As we move toward the holidays and the end of 2018, we are wrapping up some issues impacting the telecommunications industry in Texas.
While we have made great strides this year, our industry must remain ever vigilant and advance policies to make sure rural Texans will continue to reap the benefits of high-quality communications to support schools, hospitals, businesses and consumers. Rural networks are vital to our great state and provide a backbone for landline, broadband and wireless services statewide.
With all that is going on related to the state universal service fund, it’s easy to lose sight of the fact that there is much more going on in telecommunications in Texas. Scott Stringer of CenturyLink and Texas Telephone Association board chairman along with Dee Dee Longenecker and Wes Robinson of Eastex and I met with the staff of the Public Utility Commission of Texas this month to raise awareness on a variety of issues impacting the telecommunications industry in Texas. Issues discussed included the need for continuous network upgrades, cybersecurity, economic development efforts in local communities as well as potential competition from Voice over Internet Protocol, overbuild incentives in schools and non-regulated electric providers offering broadband service.
As 2018 winds to a close, there remain several policy issues pending at the PUC impacting our industry.
Virgin Mobile Lifeline-only proceeding moving forward at Texas PUC
Virgin Mobile’s proposal to expand its Lifeline-only designation into additional rural areas in Texas is inching along at the Texas PUC.
Virgin Mobile has been designated as both an Eligible Telecommunications Carrier (ETC) and an Eligible Telecommunications Provider (ETP) in certain non-rural service areas of Texas – including AT&T Texas, Verizon Southwest and Frontier – for the purpose of offering Lifeline services. Virgin Mobile’s has applied to expand the area covered by those designations to include territory served by additional local phone companies across Texas.
If granted, the proposal would allow Virgin Mobile to receive state support for Lifeline customers only in designated areas.
The PUC staff on November 30 filed testimony from
who echoed many of the arguments advanced by TTA to deny Virgin Mobile’s request. These include:
- Virgin Mobile’s unwillingness to commit to offering service to any customer within its proposed service area
- Virgin Mobile’s failure to demonstrate that its designation will be of material benefit
- Virgin Mobile’s wireless network doesn’t cover the entire proposed service area.
Kelsaw also identified deficiencies in Virgin Mobile’s application as the company does not offer required services such as operator services and primary directory listings. He recommended Virgin Mobile be required to redraw its maps to be consistent with the Federal Communications Commission boundary maps for Texas.
PUC staff noted Virgin Mobile has failed to meet its public interest obligations in rural service areas because there are already wireless competitors in many of the markets. Staff also expressed concerns that the case could set a precedent and impact the Texas universal service program.
Virgin Mobile’s rebuttal testimony is due December 19. TTA is attempting to work toward settlement with Virgin Mobile that would result in Virgin Mobile withdrawing its request. While the PUC staff is one of the parties to this case, its opposition to Virgin Mobile’s designation is a significant step in the right direction.
Virgin Mobile on November 29 issued a
request for information
to TTA and the Texas Statewide Telephone Cooperative Inc. While TTA’s legal team is prepared to file responses, it is working with Virgin Mobile to extend the deadline for objections and responses to the new discovery request in the hope that a settlement is can be reached.
TTA, TSTCI developing supporting materials for new PUC universal service rules
Although the Texas PUC approved new rules to implement universal service fund reforms under Senate Bill 586 approved by the Texas Legislature in 2017, our work continues.
The next step is to develop a set of documents so Texas telecommunications companies can make the appropriate filings under the new rules.
The new PUC rule requires electing members to file revised versions of the Earnings Monitoring Reports (EMR) calculating intrastate earnings along with “all detail and supporting documentation necessary to support each of the items” in the report. A team led by TTA and TSTCI on December 10 presented the PUC staff a proposed SB 586 industry-standard filing package that includes the necessary supporting documentation that would enable an efficient review. Once the reports are filed, the commission staff has 90 days to review the reports and make any adjustments and submit a memorandum to the commission reporting any revised earnings for each electing member.
TTA members and associated associate members from JSI, Moss Adams, Curtis Blakely and Company and Eastex walked the PUC staff through the proposed filing package and how earnings for small ILEC members are calculated. Staff members questioned issues such as separations, executive compensation, and affiliate transactions.
TTA encourages telecommunications companies opting into the new SB 586 high cost support mechanism to make sure to include the necessary supporting documentation in filings. Once a company files a SB 586 report, PUC staff may issue requests for information. Companies will have ten days to respond to any requests for supporting documentation related or risk being classified as a Category 3 provider and deemed to be over earning.
We anticipate affiliate activities are likely to be more scrutinized than they have been in recent years. We recommend members review affiliate contracts and transactions to make sure they are up-to-date before their SB 586 filings are made.
TTA’s legal team met with PUC staff in early December on creating an opt-in affidavit for electing members would file if they choose to opt into the new SB 586 Texas Universal Service Fund high-cost support mechanism. A copy of the affidavit can be found
. A draft election cover letter can be found
All companies are encouraged to use these standardized forms to ensure consistency throughout the industry. All notices of opting in to the new universal service fund mechanism must be filed by December 14.
Alternatively, companies not opting into the new mechanism will not need to file an affidavit, but will need to prepare and file the standard 2017 Earnings Monitoring Report in
docket No. 48519
no later than December 15.
If you have any questions related to SB 586, please contact me.
Finally, the PUC at its November 29 open meeting set the interest rates for calendar year 2019 in project 45319. Annually the PUC sets interest rates for customer deposits and under-charges or over-charges for the coming year. For 2019, customers who are over billed will be paid 1.99 percent interest and will receive 1.92 percent interest on utility deposits.