New Mexico PRC Denies Rural Telco USF Funding

The commission’s assertions about how Sacred Wind would use the USF funds are “absolutely wrong,” said Sacred Wind CEO John Badal, arguing that he and his colleagues have worked extensively to show proper use of the funds. Badal said Sacred Wind applied for $2.2 million in USF funds annually through 2014. The question of whether New Mexico’s PRC would approve the transfer of USF funds has hovered for 20 months, according to Badal, and “cost us hundreds of thousands [of dollars]” to pay for the attorneys and expert witnesses to testify at the various hearings. No proceeding of 20 months is “warranted,” he said, adding that of the 15 rural telephone companies operating in New Mexico, Sacred Wind is the only one not receiving any USF dollars.

The commission was vague about whether Sacred Wind would reapply for funding. If so, Sacred Wind “will have to file a revised plan at the PRC that will eventually be sent to the commission for a final vote,” the commission said. Badal said he “doesn’t know” whether he will choose to reapply at this point, citing the length of proceedings thus far. The New Mexico commissioners acted out of caution, according to a PRC spokesman. “They don’t like to make quick decisions when there’s a lot of money on the line,” said spokesman Joseph Bishop. “Yesterday came down to showing evidence.” He said that Sacred Wind was “very vague about what they'd be using the money for once they got it,” which troubled multiple commissioners.

Many factors were responsible for the two-year length of the Sacred Wind proceedings, such as “filings that aren’t necessarily complete” and “procedural aspects” that go along with the legal process, Bishop said. The length “depends on the nature of the case,” he said, declining to elaborate on whether 20 months is common or uncommon for PRC proceedings with rural telephone companies. In July 2011, the Navajo Nation lauded Sacred Wind for providing phone and Internet service to Navajo residents. “I applaud Sacred Wind Communications for their customer outreach services,” Navajo Nation President Ben Shelly said in an announcement at that time (http://xrl.us/bnc4n7). Sacred Wind’s infrastructure “allows service to over 1,500 additional unserved homes in 21 Navajo chapters,” according to the Navajo Nation announcement at the time.

To grant Sacred Wind USF funds would, the commission noted, “increase USF surcharges for telecom customers statewide.” The PRC’s final order on the case, signed on June 26, indicates Sacred Wind relied heavily on public funding: “Sacred Wind has historically received substantial amounts of public funding that are disproportionately large compared to the $1.375 million its shareholders have invested,” to the point where its business plan has allegedly become “disproportionately reliant on ongoing public subsidies” with only $787,854 in retail revenue from subscribers. Sacred Wind has received $70 million from the federal Rural Utilities Service and more than $2 million in federal USF high-cost loop support funds, the order said. The PRC spokesman said the telecom company is welcome to reapply for the funding. The commission has “left the door open,” Bishop said.

The commission has “imposed obligations and scrutiny that’s unprecedented, at least in New Mexico,” said Brian Harris, an assistant attorney general of New Mexico. The word he used to describe the length of the proceedings was “languish,” its effects “regretful.” Consumers were protected “across the board” in Sacred Wind’s proposal, he said, and he fears the effect this denial will have on the Navajo lands as a result. “The Navajo Nation is a very difficult area to serve -- and an underserved one,” Harris said. He said it’s left many in New Mexico “scratching their heads” and said he thinks the commission was confused about “how much it costs to serve the last one percent of Americans” and the broader mission of the USF. The proceeding is “narrow” and not the proper venue for reforming USF, he said.