November 2019
News and Updates
Here are some updates from the Texas Telephone Association. View as Webpage
Update from Executive Director Lyn Kamerman
Holidays approaching with new challenges on the horizon
With the Texas constitutional amendment elections behind us and Thanksgiving and the holidays around the corner, the TTA team is busy planning for 2020.

The Texas telecommunications industry had a strong year in the Texas Legislature as member companies worked together to advance policies for a strong industry.

Thanks in large part to the tremendous coordinated efforts of TTA’s legislative legal, and regulatory teams throughout the entire process, the Public Utility Commission of Texas appears to be efficiently processing member company requests to achieve a more reasonable rate of return under SB 586, approved by the Legislature in 2017, so that they have the capital to invest in their networks and better serve their customers.

Still, we have new challenges on the horizon.

The Texas PUC issued its fourth quarter financial report for the Texas Universal Service Fund indicating a 10.33 percent decline in the Texas USF reserve balance, dropping from $153 million to $130 million for the period ending August 31. 

With a $22.7 million quarterly gap between income and expenditures in the fourth quarter, the Texas USF program may be heading toward a crisis that will require regulatory action.
Reforming USF contributions is a political hot potato. The TTA regulatory team estimates that absent some reform to the contribution base, the Texas USF surcharge would need to increase from the current 3.3 percent to 5.5 percent to keep up with current demand.

Small and rural Incumbent Local Exchange Carrier high-cost support and price cap ILEC high-cost support remained relatively steady during the fourth quarter, but there were significant increases in state Lifeline support as well as Public Utility Regulatory Act chapter 56.025 support.

Quarterly receipts dipped to an all-time low of $34.6 million and a quarterly decline of 3.61 percent, which is based on telecommunications providers’ intrastate taxable telecommunications receipts while program expenditures have climbed to $54.6 million. 

The quarterly Texas USF cash flow summary since late 2017 shows the growing gap between income and program expenditures. 
Over the last few weeks we have seen a flurry of regulatory activity related to state and federal universal service funding.

Texas PUC doubles down on denying Virgin Mobile’s proposed expansion of Lifeline

In the ongoing case related to Virgin Mobile’s pending request to expand the area in Texas where it is eligible to receive federal and state low-income support, the Texas PUC on November 14 considered Virgin Mobile’s motion for rehearing in docket no. 48502 .

The PUC granted the motion for rehearing on the PUC’s denial of Virgin Mobile’s request to expand the area of Texas within which it is eligible to receive Lifeline support and incorporated lengthy changes to its previous order, strengthening it.

The changes were proposed in a memorandum by Texas PUC Chair DeeAnn T. Walker and are consistent with TTA’s arguments in the case before TTA entered into a settlement agreement with Virgin Mobile and withdrew from the proceeding.

Under the changes, in order for a carrier to be designated as an Eligible Telecommunications Provider in Texas it must provide all 10 components of basic local telecommunications service as well as agree to provide service throughout a
predetermined area, depending on whether the incumbent is a price cap ILEC or a small ILEC. In addition, the PUC changed its previous order to assert there is no such thing as a Lifeline-only ETP designation in Texas with relaxed requirements.

One of the thornier issues the PUC addressed in the latest Virgin Mobile case related to two previous PUC decisions designating Virgin Mobile as an Eligible Telecommunications Carrier and ETP within AT&T and Frontier service areas, which were uncontested and approved administratively. 

Virgin Mobile argued those prior approvals established a precedent that a provider does not have to provide all 10 components of basic local telecommunications service or provide service throughout the entire small ILEC service area in order to be designated as a Lifeline-only ETP.

However, changes to the order indicate the PUC disagrees with Virgin Mobile’s characterization of the PUC’s prior administrative approvals.

With these changes, the commissioners strengthened the order in advance of a possible appeal by Virgin Mobile and laid the groundwork for a possible audit and enforcement action against the company. 

Virgin Mobile is by far the largest recipient of state low-income support in Texas, receiving $4.5 million of the total $4.9 million in state low-income support during the latest quarter according to the Commission’s recent fourth quarter financial report.

Texas PUC processing Lifeline tariff revisions

Some member companies proposed Lifeline tariff revisions to incorporate federal reforms have been approved and the others appear to be moving toward final approval at the Texas PUC. As you may recall, under changes mandated by the FCC, the federal voice discount will drop from $9.25 to $7.25 beginning December 1.

