BILL REQ. #:  H-1386.1 

Read first time 02/12/13.   Referred to Committee on Technology & Economic Development.

     AN ACT Relating to creating a state universal communications service program; amending RCW 80.36.610; reenacting and amending RCW 80.36.005; adding new sections to chapter 80.36 RCW; creating new sections; prescribing penalties; providing effective dates; providing an expiration date; and declaring an emergency.

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

NEW SECTION.  Sec. 1   (1) The legislature finds that: (a) The benefit that all consumers and communications providers derive from connection to the public network is enhanced by a universal service program that enables as many consumers to be connected to the public network as possible; and (b) consumers in all areas of the state should have access to communications services at reasonable rates.
     (2) Significant changes in the communications marketplace are adversely affecting the ability of some communications companies to continue to offer communications services in rural areas of the state of Washington at rates that are comparable to those prevailing in urban areas. These changes, absent explicit federal and state universal service support for such communications companies, may lead to unreasonable telephone service rate increases or cessation of service for some Washington consumers.
     (3) Pursuant to RCW 80.36.600, enacted in 1998, the legislature directed the utilities and transportation commission to plan and prepare to implement a universal service program that would benefit telecommunications ratepayers in the state by minimizing implicit sources of support and maximizing explicit sources of support that are specific, sufficient, competitively neutral, and technologically neutral to support basic telecommunications services for customers of telecommunications companies in high-cost locations.
     (4) As a result of the foregoing and to enable all consumers in Washington to access and benefit from a ubiquitous public network, the legislature intends to create a universal service program that: (a) Enhances the public network; (b) is funded with a network connection fee paid by communications providers based upon working telephone numbers; (c) is administered by a neutral third party selected by the utilities and transportation commission; (d) is operated pursuant to rules adopted by the utilities and transportation commission; and (e) advances universal service in a manner not inconsistent with the requirements of the federal telecommunications act of 1996 (47 U.S.C. Sec. 254).

Sec. 2   RCW 80.36.005 and 2009 c 565 s 53 are each reenacted and amended to read as follows:
     The definitions in this section apply throughout ((RCW 80.36.410 through 80.36.475,)) this chapter unless the context clearly requires otherwise.
     (1) "Basic residential service" means those services set out in 47 C.F.R. Sec. 54.101(a)(2011) and mandatory extended area service approved by the commission.
     (2) "Communications provider" means a provider that provides a working telephone number to a final consumer for intrastate wireline or wireless communications services or interconnected voice over interconnected protocol service, and includes local exchange carriers.
     (3) "Communications services" includes telecommunications services and information services and any combination thereof.
     (4) "Community action agency" means local community action agencies or local community service agencies designated by the department of commerce under chapter 43.63A RCW.
     (((2))) (5) "Community agency" means local community agencies that administer community service voice mail programs.
     (((3))) (6) "Community service voice mail" means a computerized voice mail system that provides low-income recipients with: (a) An individually assigned telephone number; (b) the ability to record a personal greeting; and (c) a private security code to retrieve messages.
     (((4))) (7) "Department" means the department of social and health services.
     (((5))) (8) "Incumbent local exchange carrier" has the same meaning as set forth in 47 U.S.C. Sec. 251(h).
     (9) "Incumbent public network" means the network established by incumbent local exchange carriers for the delivery of communications services to customers that is used by communications providers for origination or termination of communications services by or to customers.
     (10) "Interconnected voice over interconnected protocol service" means an interconnected voice over internet protocol service that: (a) Enables real-time, two-way voice communications; (b) requires a broadband connection from the user's location; (c) requires internet protocol-compatible customer premises equipment; and (d) permits users generally to receive calls that originate on the public network and to terminate calls to the public network.
     (11) "Program" means the state universal communications service program created in sections 3 and 4 of this act.
     (12) "Service year" means the period between July 1st and June 30th.
     (13) "Telecommunications" has the same meaning as defined in 47 U.S.C. Sec. 153(43).
     (14) "Telecommunications act of 1996" means the telecommunications act of 1996 (P.L. 104-104, 110 Stat. 56).
     (15) "Working telephone number" means a north American numbering plan telephone number, or successor dialing protocol that is developed for use in placing calls to or from the public network, that enables a consumer to make or receive calls.

