By: Carona S.B. No. 583

(In the Senate - Filed February 14, 2013; February 20, 2013, read first time and referred to Committee on Business and Commerce; April 8, 2013, reported adversely, with favorable Committee Substitute by the following vote: Yeas 8, Nays 0; April 8, 2013, sent to printer.)

COMMITTEE SUBSTITUTE FOR S.B. No. 583 By: Carona

A BILL TO BE ENTITLED

AN ACT

relating to eligibility for support from the universal service fund.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 56.023, Utilities Code, is amended by amending Subsection (b) and adding Subsections (f), (g), (h), (i), (j), (k), (l), (m), (n), (o), and (p) to read as follows:

(b) The eligibility criteria must require that a telecommunications provider, in compliance with the commission's quality of service requirements:

(1) offer service to each consumer within an exchange in the company's certificated area for which the incumbent local exchange company receives support under a plan established under Section 56.021(1) and to any permanent residential or business premises to which the company is designated to provide services under Subchapter F; and

(2) render continuous and adequate service within an exchange in the company's certificated area for which the incumbent local exchange company receives support under a plan established under Section 56.021(1) and to any permanent residential or business premises to which the company is designated to provide services under Subchapter F.

(f) For purposes of this subsection, "incumbent local exchange company" includes all incumbent local exchange company affiliates of the incumbent local exchange company. After December 31, 2016, an incumbent local exchange company or cooperative that served greater than 31,000 access lines in this state on September 1, 2013, or a company or cooperative that is a successor to such a company or cooperative and that serves any part of the same market as its predecessor is not eligible for support under a plan established under Section 56.021(1) for service provided in an exchange that has operating in any part of the exchange at least two competitors to the company or cooperative that:

(1) are unaffiliated with the company or cooperative; and

(2) provide voice communications service without regard to the delivery technology, including through:

(A) Internet Protocol or a successor protocol;

(B) satellite; or

(C) a technology used by a wireless provider or a commercial mobile service provider, as that term is defined by Section 64.201.

(g) For each exchange for which service by an incumbent local exchange company or cooperative that may be subject to Subsection (f) is receiving support under a plan established under Section 56.021(1), the commission shall initiate contested case proceedings as necessary to determine the eligibility of a company or cooperative to receive continued support under the plan for service in the exchange after December 31, 2016. The proceedings must be completed before September 1, 2015.

(h) If an incumbent local exchange company or cooperative is ineligible for support under a plan established under Section 56.021(1) for services in an exchange, a plan established under Section 56.021(1) may not provide support to any other telecommunications providers for services in that exchange.

(i) Subsection (g) does not authorize the commission to initiate a contested case hearing concerning a local exchange company that has elected to participate in a total support reduction plan under 16 T.A.C. Section 26.403 that requires the company to forego funding under a plan established under Section 56.021(1) after January 1, 2017. This section does not affect any obligation of a local exchange company subject to such a total support reduction plan.

(j) Notwithstanding Subsections (f) and (g), if an incumbent local exchange company is determined under those subsections to be ineligible to receive support under a plan established under Section 56.021(1) in an exchange, after September 1, 2015, the company may petition the commission to receive support for service in an exchange after January 1, 2017, if:

(1) the exchange does not have an unsubsidized wire line competitor to the company that offers voice communications service in that exchange; and

(2) the incumbent local exchange company demonstrates it has a financial need for support in the exchange.

(k) If the commission determines that an incumbent local exchange company has demonstrated financial need for support in an exchange under Subsection (j), it shall set the amount of support in the same proceeding.

(l) An incumbent local exchange company may not receive an amount of support in an exchange under a plan established under Section 56.021(1) and authorized under Subsections (j) and (k) that exceeds the total amount of such support the company is eligible to receive for the exchange on December 31, 2016.

(m) Notwithstanding Subsections (f) and (g), if a cooperative that is a cooperative on January 1, 2013, is determined under those subsections to be ineligible to receive support under a plan established under Section 56.021(1) in an exchange, the cooperative may petition the commission to receive support for service in the exchange.

(n) A cooperative may not receive an amount of support under a plan established under Section 56.021(1) as authorized under Subsection (m) that exceeds the total amount of such support the cooperative was receiving on September 1, 2013, attributable to access lines used to provide stand-alone residential local exchange voice service, as defined by Section 65.002.

(o) Subsections (f) and (g) do not apply to an incumbent local exchange company that elects, no later than March 1, 2014, to eliminate not later than September 1, 2018, the support it receives under a plan established under Section 56.021(1).

(p) Nothing in this chapter relieves any party of an obligation entered into in the commission's Docket No. 40521.

SECTION 2. Section 56.024, Utilities Code, is amended by amending Subsection (b) and adding Subsections (c) and (d) to read as follows:

(b) A report or information the commission requires a telecommunications provider to provide under Subsection (a) is confidential and not subject to disclosure under Chapter 552, Government Code.

(c) A telecommunications provider shall file with the commission the provider's annual earnings report if the provider:

(1) is not a local exchange company subject to a total support reduction plan under 16 T.A.C. Section 26.403 or that has made an election under Section 56.023(o);

(2) serves greater than 31,000 access lines; and

(3) receives support under a plan established under Section 56.021(1).

(d) A report filed under Subsection (c) is public information.

