Utah Eyes Universal Service Surcharge as State Fund Runs Out
Utah could exhaust its USF by early next year unless the Public Service Commission overhauls its contribution methodology, a state official said Tuesday at a technical conference live-streamed from PSC headquarters in Salt Lake City. The agency is eyeing methods to ensure telecom providers that pay into the state USF collect and remit required revenue, and ways to ensure funding, including possibly adding a line or connection surcharge (see 1606080064). Rural LECs suggested requiring interconnected VoIP companies to contribute.
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“Contributions are declining,” said Bill Duncan, telecom manager for the Utah Division of Public Utilities, in a presentation at the meeting. “They have been declining for six years. But in the recent 12 months … the rate of decline has accelerated.” Since June 2015, there has been a $2.1 million reduction in the fund’s balance, with a $300,000 drop in May alone, he said. Duncan expects about $8 million to come into the fund this year -- compared with $11.4 million in 2012 -- with expenses estimated at about $11 million, he said. “We have the potential of dropping $3 million in the balance.” At this rate of decline, the fund balance could hit zero in early 2017, he said. There has been a large decline in contributions from wireless companies, which provide 70 percent of contributions, he said. "If they start going down, the whole thing comes down with it.”
Duncan recommended a surcharge of 32 cents per line, replacing the current model where companies contribute 1 percent of billed intrastate retail rates. In 2012, the industry reported $95 million in monthly revenue, so $950,000 went into the fund each month, he said. Last year, it was down to $78 million, with $780,000 going into the fund monthly. Duncan estimated a 32-cent surcharge would yield $927,000 a month or $11 million annually for the fund.
A CenturyLink official pointed to one potential source of missed universal service funding -- VoIP. Jim Farr, the telco’s regulatory affairs director in Utah, said the commission should shore up funding by requiring contributions from interconnected VoIP providers. The PSC could do so under its existing authority, he said. But AT&T attorney Roger Moffitt said he believes legislation may be required to mandate a VoIP contribution.
Other rural wireline companies agreed interconnected VoIP providers should contribute. “If interconnected VoIP providers do not contribute to the State USF when providing voice service to their customers, the State USF is not being operated in a technologically neutral manner,” the Utah Rural Telecom Association said in reply comments June 3. “Customers who pick up the phone to make a voice call may or may not be subject to the State USF surcharge, depending on the technology used by their provider. This is inconsistent with current Utah law.”
The VON Coalition doesn't protest when its interconnected VoIP members are required to contribute to state universal service funds, Executive Director Glenn Richards told us. “Though the FCC has broadly preempted state regulation of interconnected VoIP, the FCC does permit states to require contributions to state USF programs from interconnected VoIP providers,” he emailed. “Thus, if a state, either through the legislative process, or, when appropriate, through the state regulator (PSC/PUC), requires interconnected VoIP providers to contribute, VON does not object.”
At the PSC meeting, a CTIA official said the state USF is imbalanced because wireless consumers are the fund’s main contributors, but wireless carriers don’t receive any universal service funding. Matthew DeTura, CTIA counsel-external and state affairs, echoed the wireless association’s criticism from reply comments June 2. “A broad view of this landscape calls into question the UUSF program’s reliance on wireless consumers’ subsidization of the wireline service they have chosen to abandon,” CTIA said.