NEW SECTION.  Sec. 3   A new section is added to chapter 80.36 RCW to read as follows:
     (1) A state universal communications service program is established. The program may not exceed five million dollars in annual distributions and must be funded on an equitable and nondiscriminatory basis by every communications provider through the payment of a network connection fee for connection to the incumbent public network. Initially, the fee must be a surcharge on each working telephone number rated within the state of Washington. The commission is authorized to develop a new basis for the fee as it may determine to be in the public interest. By order, the commission shall annually establish the network connection fee. Each communications provider may, but is not required to, pass-through to its customers the network connection fee or any portion thereof.
     (2) The program must be administered by a neutral third-party administrator selected by the commission by contract through a competitive process and subject to commission oversight. The commission shall establish and approve the budget for the administrator and the program expenses of the administrator must be paid out of the fund established for the program after such expenses have been approved by the commission. The administrator may establish an account or accounts in one or more independent financial institutions within the state.
     (3) All receipts from the network connection fee created under subsection (1) of this section, penalties imposed under section 5 of this act, and other moneys authorized to be deposited in the fund by law or order of a court of competent jurisdiction must be paid into the fund, which shall be outside the state treasury and not be subject to appropriation, as required under RCW 80.36.600(3)(a). Expenditures from the fund may be used only as provided in this section. Pursuant to rules adopted by the commission, only the administrator may authorize expenditures from the fund.
     (4) In addition to such other jurisdiction as the commission may have, and notwithstanding RCW 80.66.010, the commission has jurisdiction over all communications providers for the following limited purposes: (a) Assessment, payment, and collection of fees under subsection (1) of this section; (b) enforcement of fee payment obligations; and (c) reports and information on the assessment, payment, and collection of network connection fees and use of moneys distributed.
     (5) The commission shall establish eligibility criteria and designate incumbent local exchange carriers that are eligible for support from the fund.
     (6) The commission shall use a benchmark equal to the local urban rate floor established by the federal communications commission as the affordable residential rate for purposes of administration of the fund.
     (7) Communications providers that may receive support from the fund must meet the eligibility criteria established by the commission and be one of the following: (a) An incumbent local exchange carrier serving fewer than forty thousand access lines in the state; or (b) a radio communications service company providing wireless two-way voice communications service to less than the equivalent of forty thousand access lines in the state; provided that RCW 80.66.010 shall not apply to any radio communications service company that receives support from the fund, and that company and its intrastate telecommunications services shall be subject to commission jurisdiction and regulation to the extent determined by the commission. For purposes of determining the access line threshold, the access lines or equivalents of all affiliates must be counted as one carrier.

NEW SECTION.  Sec. 4   A new section is added to chapter 80.36 RCW to read as follows:
     (1) The commission shall adopt rules for the program that include the following:
     (a) Provisions for operation of the program and fund;
     (b) Criteria for the selection of an independent neutral third-party administrator of the fund;
     (c) Criteria for determining which incumbent local exchange carriers are eligible for support from the fund;
     (d) Contribution and remittance requirements for communications providers related to the program, as authorized by section 3 of this act;
     (e) The method for establishing the annual benchmark used to calculate the amount of support an eligible incumbent local exchange carrier may receive from the fund. The benchmark is the rate the commission determines to be a reasonable amount customers should pay for basic residential service provided over the incumbent public network supported by the program. However, if an incumbent local exchange carrier is charging rates above the benchmark for the basic residential service, that provider may not seek distributions from the fund for the purpose of reducing those rates to the benchmark;
     (f) Creation of an advisory board, consisting of a reasonable balance of representatives from different types of communications providers and consumers, to advise the commission on selecting and overseeing the administrator of the fund;
     (g) Readopt, amend, or repeal existing commission rules adopted pursuant to RCW 80.36.610 and 80.36.620 as necessary to be consistent with this chapter.
     (2) The commission shall periodically review the accounts and records of any communications provider that contribute to or receive support under the program to ensure compliance with the program and monitor the providers' use of the funds.

