Texas Telcos Warn Against Carrying Out 2011 State USF Law, Potential Waste
New proposed state laws may interfere as Texas fights to reorganize its state USF, which provides several hundreds of millions of dollars a year, and reduce the support it gives out by the start of 2014. The Legislature previously demanded its state regulators make the changes. The Texas Public Utility Commission tried to begin that process in a docket this year, but has encountered resistance from telcos that suggest the Legislature may modify its USF laws yet again in the current session.
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In early January, staff of the Texas PUC proposed establishing a reasonable rate for basic phone service, one that would harmonize with the small and rural incumbent local exchange company universal service plan and that would determine how much support ILECs receive (http://bit.ly/Y8nK1y). The PUC had, as part implementation of the 2011 Texas law known as Senate Bill 980, evaluated the state USF and the USF plan, adjusting its own rules in an order effective Dec. 6, which would ultimately reduce support companies receive. The PUC has begun many efforts due to that 2011 law, it told the Texas Legislature in a November report (CD Nov 5 p16). In figuring out a reasonable rate, staff want to determine what the transition period should be and the proper geographic scope of such calculations, as well as their methodology and whether the PUC should consider how the rate affects residential customers.
A multitude of parties had moved to intervene throughout February, and many of those filings represented multiple companies. The intervenors included Verizon, Windstream, CenturyLink, the Texas Telephone Association, several smaller telcos and cooperatives, the Office of Public Utility Counsel and a USF Reform Coalition comprising Sprint Nextel, tw telecom of Texas and the Texas Cable Association. The Texas Statewide Telephone Cooperative worried that “insufficient notice for this proceeding has been given, and would ask that additional notice be provided,” it told the PUC in a Feb. 22 motion (http://bit.ly/10IrlcL), calling the proceeding “highly important.” It noted that the PUC sometimes sent a notice to telco employees who worked in billing and not to the CEOs.
Several dozen of the intervenors sought a stay on the proceeding last Monday. These telcos and cooperatives cited “several bills” filed that would affect the Texas USF statutes, and they have “a reasonable belief that additional legislation may be filed in the coming weeks” that'll also affect the statutes. Actions from the companies and the PUC “will likely be rendered useless, in whole or substantial part,” the request said (http://bit.ly/YY8WS7). “Pending legislation also impacts the ability of the parties to arrive at settlement or limitation of issues, both of which affect the efficiency with which this proceeding may be brought to conclusion. Many of the parties involved in this proceeding are participants in the legislative process, either seeking or opposing legislative change."
No funding changes are to take place until Jan. 1 of next year anyway, they added, dismissing any “compelling necessity to proceed.” The proceeding will be more “efficient” once the legislative process concludes, they said. The Legislature is scheduled to adjourn May 27.
Multiple bills in this year’s legislative session touch on the state USF. Senate Bill 494, introduced last month, calls for the PUC to “ensure that the universal service fund has at all times the resources necessary to meet the public purposes of the fund,” among other provisions, according to its text (http://bit.ly/YYeoEN). Meanwhile, House Bill 2835, introduced Thursday, digs into the USF assessments and proposes including VoIP providers and erases from the statutes a line about the PUC considering “the adequacy of basic rates to support universal service” (http://bit.ly/10IQqV5). House Bill 2805, also introduced Thursday, proposes modifying Texas’s USF to restrict the areas served and to drop the fund in size: “For each incumbent local exchange company that receives funds under the Small and Rural Incumbent Local Exchange Company Universal Service Plan, the commission may determine a schedule of yearly support reductions to take effect between September 1, 2013 and January 1, 2018,” that bill proposed (http://bit.ly/10ITjFk).
But the stay request cites “no case law, nor any Commission rule or rule of Texas Civil Procedure that recognizes the pendency of a legislative session and potential change in law as grounds for staying litigation or a contested case,” the USF Reform Coalition argued Monday before the PUC. ILECs asking for a stay have “have failed to make the legal and factual demonstration necessary to justify derailing a proceeding required by law and required by Commission rule to be implemented by January 1, 2014,” said the coalition. The PUC has acted correctly, it said, saying determining a reasonable rate will be a “data intensive process” that requires an “aggressive” schedule to meet the Jan. 1 deadline for Texas USF reductions. “The greater danger lies in failing to go forward, since a delay in processing this case so compresses the procedural schedule that it could detract from the parties’ ability to engage in serious settlement efforts and, as a result, require the Commission to make decisions based on a record that is not as complete and on an analysis not as thorough as the parties’ desire,” the coalition told the PUC.