BILL REQ. #:  S-4541.1 

Read first time 02/24/14.   Referred to Committee on Ways & Means.

     AN ACT Relating to the expenditure limit for the state universal communications services program; amending RCW 80.36.650; creating a new section; and providing an effective date.

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

NEW SECTION.  Sec. 1   The legislature makes the following findings:
     (1) The state has long relied on incumbent local exchange carriers as carriers of last resort to provide a public telephone network that reaches as many consumers as possible, even in areas that are expensive to serve.
     (2) Consumers in all areas of the state should continue to have access to communications services at reasonable rates.
     (3) The rapidly declining revenue of incumbent local exchange carriers is threatening the ability of these businesses with obligations to serve as a carrier of last resort from continuing to provide landline telephone and other communications service in much of rural Washington.
     (4) This declining revenue is attributable to a number of factors, including but not limited to a loss of federal universal service funds to subsidize service in high-cost areas, changes in intercarrier compensation, and the technological transformation in which many for whom such service is available are switching to relying more heavily on broadband for communications.
     (5) Although the federal government has decided to transition federal subsidies from the connect America fund and reduce intercarrier compensation revenues available to incumbent local exchange carriers, Washington state needs time to develop a strategy before transitioning away from the decades-long policy of ensuring universal service.
     (6) Access to reliable, quality telephone and internet service is not a luxury but rather a basic staple essential to modern life, and it is necessary to the health and welfare of all and to the success of the economy in all our communities, urban and rural, to ensure that such service is available throughout the state.
     (7) Customers in many parts of the state are at grave risk of rate instability and service interruptions or cessations without a limited and temporary influx of funds to support additional investments that rural incumbent local exchange carriers would otherwise have little hope of recouping in the marketplace.
     (8) Changes in the communications marketplace have resulted in a revenue shortfall of greater than five million dollars for rural incumbent local exchange carriers in the state.
     (9) The effective expenditure limit for the state universal communications services program, as established by current law governing the authority of the utilities and transportation commission to make distributions to an eligible communications provider, is too low to effectuate the legislature's intent of providing funding that is adequate to ensure that quality, affordable local communications services are not interrupted.
     (10) As a result of the foregoing, and to enable all consumers in Washington to access and benefit from a public network that leaves no community behind, the legislature intends to modify the temporary universal communications services program to ensure that five million dollars is expended in each fiscal year over the five years of the program.

Sec. 2   RCW 80.36.650 and 2013 2nd sp.s. c 8 s 203 are each amended to read as follows:
     (1) A state universal communications services program is established. The program is established to protect public safety and welfare under the authority of the state to regulate telecommunications under Article XII, section 19 of the state Constitution. The purpose of the program is to support continued provision of basic telecommunications services under rates, terms, and conditions established by the commission during the time over which incumbent communications providers in the state are adapting to changes in federal universal service fund and intercarrier compensation support.
     (2) Under the program, eligible communications providers may receive distributions from the universal communications services account created in RCW 80.36.690 in exchange for the affirmative agreement to provide continued services under the rates, terms, and conditions established by the commission under this chapter for the period covered by the distribution. The commission must implement and administer the program under terms and conditions established in RCW 80.36.630 through 80.36.690. Expenditures for the program ((may not exceed)) must be five million dollars per fiscal year less administrative costs appropriated to the commission to administer the program established in subsection (1) of this section in the omnibus operating appropriations act. In order to ensure that the entire five million dollars is expended, the commission shall make distributions for the fiscal year by October 1st of the fiscal year.
     (3) A communications provider is eligible to receive distributions from the account if:
     (a) The communications provider is: (i) An incumbent local exchange carrier serving fewer than forty thousand access lines in the state; or (ii) 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. For purposes of determining the access line threshold in this subsection, the access lines or equivalents of all affiliates must be counted as a single threshold, if the lines or equivalents are located in Washington;
     (b) The customers of the communications provider are at risk of rate instability or service interruptions or cessations absent a distribution to the provider that will allow the provider to maintain rates reasonably close to the benchmark; and
     (c) The communications provider meets any other requirements established by the commission pertaining to the provision of communications services, including basic telecommunications services.
     (4)(a) Distributions to eligible communications providers are based on a benchmark established by the commission. 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. 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.
     (b) To receive a distribution under the program, an eligible communications provider must affirmatively consent to continue providing communications services to its customers under rates, terms, and conditions established by the commission pursuant to this chapter for the period covered by the distribution.
     (5) The program is funded from amounts deposited by the legislature in the universal communications services account established in RCW 80.36.690. The commission must operate the program within amounts appropriated for this purpose and deposited in the account. If expenditures for distributions together with administrative costs amount to less than five million dollars in expenditures in a fiscal year, the remainder must be expended as provided in subsection (7)(b) of this section.
     (6) The commission must periodically review the accounts and records of any communications provider that receives distributions under the program to ensure compliance with the program and monitor the providers' use of the funds.
     (7)(a) The commission must establish an advisory board, consisting of a reasonable balance of representatives from different types of communications providers and consumers, to advise the commission on any rules and policies governing the operation of the program.
     (b) In the event that the amounts expended by the commission in distributions, pursuant to the distribution methodology established by rule under this section, together with the administrative costs of the commission, do not amount to five million dollars, the commission shall expend the remaining funds before the end of the fiscal year, consistent with the intent of the legislature as provided in section 1 of this act and pursuant to a recommendation from the advisory board. The advisory board shall make a recommendation to the commission for how to expend the remaining amounts through additional funding to incumbent local exchange carriers serving fewer than forty thousand access lines in the state, prioritizing expenditures that help carriers fulfill carrier of last resort obligations to serve and expand communications services to underserved populations.
     (8) The program terminates on June 30, 2019, and no distributions may be made after that date.
     (9) This section expires July 1, 2020.

NEW SECTION.  Sec. 3   This act takes effect July 1, 2014.