SAN ANTONIO--Michael Brunner, CEO of the National Telecommunications Cooperative Association opened that group's annual meeting today by saying that 2004 was a good year for the group's small, mostly rural telcos, but that this year would be filled with challenges.

Noting that decisions impacting both universal service as well as inter-carrier compensation are likely to be made in 2005, Brunner said one of the association's objectives is to ensure Congress knows the full impact of those issues on rural America. "We understand how important the rules of the game are," he said. "We had a pretty good year in 2004, but we have some concern about the future."

The FCC's move last week to push off any final decision on inter-carrier compensation rules was a victory for rural telcos but brings to the forefront a system that is fundamentally broken, he said.

"The current system defies logic. There are too many rate structures," Brunner said, noting that intrastate calls are more than interstate traffic and wireless and wireline calling are on different rates. "The ball is now in the industry's court."

In a study done using data from the year 2000, he added, using the bill-and-keep system preferred by some would cost rural carriers $2 billion per year.

On the universal service front, NTCA will continue fighting to allow recipients to base their funding on actual, and not forward-looking, costs.

"These theoretical models simply don't work," Brunner said.

Just as important, the association will push to expand the pool of contributors to include wireless and voice-over-IP providers.

"The free ride for some has got to be over," he said. "If someone is using your network, they have to pay. What could be simpler and fairer?"