding  the  impact  that  our  policies  may  have  on  rural  America.  And,  in  that  vein,  I  am 
 committed  to  evaluating  these  issues  and  remain  receptive  to  making  significant  changes 
 as  we  move  forward. 
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