Texas USF Law Sought by PUC Not Likely Soon, Warns State Legislator
Texas legislators probably can’t quickly fix a state USF on the brink of collapse, a top state lawmaker told us Friday. The Public Utility Commission, which has been unwilling to make changes on its own authority, sought legislative guidance in a competition report this month. AT&T and cable companies agreed it's the legislature's job. Small telcos facing possible bankruptcy worry legislative relief won’t come fast enough, said Texas Telephone Association (TTA) Executive Director Mark Seale. Nebraska and Oklahoma commissioners could soon make USF contribution method changes after hearings this and last week.
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The Texas PUC “requests guidance from the Legislature regarding the State’s policy on the continuation of universal service support and funding," said its biennial agency report to the legislature. Wireless carriers’ 2019 determination that voice comprises a smaller part of their plans led to “a smaller amount of taxable receipts ... eligible for TUSF surcharge assessment,” which “created an unanticipated, marked shortfall of TUSF revenues,” it said. “Either TUSF support must be reduced or collections must be increased."
The PUC must “step up” to address TUSF now as a stopgap until the legislature can pass comprehensive changes, said Texas Legislative Rural Caucus Chairman Doc Anderson in an interview. “Where we are, in this environment, it’s going to take a while to do that.” Even if the legislature put it on an emergency calendar, the changes may not take effect until next year, the House Republican said. Passing a law won’t be easy because USF is a “thorny issue,” the legislature faces COVID-19 restrictions that could slow work, and lawmakers will be focused on redistricting and the state budget, he said.
Small telcos could face bankruptcy without quick action, Anderson said. It’s especially important to prevent that with many forced to work from home, he said. The rural caucus leader wants the commission to double the revenue-based surcharge on intrastate revenue to 6.4% to maintain funding for smaller telcos, but the PUC “has been reluctant to do so.”
“We have provided our report to the legislature detailing the challenges facing the TUSF and look forward to their deliberation and guidance on these issues as the legislative session advances,” a Texas PUC spokesperson emailed Friday. The agency shared a letter that it authorized TUSF administrator Solix to send to recipients Thursday explaining what will happen if the fund becomes insolvent. "Each month, lifeline programs including tel-assistance, Texas relay service, specialized telecommunications assistance program, audio newspaper program, intralata and administrative costs will be deemed 'first priority' disbursements and must be made before all other disbursements."
State lawmakers, small telcos and rural educators sounded the alarm last fall about TUSF’s imminent insolvency (see 2010160052) after the PUC declined to address the issue itself by doubling the surcharge on consumer phone bills. Chair DeAnn Walker said an increase wasn’t appropriate during the pandemic.
“There has been no change to the situation, other than it is a bit worse,” TTA’s Seale emailed. “Funds collected by the USF assessment have dropped faster than anticipated, and we now believe the fund will be out of money to support high cost and rural customers by April, with severe reductions in support,” of at least 60%, "starting in January." Some members could go bankrupt, he said. “There has been no action by the Commission and it doesn’t seem there will be any. Legislative action will take over two years to implement, so while we look forward to engaging on these issues in the upcoming session, it doesn’t seem relief will be timely.”
Any changes to TUSF, "whether a modernization or a total elimination," is the legislature's responsibility, emailed Texas Cable Association President Walt Baum. "As funding for TUSF has diminished, the Legislature should review ways to reduce overall spending and to ensure dollars are flowing only to areas where support is truly needed to connect Texans.”
AT&T supports the PUC’s recommendation lawmakers complete “a thorough analysis of the TUSF in 2021,” emailed a spokesperson. “The current revenue-based model is the most fair and practical methodology for adjusting the TUSF assessments. Any other approach shifts more of the funding burden to residential consumers.”
State Rep. Ken King (R) prefiled a USF bill Nov. 10 for the 2021 session to expand the fund to support rural broadband. HB-425 would add a surcharge for broadband providers that choose to participate. It doesn’t address the fund’s possible insolvency. King didn’t comment now.
Elsewhere, the Nebraska Public Service Commission heard testimony Wednesday on a proposal to expand the state USF’s connections-based method for residential services to include business and government lines (see 2009020032). Parties “largely summarized” written comments from August and September, Nebraska USF Director Cullen Robbins emailed Thursday. “An order will be issued with either a decision, or the next steps, depending on what the Commissioners prefer.” Commissioners would vote on such an order at a future meeting, he said.
The Oklahoma Corporation Commission delayed voting on a USF contributions case at a Dec. 30 meeting. The OCC took under advisement industry exceptions to a plan to change from a revenue-based method to a connections-based mechanism with a 91-cent-per-line monthly surcharge (see 2012160008). “No word yet on when it may come up for a vote,” an agency spokesperson said Wednesday.