NEW SECTION.  Sec. 5   A new section is added to chapter 80.36 RCW to read as follows:
     (1) In addition to any other penalties prescribed by law, the commission may impose penalties for failure to make or delays in making or filing the: (a) Required reports; or (b) payments of the network connection fee under the program, or both. For the purposes of this section, the provisions of RCW 80.04.380 through 80.04.405, inclusive, apply to all companies that are required to contribute to, or that receive support from, the fund created in section 3 of this act.
     (2) Any penalties imposed by the commission under this section or imposed for a violation of rules adopted under sections 3 through 6 of this act or RCW 80.36.610 must be payable into the fund.
     (3) In addition to any penalties imposed under this section, the administrator, at the direction of the commission, may withhold payments to any designated incumbent local exchange carrier that fails to submit to the administrator information required to be submitted under sections 3 through 5 of this act.
     (4) Any action taken under this section must be taken only after providing the affected communications provider with notice and an opportunity for a hearing, unless otherwise provided by law.

NEW SECTION.  Sec. 6   A new section is added to chapter 80.36 RCW to read as follows:
     The commission may delegate to the commission secretary or other staff the authority to resolve disputes, approve expenses of the administrator, and make other administrative decisions necessary to the administration and supervision of the program consistent with the relevant statutes and commission rules.

NEW SECTION.  Sec. 7   A new section is added to chapter 80.36 RCW to read as follows:
     By July 1, 2018, the commission shall report to the legislature regarding whether and how the fund disbursements have been used to provide rate stability for rural telecommunications customers in the state and whether this act has served its intended purpose and should be allowed to expire. Upon expiration of this act, the administrator shall disburse all remaining funds and end its operations as directed by the commission.

NEW SECTION.  Sec. 8   The utilities and transportation commission shall adopt rules to implement this act prior to the effective date of the other provisions of this act to ensure that this act is implemented on its effective date.

Sec. 9   RCW 80.36.610 and 1998 c 337 s 2 are each amended to read as follows:
     (((1))) The commission is authorized to take actions, conduct proceedings, and enter orders as permitted or contemplated for a state commission under the ((federal)) telecommunications act of 1996((, P.L. 104-104 (110 Stat. 56), but the commission's authority to either establish a new state program or to adopt new rules to preserve and advance universal service under section 254(f) of the federal act is limited to the actions expressly authorized by RCW 80.36.600)). The commission may establish by rule fees to be paid by persons seeking commission action under the ((federal)) telecommunications act of 1996, and by parties to proceedings under that act, to offset in whole or part the commission's expenses that are not otherwise recovered through fees in implementing the act((, but new fees or assessments charged telecommunications carriers to either establish a state program or to adopt rules to preserve and advance universal service under section 254(f) of the federal act do not take effect until the legislature has approved a state universal service program.
     (2) The legislature intends that under the future universal service program established in this state:
     (a) Every telecommunications carrier that provides intrastate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, to the preservation and advancement of universal service in the state;
     (b) The contributions shall be competitively and technologically neutral; and
     (c) The universal service program to be established in accordance with RCW 80.36.600 shall not be inconsistent with the requirements of 47 U.S.C. Sec. 254)).

NEW SECTION.  Sec. 10   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 11   Sections 1 through 7, 9, and 10 of this act take effect July 1, 2014.

NEW SECTION.  Sec. 12   Section 8 of this act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect July 1, 2013.

NEW SECTION.  Sec. 13   Sections 1 through 10 of this act expire June 30, 2019.