CenturyLink calls on electric coops to follow FCC pole attachment rules for broadband

CenturyLink has proposed that any municipal or cooperative utility winning federal support under the Rural Development Opportunity Fund should be required to commit to provide access to their poles consistent with the FCC’s pole attachment rules, according to a letter filed with the FCC on October 30. 

Craig J. Brown, assistant general counsel of CenturyLink, said its experience is consistent with the findings in a report NCTA filed in July 2019 indicating that its cable members’ pole attachment rates charged by municipal and cooperative electric utilities are more than double the rates paid to investor-owned utilities. NCTA and CenturyLink said the disparity in rates can be attributed to the fact that municipal and cooperative electric providers are not subject to pole attachment regulations under section 224 of the federal Telecommunications Act of 1996.
Around the Texas Capitol – John Hubbard and Ian Randolph
New constitutional changes and some new laws
The November 5 statewide elections are now behind us.

Of the 10 amendments to the Texas Constitution on the ballot, all but one proposed change was approved by voters.

Most constitutional amendments passed by comfortable margins except for Proposition 1 – which failed 65-35 percent – that would have allowed select municipal court judges to serve in multiple municipalities at once.

In the legislative arena, most bills passed the Texas Legislature this year have now taken effect or are undergoing rulemakings at various state agencies. There were four telecommunications bills passed last session and there has been some activity on each new law. Here is a look at where we are on these key bills, with official language:

  • SB 14 – relating to broadband service or facilities provided by an electric cooperative.  This electric coop bill, sponsored by Sen. Robert Nichols, R-Jacksonville, deals with electric cooperatives running high-speed fiber networks in electric easements. This legislation occupied much of our time during the legislative session. Working closely with member companies, the TTA legislative team worked with the authors to include language dealing with cross-subsidies and pole attachment rates to create a level playing field for industry players. While we made considerable headway on this bill, we will need to keep a close eye on implementation to make certain that the pro-competition provisions are honored. Fortunately, the Senate committee of jurisdiction, the Business and Commerce Committee, has been given the charge of monitoring the major legislation passed by that committee, including SB 14.

  • HB 1960 – relating to the creation of the governor's broadband development council. This is the bill, sponsored by Rep. Four Price, R-Amarillo, creating a 17-member committee appointed by the governor to examine and advise on ensuring necessary broadband connectivity in rural Texas. We were successful in ensuring that two members of the committee would include representatives from rural internet service providers. While there is no deadline for all the appointments to be made, Gov. Greg Abbott’s office is currently interviewing potential appointees, including representatives from TTA member companies. It is very likely that appointments will be made soon.

  • HB 2422 – relating to the coordination of certain broadband projects by the Texas Department of Transportation. This legislation, sponsored by Rep. Charles “Doc” Anderson, R-Waco, requires the Texas Department of Transportation (TxDOT) to provide notice on TxDOT's Internet website of ongoing and planned highway construction projects for which TxDOT will provide voluntary joint trenching opportunities in the state's right-of-way for broadband providers. The new law authorizes a broadband provider to collaborate with TxDOT to deploy broadband conduit or other broadband facilities in those rights-of-way. TxDOT is currently working through the details before developing rules and is expected to reach out to TTA and telecommunications companies in the near future.

  • SB 1152 – relating to the payment of certain fees to municipalities by entities that provide telecommunications and cable or video services.  Until the Legislature approved SB 1152, sponsored by Sen. Kelly Hancock, R-North Richland Hills, telecommunications companies paid separate fees for telephone and cable lines in city rights-of-way. As a result, companies paid both fees even when one line was laid for both services. SB 1152 allows companies to pay municipalities only the higher of the fees if both services are delivered over the same line. Municipalities opposed the legislation, claiming they will lose large amounts of revenue. Consequently, some 50 Texas cities have filed suit over the law. The lawsuit has been joined with a previous suit against SB 1004 – known as the small cell bill – that passed the Legislature in 2017. The municipalities allege that both SB 1004 and SB 1152 are unconstitutional because they violate several articles of the Texas Constitution – arguing the state is essentially forcing cities to provide a gift of public funds to private companies.

