Public Hearing on Telephone Universal Service Fund Rules to be Held in Albuquerque on August 29, 2005

Implementation of HB776 expected to raise phone bills by as much as $3/month

The Public Regulation Commission has scheduled two public comment hearings in case 05- 211-UT, a rulemaking procedure to implement House Bill 776, passed during the 2005 legislative session:

HB 776 requires the PRC to reduce intrastate switched access charges to interstate levels in a revenue-neutral manner. The legislation directs the PRC to allow telephone companies to recover their lost intrastate access fee revenue through higher rates and through a state universal service fund (USF), to be funded by a surcharge on telephone bills. The combined effect of the rate increases and surcharges on a Qwest customer’s bill has been estimated to be in the range of $2.00 to $3.00.

Among the significant issues that still need to be addressed through the PRC’s rule-making process are:

• How quickly to phase-in the rate changes and surcharges.
• How to implement the legislation’s requirement for revenue-neutral rate-rebalancing and an “affordability benchmark” rate for basic residential service.
• How to spread the burdens of rate rebalancing between residential and business customers.
• Whether to impose the USF surcharge only on wireline phone customers, or extend it to wireless and/or VOIP (voice over internet protocol) customers.
• Whether to assess the USF surcharges as a fixed amount per line/telephone number, a percentage of the bill, or a combination of the two.
• Whether to assess a USF surcharge on in-state long-distance services.
• What criteria to use for allowing competitive carriers in rural areas to draw from the state USF.

I opposed passage of HB 776 (and its companion SB 218), but now that it is the law, we need to implement it in a manner that is as fair as possible, keeps rate increases to a minimum, and provides for a stable and predictable administrative mechanism. To that end, I drafted proposed language for rules that, among other things, includes wireless and VOIP within the services subject to the USF surcharge. This will result in more customers paying in to the USF, however, each will pay a lesser amount (about half as much).

I, and the other PRC Commissioners, welcome the input of the general public on the PRC’s proposed rules at either of the two scheduled hearings (you can well believe that we’ve already heard quite a bit from various industry interests). We will consider written comments received by August 31*, brought to the Albuquerque hearing or sent to the following address:

Melanie Sandoval
New Mexico Public Regulation Commission
Attention: Proposed Rule Relating to Access Charge Reform
224 East Palace Avenue, Marian Hall
Santa Fe, NM 87501

Click here for a copy of the proposed rules in normal formatting or proposed rule in legislative format. [microsoft word documents]

Click here for the official Notice of Proposed Rulemaking [pdf]

Background information on rural telephone compainies and access fee reform. [pdf]

*The Commission will also consider response comments received on or before September 23, 2005.