BP BHEAD INT S [atlas:bill]

AN ACT Relating to encouraging the development of telecommunications infrastructure in all areas of the state and ensuring that telecommunications services are available in rural and hard-to-serve areas of the state by establishing a universal service fund for telecommunications; adding new sections to chapter 80.36 RCW; and creating a new section.

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

NEW SECTION. Sec. 1. The legislature finds that in a competitive telecommunications industry, telecommunications companies will be less inclined to invest in facilities to serve sparsely populated or hard-to-serve areas of the state. The legislature further finds that in order to secure for all consumers of the state the benefits of high quality telecommunications service and evolving telecommunications technology, it is necessary to create a universal service fund. The purpose of this fund is to provide an incentive to telecommunications carriers to build facilities to provide universal service as defined in section 2 of this act and to serve sparsely populated and hard-to-serve areas of the state while preserving to consumers in those areas the availability of telecommunications services at rates which are comparable to rates in urban areas and are affordable.

NEW SECTION. Sec. 2. The definitions in this section apply throughout sections 2 through 9 of this act unless the context clearly requires otherwise.

(1) "Basic service" means basic telecommunications service that provides access to the public switched telecommunications network with: The ability to place and receive calls; single-party touch tone service, including billing and setup and installation; access to interexchange carriers consistent with federal and state requirements; white page directory listing; access to emergency services; access to directory assistance and operator services; data transmission capacity as allowed by currently deployed voice-grade circuits; and a minimum calling area to meet basic customer service needs. "Basic service" also includes public‑interest pay phones as identified by the commission. The commission shall review the definition in this subsection every two years and may adopt rules to expand the definition to include additional services.

(2) "Eligible telecommunications carriers" mean incumbent local exchange telecommunications companies as that term is used in the federal telecommunications act of 1996 and such other facilities-based local exchange companies as may be designated by the commission consistent with the standards contained in the federal telecommunications act of 1996 and this chapter.

(3) "Embedded cost of service" means the cost of providing universal service as determined by the historical costs and investment of a company using accepted regulatory accounting practices.

(4) "End-user service" means a telecommunications service offered directly to a member of the consuming public, regardless of the facilities used.

(5) "Facilities-based local exchange company" means a telecommunications company providing local exchange service that at a minimum provides, through itself or an affiliate, substantially all of its own switching facilities, a substantial majority of its distribution and customer loop facilities, or substantially all of its switching and distribution network with the exception of customer loop plant, if it provides its own customer loop facilities where it is economically reasonable for it to do so.

(6) "Forward-looking cost of service" means a forward-looking long-run incremental cost produced by the company's cost study using a methodology consistent with that prescribed by the federal communications commission in its rules implementing the federal telecommunications act of 1996.

(7) "Retail revenues" mean all revenues from end-user services originating or terminating in this state.

(8) "Telecommunications company" means a telecommunications company, whether or not exempt from regulation under RCW 80.36.370 (5) or (6) or 80.66.010.

(9) "Universal service" means the offering of basic service and the construction and deployment of facilities to provide basic service.

NEW SECTION. Sec. 3. The commission shall establish by rule a universal service fund that is consistent with the federal telecommunications act of 1996 and sections 2 through 8 of this act. The commission shall adopt detailed rules for administration of the universal service fund and shall select the administrator of the fund. Under the rules adopted by the commission, the administrator shall assess telecommunications companies providing telecommunications service in Washington an amount that, in total, is sufficient to fund the universal service fund. The assessment must be based on each telecommunications company's billed retail revenues. The rate of assessment must be the same for all telecommunications companies. All telecommunications companies are subject to the commission's rules adopted under this chapter.

NEW SECTION. Sec. 4. To be eligible to draw from the universal service fund, a telecommunications company must be a facilities-based local exchange company. An eligible telecommunications company may draw from the universal service fund only so much as is necessary for the company to provide universal service at the affordable rate benchmark established by commission rule.

NEW SECTION. Sec. 5. An eligible telecommunications company that is a rural telephone company under the federal telecommunications act of 1996 shall use embedded cost of service to determine the cost of universal service, but if a rural company is required to use forward-looking cost of service as the exclusive means to draw support from the federal service fund, the rural company may use a forward-looking cost of service for intrastate universal service fund purposes.

NEW SECTION. Sec. 6. Except as provided in section 5 of this act, the cost of providing universal service as defined is determined by forward-looking cost of service. Receipt of universal service fund support under this section must be targeted to those areas identified as requiring support consistent with the methodology developed by the federal communications commission for federal universal service fund support.

NEW SECTION. Sec. 7. Universal service funds may not be used to cross-subsidize competitive and nonregulated activities of a telecommunications company.

NEW SECTION. Sec. 8. Except for acts or omissions of gross negligence or intentional misconduct, the administrator of the fund, its board of directors, officers, employees, and agents must be indemnified and held harmless by the telecommunications companies paying into or drawing from the universal service fund for all acts or omissions in administering the universal service fund. All costs of administration, including but not limited to the purchase of insurance, must be recovered from the fund and included in the charges to telecommunications companies for the universal service fund.

NEW SECTION. Sec. 9. The commission shall adopt and place into effect the rules required to be adopted by the commission under sections 2 through 8 of this act by December 31, 1997.

NEW SECTION. Sec. 10. Sections 2 through 9 of this act are each added to chapter 80.36 RCW.