REFORM THE TEXAS UNIVERSAL SERVICE FUND TO ENSURE ACCOUNTABILITY & TRANSPARENCY

TUSF BACKGROUND

• The Texas Universal Service Fund (TUSF) was implemented in 1999 to provide basic local telephone services at reasonable rates to customers in high cost rural areas and to qualifying low-income consumers.
• The fee – about 6 percent monthly charge on every phone bill – generates approximately $600 million each year.
• AT&T and Verizon receive over $300 million in USF subsidies annually.
• TUSF subsidies are based on 1997 company revenues per phone line. Since then, most providers have seen their revenues per phone line increase (artificially inflating corporate revenues).
• During the USF debate in the 2005 legislative session, the PUC was not able to account for exactly how the TUSF money is spent.
• SB 5 requires the PUC to undertake a study to review and evaluate the TUSF in order to account for TUSF funds and to recommend reforms.

CABLE POSITION

• Cable operators recognize that there is a place for the TUSF and support worthwhile programs such as Lifeline and Relay Texas.
• Currently, however, there is no way to verify how phone companies spend TUSF subsidies. Updated data is needed to calculate the cost incurred by phone companies to provide service and the subsidies companies receive from the TUSF.
• The cable industry believes there should be a transparent connection between the cost of service and the money the phone companies are receiving so that 1) the USF is operated in a fiscally responsible way and 2) incumbent telephone operators are not given an artificial advantage in the marketplace in the form of hundreds of millions of dollars in subsidies.
• When phone companies are deregulated, any government subsidies should be justified.