Key IssuesOn April 25, 2008, the three-member Public Utility Commission (PUC) unanimously approved a settlement agreement reached by several phone companies, PUC staff, the USF Reform Coalition and the Office of Public Utility Council to reduce consumers’ largest telephone tax, the Texas Universal Service Fund (TUSF), by $144 million. Below is background on the USF reform process. PUC Report: The Texas Universal Service Fund’s Large Carrier Fund is “Overdue for Updating” The PUC’s January 2007 report to the Legislature stated that the TUSF's “Large Company Area High-Cost Program is overdue for updating” (the fund still relies on 1997 data). The Commission held proceedings to consider any “appropriate resizing and retargeting of funding.” The PUC ONLY examined the Large Carrier Fund. Other USF programs such as Lifeline, Relay Texas and the Rural Carrier Fund will not be touched. About the TUSF in 1999 to help the state achieve its policy goal of providing universal, low-cost telephone service for citizens across the state in an increasingly competitive environment. The largest portion of the USF, which subsidizes high-cost service in suburban and rural Texas, is divided into the large carrier and small carrier funds. A small portion of the USF is also used to provide service to those with low incomes and disabilities. This portion will not be touched in the reform process. Every Landline and Cell User in Texas Pays the Tax Why Reform of the USF Large Carrier Fund is Needed Because of bundled offerings and the fact that many exchanges have been price deregulated under SB 5, the customer base that receives only basic service (and therefore qualifies for USF money) has shrunk, yet the amount collected has increased. Growth of Alternative Technologies Has Increased Choice All Texans have access to satellite phone service and most have several choices of cellular providers. Data is Outdated and System Lacks Any Real Transparency or Accountability Current subsidy levels received by the phone companies are based on average revenue and cost estimates from 1997. Additionally, there are no real tracking mechanisms or auditing requirements in place to hold large carrier recipients accountable for how subsidies are used. Reform Timeline — June 2008 |
