Iowa protected from losing landlines -- for now

Nathan Pacha has owned Premier Automotive in North Liberty for 12 years. His business now depends on landline phone service so much that he has not one line, but six.

Pacha's auto-repair shop is served by a local provider, South Slope Cooperative, which serves homes and businesses in and around the Cedar Rapids-Iowa City area. And Pacha said the service is so critical that his business could not survive without it.

“We couldn't rely on cellphones. Landlines are the lifeblood of our business,” Pacha told The Gazette. “We're in a rural area and the cellphone service has gotten better, but it is still spotty. My neighbors are all in the same boat, too. You just can't beat the reliability of a landline.”

But Pacha is on the opposite side of an accelerating consumer trend: More Americans are replacing their landline service with cellphones, and the telecommunications industry is responding with a reluctance to keep offering landline service.

In four states - Texas, North Carolina, Florida and Wisconsin - phone companies have persuaded state legislators to remove a generations-old requirement to provide residential landline service. Known as the “carrier of last resort” obligation, the requirement is also under fire in six other state legislatures.

The good news for Iowans is that the state has an effective patchwork of local, independent phone service providers - about 130 in all - that have sprung up because larger companies weren't serving the state's rural areas.

That means landline phone service isn't going away anytime soon in Iowa, say industry experts. There is no bill in the Legislature to undo the carrier of last resort requirement, and with so many local providers, most say there is so far no need.

“Iowa 's a little different,” said Justyn Miller, general manager of South Slope Cooperative. “That's not to say there isn't a need for that movement in other states. But in Iowa, if anything, there's been an opposite push. In areas that are underserved by a non-independent provider, those people have come to us. It really boils down to having great providers in the state.”

Likewise, Iowa Telecommunications Association President Dave Duncan said he is unaware of any impending effort in the state to remove the rural last-resort requirement.

Besides the presence of local providers, Duncan said consumer advocates would likely block any such effort. Duncan's organization represents cooperatives such as South Slope.

“Our state is not densely populated,” Duncan said. “We have a lot of small towns spread across the state, so it's a different marketplace than you'll see in other states.”

But the national trend has caught the eye of some in the U.S. Senate, where some members recite the common fear among consumer advocates that the pace of consolidation could someday include Iowa. In some rural areas, senators say, cellphone reception can be so poor that it isn't even an option, especially for more vulnerable residents such as the elderly or those with lower incomes.

“I have great concerns about releasing these requirements,” said Sen. Tom Harkin, D-Iowa. “Landlines, especially in small towns and rural areas, remain essential. I can't tell you how frustrated I get a lot of times when I'm traveling around Iowa and I can't get connections on my cellphone ... So unless and until there is absolute 100 percent assurance of cellphone coverage, I want to maintain the requirement.”

Iowa law requires local exchange utilities to serve “all eligible customers within the utility's approved, non-exclusive service territory.” Utilities are allowed to charge customers for the cost of offering such service if the customer is located in a remote area, and the requirement applies to all landline telecommunications companies that are state-certified. Wireless services are not regulated.

Landline service regulation is handled by the Iowa Utilities Board, where communicatios manager Don Tormey said current services provided by small, rural telecommunications firms seem likely to continue for the near future. But like others, he said that may change someday.

“At some point, all carriers will probably have to consider the business case for serving, or not serving, remote customers,” Tormey said.

In Washington, companies such as South Slope are represented by the National Telecommunications Cooperative Association, which tracks legislation in Congress and advocates for rural phone service. CEO Shirley Bloomfield said dismantling the carrier of last resort requirement would undo a governmental guarantee that stretches back for more than 100 years, and was reaffirmed as recently as 1996, when Congress passed an updated telecommunications law.

“It's the whole theory behind electricity, water and sewer service, and critical infrastructure services like that,” Bloomfield said. “The government has said there is a right to these services.

“It's true that for carriers, the obligation is relatively expensive,” she said. “They're basically saying, ‘We're willing to extend our lines to that farm at the end of the road or the house on top of that mountain.' But it is a kind of a social contract that carriers have had for about 100 years. And we feel very strongly that continues to be important.”

Like Harkin, Bloomfield is also worried that Iowa and other states will someday succumb to a sustained push by telecommunications lobbyists and release the companies from the requirement.

“I can see it happening in virtually every state,” she said. “It just depends on how receptive each state is, and who's ripe for it. For now, what they're doing in Iowa is very cool. They're able to fill all the nooks and crannies.”