We will continue to keep you informed on any further developments. Happy Thanksgiving.
Association News
Save the date – 2020 TTA Convention and Product Showcase 
The 2020 TTA Convention is set for August 16-19 at the Hyatt Regency Hill Country Resort and Spa in San Antonio.

Look for more details soon.
In the State and Around the Nation
Digital divide in Texas: The state of broadband in Texas rural communities
More than 2 million Texas households don’t have high-speed internet. While most cities can access broadband services, even urban areas have pockets without it, according to the Texas Comptroller’s October 2019 edition of its Fiscal Notes newsletter .

While most of city residents can access broadband, even urban Texas has pockets without it. State legislation, federal programs and various grassroots efforts all are trying to help more Texans access this vital service, according to Fiscal Notes.

Texas’ vast rural areas are especially underserved. As of 2016, only 69 percent of rural Texans could access high-speed Internet, according to Fiscal Notes citing data from the Federal Communications Commission.

“This digital divide has serious implications for education, telemedicine, agriculture and small business,’’ the comptroller’s office said. “But recent state legislation, federal funding programs and grassroots efforts may help Texans — and particularly rural Texans — get connected.’’

The Federal Communications Commission’s (FCC) benchmark for high-speed internet is at least 25 megabits per second (Mbps) for downloads and 3 Mbps for uploads. The commission’s 2019 Broadband Deployment Report found 21.3 million Americans lack access to broadband.

The newsletter also discusses the low return on investment of rural broadband and points Connected Nation’s Texas Broadband Funding Guide as a resource to help identify whether certain projects are eligible for funding. 
New area code proposed for parts of Dallas-Fort Worth metroplex
In an effort to accommodate growth in the Dallas-Fort Worth metroplex, the Public Utility Commission of Texas is reviewing a petition by the North American Number Planning Administrator to add a new area code in the area.
The new area code would overlay existing area codes 214, 469, and 972 in Grayson, Denton, Colin, Hunt, Tarrant, Dallas, Rockwall, Kaufman, Johnson, Ellis and Hill counties. Click here to view a map of the affected region.
The NANPA projects that the three existing area codes will run out of numbers by the second quarter of 2021. 
In the News
RAYMONDVILLE — From this small farming town, internet service has helped technologically transform much of South Texas’ rural landscape. Since 1952, Valley Telephone Cooperative has evolved into VTX1, offering high-speed internet, telephone services and security systems to 26,000 customers in a region stretching from Brownsville to the Austin area and from Corpus Christi to Laredo. “We were the first rural company in the United States to offer high-speed internet access to its members,” Denise Reyna, the company’s spokeswoman, said. Now, the company has purchased Rock Solid Internet in San Antonio, expanding its internet and telephone services into the Alamo City area while adding 21 employees. Read more.

While Texas is responsible for educating more rural students than any other state in the country — nearly 700,000 — it’s not doing as much for those students as most other states in two key areas. That’s according to a  new report  from the  Rural Schools and Community Trust . Read more.

(Op-ed from Dustin McKissen , Founder and CEO, McKissen + Company)
Way back in the mid-1990s, I had a crush on a pretty girl in my grandmother's  rural  Idaho hometown. Unlike the young women in my own, more sophisticated high school, my friend in Idaho liked me back, and we would have spent more time talking--but her landline was clogged up with the  early internet , and all I ever got was a busy signal. Read more.

House lawmakers advanced legislation that would boost protections of emerging 5G wireless technology, as well as offer incentives for telecommunications providers to remove Chinese-made equipment from their networks. In a Nov. 14 markup session, the House Subcommittee on Communications and Technology approved five bills related to emerging 5G networks and technology, advancing them to the full Energy and Commerce Committee for consideration. Read more.

The FCC has authorized another $13 million-plus for rural broadband buildouts as it works to close the digital divide. That broadband subsidy money, from the Connect America Fund (CAF) Phase II auction, is going to 66 winning bidders whose applications for the money passed muster with the Wireline Competition Bureau, Rural Broadband Auctions Task Force and Office of Economics and Analytics. Read more.

The Federal Communications Commission faces a legal battle against dozens of cities from across the United States, which sued the FCC to stop an order that preempts local fees and regulation of cable-broadband networks. The cities filed lawsuits in response to the  FCC's August 1 vote  that limits the fees municipalities can charge cable companies and prohibits cities and towns from regulating broadband services offered over cable networks. Read more.

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