New Mexico Shifts to Connections in State USF Contribution Revamp
New Mexico is the third state to decide carriers should contribute by connection count to state USF rather than by percentage of revenue, following Utah and Nebraska. The Public Regulation Commission voted 4-0 at their livestreamed Wednesday meeting to switch to a $1.17-per-connection monthly surcharge Oct. 1, and 4-0 to open a docket to revise the amount for 2019. Commissioners rejected exceptions suggested by CTIA and others. As Oklahoma also weighs state USF changes, big carriers warned the state commission not to regulate broadband or re-regulate competitive services.
If the contribution method didn’t change to connections, the revenue-based surcharge would likely increase to more than 7.3 percent from about 6.1 percent today, said PRC Associate General Counsel Russell Fisk. Staff estimated New Mexico has about 2.3 million communications connections, he said. At a hearing last week, Commissioner Patrick Lyons (R) said the state needs to act fast because the USF isn’t sustainable under the current revenue-based mechanism (see 1808150065). Earlier this month, Nebraska decided to move to a $1.75 per connection fee in January for residential lines, temporarily keeping the revenue-based system for business lines (see 1808080022). Utah shifted to a 36 cents per connection fee in January and reported early signs of success (see 1804260067).
Moving to connections is a “reasonable solution to a problem that we’ve seen is only going to get worse,” said New Mexico Commissioner Cynthia Hall (D). It may not be perfect, but no reasonable alternatives were presented, she said. It’s a “simpler way to sustain the fund,” and it will be easier for the commission to verify correct payments from contributors, said Chairman Sandy Jones (D).
Commissioner Lynda Lovejoy (D) voiced caution and agreed with some CTIA concerns, though she voted for the order. “I just want to make sure we're not swiftly going toward a different method and thinking that there’s going to be no issues with it down the road.” CTIA argued a connections mechanism is a “regressive tax” shifting cost burden to those who can less afford it. Lovejoy said she worries about imbalance between different types of providers, saying she doesn’t want to see the surcharge absorbed more by wireless than by rural landline companies. Fisk responded that more people are moving to wireless and the cost burden would likely switch under either regime.
USF Joint Board state and federal members are at loggerheads on revamping formulas for contributions to the federal fund, with federal members disagreeing to a proposal by state members, said federal chair Mike O’Rielly at last week’s Senate Commerce Committee hearing, answering a question from Communications Subcommittee ranking member Brian Schatz, D-Hawaii. At least a half-dozen states are trying to determine a new formula with no consensus, the GOP commissioner said. O’Rielly and the FCC didn’t comment Wednesday.
Oklahoma USF
Carriers resisted Oklahoma USF support for broadband and state VoIP regulation, in comments released this week on the Oklahoma Corporation Commission’s June 28 NOI in docket PUD-201800066. The OCC Wednesday scheduled a technical hearing on the NOI for Aug. 30 at 10 a.m.
Oklahoma is “considering a dangerous expedition into the realm of increased regulation of the hyper-competitive telecom market,” warned AT&T: “This would make for disastrous public policy and be subject to certain defeat in the courts.” OCC should “resist any Quixotical urge to re-implement any aspects of the old regulatory regime from the bygone era of exclusive telephone monopolies,” the carrier said. New regulations would disrupt investment and add unnecessary costs, it said.
“The goal of helping underserved communities and low-income families obtain broadband can best be achieved through appropriated state general funds,” commented Verizon. “Charging the customers of carriers to fund their competitors is both anti-competitive and inefficient.” The OCC should wait for the FCC to fully implement Connect America Fund and Lifeline programs before considering expanding USF to broadband, it said. “Increasing customers' OUSF charges for broadband may be premature, unnecessary, and duplicative.” States may not regulate VoIP because it’s an information service, Verizon said.
“Government-funded support and infrastructure programs should be open to all broadband providers on an equal basis, regardless of technology, and limited to areas currently unserved by any broadband provider,” Cox said. OUSF can be expanded to broadband without violating state law, it said. “While states' ability to regulate VoIP services is unclear, it is even less clear that imposing such regulation would be beneficial to customers or fair to providers.” Cox sees no reason for Oklahoma to change the contribution method because the revenue-based mechanism is equitable, it said.
The legislature should revamp OUSF, said Sprint. The Oklahoma commission should ask legislators to “cap the OUSF at current funding levels, pending an investigation of the legality of, the necessity of, and the viability of the current OUSF,” it said: Legislative changes “may include eliminating the OUSF and replacing it with specific statutes to fund certain programs through general revenues.”