SECTION 3. Section 56.025, Utilities Code, is amended by amending Subsection (a) and adding Subsection (g) to read as follows:

(a) In addition to the authority provided by Section 56.021:

(1) [,] for each local exchange company that serves fewer than 31,000 access lines and each cooperative, the commission[:

[(1)] may adopt a mechanism necessary to maintain reasonable rates for local exchange telephone service; and

(2) for each local exchange company and each cooperative that serves 31,000 or fewer access lines and that on June 1, 2013, is not an electing company under Chapter 58 or 59, the commission shall adopt rules to expand the universal service fund in the circumstances prescribed by this section.

(g) Notwithstanding any other provision of this section, after December 31, 2013, the commission may not distribute support granted under this section, including any support granted before that date, to a local exchange company or cooperative that serves greater than 31,000 access lines or that is an electing company under Chapter 58 or 59 on June 1, 2013.

SECTION 4. Section 56.026, Utilities Code, is amended to read as follows:

Sec. 56.026. PROMPT AND EFFICIENT [UNIVERSAL SERVICE FUND] DISBURSEMENTS. [(a) A revenue requirement showing is not required for a disbursement from the universal service fund under this subchapter.

[(b)] The commission shall make each disbursement from the universal service fund promptly and efficiently so that a telecommunications provider does not experience an unnecessary cash-flow change as a result of a change in governmental policy.

SECTION 5. Subchapter B, Chapter 56, Utilities Code, is amended by adding Section 56.029 to read as follows:

Sec. 56.029. INELIGIBILITY FOR BUSINESS LINE SUPPORT. For purposes of this section, "incumbent local exchange company" includes all incumbent local exchange company affiliates of the incumbent local exchange company. Notwithstanding any other provision of this subchapter, an incumbent local exchange company or cooperative that is not an incumbent local exchange company subject to a total support reduction plan under 16 T.A.C. Section 26.403 and that serves greater than 31,000 access lines in this state is not eligible to receive support from the universal service fund for the business lines served by the company or cooperative after December 31, 2016. If an incumbent local exchange company or cooperative is ineligible under this section for support from the universal service fund for business lines served by the company or cooperative, a plan established under Section 56.021(1) may not provide support to any other telecommunications provider for business lines served by the provider.

SECTION 6. Subsections (b), (c), (d), (e), (f), and (h), Section 56.032, Utilities Code, as added by Chapter 535 (H.B. 2603), Acts of the 82nd Legislature, Regular Session, 2011, are amended to read as follows:

(b) Except as provided by Subsections [(c),] (d) and[,] (e), [and (f),] the commission may revise the monthly support amounts to be made available from the Small and Rural Incumbent Local Exchange Company Universal Service Plan by any mechanism, including support reductions resulting from rate rebalancing approved by the commission, [by revising the monthly per line support amounts,] after notice and an opportunity for hearing. In determining appropriate monthly [per line] support amounts, the commission shall consider the adequacy of basic rates to support universal service.

(c) A [On the written request of a small or rural incumbent local exchange] company that receives frozen monthly [per line] support amounts as prescribed by a final order issued by the commission in the commission's Docket No. 39643 is entitled to continue to receive that monthly support until the support is revised under Subsection (b)[, the commission shall disburse funds to the company in fixed monthly amounts based on the company's annualized amount of recovery for the calendar year ending on December 31, 2010. A company may submit only one request under this subsection and must submit the request on or before December 31, 2011].

(d) For each [On the written request of a] small or rural incumbent local exchange company that is not receiving frozen support amounts as described by Subsection (c) and is not an electing company under Chapter 58 or 59, the commission annually shall set the company's monthly support amounts for the following 12 months by dividing by 12 the annualized support amount calculated under this subsection. The commission shall calculate the annualized amount:

(1) for the initial 12-month period for which a company makes an election under this subsection, by[:

[(A)] determining the annualized support amount received by the company as of January 1, 2013 [calculated for the requestor in the final order issued by the commission in Docket No. 18516; and

[(B) adjusting the support amount determined under Paragraph (A) at the beginning of each calendar year by a factor equal to the most recent consumer price index published at that time, beginning with the 1999 calendar year and ending in the year the company makes an election under this subsection]; and

(2) for [the 12-month period following the initial period for which a company made an election under this subsection and for] subsequent 12-month periods, by adjusting the most recent annualized support amount calculated by the commission by a factor equal to the percentage change in the consumer price index for the most recent 12-month period.

(e) The [If a company elects to receive monthly support amounts under Subsection (d), the] commission, on its own motion or on the written request of the company, may initiate a proceeding to recalculate the most recent annualized support amount to be used as the basis for adjustment for a subsequent 12-month period under Subsection (d)(2). If, based on the recalculation, the commission by order adjusts a company's most recent annualized support amount, the adjusted support amount supersedes the annualized support amount calculated in accordance with Subsection (d).

(f) [The commission shall administratively review requests filed under Subsections (c) and (d).] Except for good cause, the commission shall establish monthly support amounts under Subsection (d) [approve the request] not later than the 60th day after the date the commission determines the company is eligible [and has met all the procedural requirements under this subchapter].

(h) Subsections (a), (c), (d), (e), and (f) [This section] and any monthly support amount approved under those subsections [this section] expire [on] September 1, 2017 [2013].

SECTION 7. Section 3, Chapter 535 (H.B. 2603), Acts of the 82nd Legislature, Regular Session, 2011, which amended Section 56.031, Utilities Code, is repealed.

SECTION 8. This Act takes effect June 1, 2013, if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary to take effect on that date, this Act takes effect on the 91st day after the last day of the legislative session.

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