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Public Utility Commission adopts Universal Service Fund settlement

by Will Lutz

Sat, Apr 26, 2008, 01:07 PM

It's not every day that a heavily contested telecommunications matter winds up getting solved on the Public Utility Commission's consent agenda. But that's exactly what happened today. The Public Utility Commission unanimously adopted the settlement in the Universal Service Fund case without discussion at this morning's open meeting.

The settlement and its details and implications were explored in an article in our April 11 issue. In a nutshell, the Universal Service Fund is a fee paid by all telecommunications carriers -- including wireless and cable telephone providers -- that usually appears as a line item on people's phone bills. It is currently 4.4 percent of phone bills. The fee subsidizes a variety of programs, the most notable of which is a subsidy for basic local phone service in high-cost rural areas. While cable-telephone and cell-phone-only providers have to pay into the USF, only traditional land-line phone companies get subsidized for providing universal service -- which is one of the reasons the fund is hotly debated within the industry. Today's Public Utility Commission decision does not adversely affect the Lifeline program for the poor nor does it affect the Relay Texas program for the hearing impared nor the Small and Rural Carrier Fund. The settlement reduces subsidies to four traditional phone companies by $144 million and is estimated to reduce the Universal Service Fund fee by about a quarter, when fully implemented over four years.

The USF Reform Coalition, which consists of several telecommunications affiliates of Time Warner along with the cell phone provider Sprint Nextel, praised the commission's action. "The Texas Universal Service Fund was long overdue for reform," said Kristie Ince, a spokesperson for the coalition and Vice President of Regulatory Affairs for Time Warner Telecom of Texas. "As a result of today's PUC action, the taxpayers of Texas will see relief from burdensome telephone fees. These reforms will help level the playing field and promote competition in the Texas telecommunications market by eliminating unnecessary subsidies to the largest phone companies," Ince added.

A.T.&T. issued the following statement on PUC's approval of the settlement:
“AT&T commends the Public Utility Commission for approving the Texas Universal Service Fund settlement reached earlier with the PUC staff. The settlement strikes a fair balance on all issues and will continue the goal set by the Legislature to provide affordable phone service to all Texans.”

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