We are in the dog days of summer and activities in Austin and the halls of the Texas Capitol and the Public Utility Commission of Texas are beginning to heat up.
We are putting the finishing touches on plans for the Texas Telephone Association Convention and Product Showcase set for August 25-28 in San Antonio. I hope you plan to join us at the convention where we will be discussing some of the pressing issues impacting the telecommunications industry today.
We are also looking forward to our annual TTA golf tournament on Monday August 26 at the Hyatt Regency Hill Country Resort in San Antonio. This tournament always has been a great time for our members and supporters and raises funds for the TTA Political Action Committee. This event will be even more special this year as we are playing the tournament in honor of our great friend John H. Greenberg of Btel, who passed away earlier this year.
Support, sponsorships and gifts to the convention events and the raffle are a huge part of making this event a success and the TTA team appreciates its member support.
At the same time, the TTA team is continuing to work closely with member companies to advocate for policies in the regulatory arena to support a strong telecommunications industry.
Notably, the TTA team’s decision to be the only intervenor to actively oppose Virgin Mobile’s application to expand its Lifeline service area in parts of Texas laid the groundwork for a recent decision by the Texas PUC to deny Virgin Mobile access to additional state lifeline support, limiting a growing concern related to the overall health of the Texas universal service fund program.
The Texas PUC during its August 8 open meeting ruled on Virgin Mobile’s application to expand its Eligible Telecommunications Carrier (ETC) and Eligible Telecommunications Provider (ETP) designation in certain service areas in Texas. The commission denied Virgin Mobile’s request to expand its ETP-designated area, but granted the request to expand its ETC-designated area – which is consistent with the settlement agreement TTA reached with Virgin Mobile early this year.
Virgin Mobile, hinting at some frustration with the PUC’s lack of action in the case, filed a
letter
with the commission on July 31, asking the PUC to consider the pending application at the next open meeting, indicating there was no dispute between the remaining parties in regard to its ETC designation. Given that Virgin Mobile received $3.3 million in state Lifeline support in the second quarter of 2019, the commission’s delay has clearly been costly, but the company’s troubles may just be starting.
Texas PUC Chair DeAnn T. Walker on August 7 released a
memorandum
in the case that could jeopardize Virgin Mobile’s ETP designations in the larger price cap service areas in Texas, putting at risk the company’s current state lifeline support. Consistent with
TTA’s prior testimony
in the Virgin Mobile case, Walker’s memorandum indicates that in order to be designated as an ETP, a company must provide all elements of basic local telecommunications service. Walker points to the commission’s action in Virgin Mobile’s prior two price cap cases and notes “whether Virgin Mobile is in compliance with the Commission’s orders and providing the service ordered in the [prior orders] is a question for another proceeding.” Walker further notes that “I do not believe that the rule allows for good cause exceptions for the requirements to the designation as an ETP” and that she “do[es] not believe that the good cause exception [from the requirement to provide operator services] granted in the previous [orders] are allowed under the rules.”
Whether the Texas PUC will now open an investigation into whether Virgin Mobile is meeting its existing obligations as an ETP remains to be seen. However, based upon the Texas PUC’s decision, it is possible Virgin Mobile could be investigated and ordered to refund all of the state Lifeline support it has received since 2017 in Texas because of its failure to provide all elements of basic local telecommunications service to its customers in Texas.
Meanwhile, in another win for TTA, Q Link Wireless on July 26 filed a
request to withdraw
from Texas PUC consideration its request for designation as an ETP and eligible to receive state low-income support for its Lifeline customers within the AT&T, Frontier, and CenturyLink service areas. TTA in May 2019, filed
comments
on Q Link’s application pointing out the various discrepancies in Q Link’s positions in this latest case seeking state low-income support as a facility-based provider and Q Link’s prior cases seeking a similar designation as a reseller.
Q Link withdrew its request for ETP designation without prejudice, which means that it could refile a similar request at some point in the future.
Texas universal service fund revenues dip
Texas universal service fund revenues dropped by nearly 18 percent for the second quarter of 2019, according to the Texas PUC’s
Texas Universal Fund Financial Report
covering March through May 2019. Texas USF revenues are based upon an assessment on telecommunications providers’ intrastate taxable telecommunications receipts.
While revenues have been steadily declining, during the second quarter, Texas USF revenues unexpectedly fell from $43.7 million in the prior period to $35.9 million. The balance in the fund on March 1 was $170.5 million and fell to $152.9 million on May 31.
Over the same period, demand for state low-income support increased from $571 thousand to $3.7 million -- an increase of 552 percent. Increased demand for state low-income support was mainly related to a dramatic increase in payments to one provider, Virgin Mobile, which received $3.3 million in state lifeline support during the second quarter of 2019.
Demand for the main two components of the high-cost funding mechanism Small and Rural Incumbent Local Exchange Carrier Universal Service Plan support and Texas High Cost Universal Service Plan support – remain relatively steady at about $20 million each per quarter.
SB 586 reviews still pending
The Texas PUC has not yet acted on commission staff’s recommendations related to Texas telecommunications companies SB 586 reports and companies remain in a holding pattern. Those companies interested in seeking additional high-cost support should continue to prepare draft applications for funding increases.
We will continue to monitor commission action on this important issue. The next PUC open meeting is scheduled for August 29.
Texas PUC makes no changes to municipal franchise fee program
In a blow to cities’ municipal franchise fee revenues, the Texas PUC on August 8 approved a commission staff recommendation to let stand the current definition of “access line” for the purpose of accessing municipal franchise fee charges.
Under Texas law governing municipal franchise fees, the commission is required to regularly review the definition of access lines to consider “whether changes in technology, facilities, or competitive or market conditions justify a modification in the commission-established categories of access lines or, if necessary, the adoption of a definition of access line.”
Commission staff in a
memo
to the commissioners noted that “over-the-top” providers of Voice over Internet Protocol services continue to be excluded from the requirement to pay municipal franchise fees, but did not have an administratively-easy solution to begin assessing franchise fees on such services. Staff also noted the Texas Legislature in 2017 adopted changes to the law to address franchise fees paid by wireless network providers seeking to deploy small-cell technologies. Interestingly, the commission staff hinted that should the commission redefine “access line,” it would likely result in an increase in the number of access lines subject to municipal franchise fees and it would be reasonable to require cities to rebalance their base municipal franchise fee revenues, which have likely declined since they were originally established 20 years ago before customers began transitioning to wireless-only and over-the-top VoIP services.
Texas PUC approves assessment for live Internet broadcasts
The Texas PUC on August 8 approved assessing charges to certain regulated entities to cover the cost of broadcasting meetings. According to the PUC staff’s
revised memo and proposed order
, the commission contracts with a third party to provide live Internet broadcasts of meetings at a cost of $190,800 per year. As the vast majority of PUC meetings relate to electric matters, the PUC is assessing only 10 percent of the annual costs to telecommunications providers and that only the two largest telecommunications companies that are considered public utilities -- Windstream and CenturyLink – should be assessed $9,540 each. The remaining 90 percent of the annual costs will be assessed to electric service providers.
Connected Texas seeks broadband coverage information
Connected Texas has reached out to TTA and some of its members seeking broadband coverage information in an effort to map unserved and underserved areas in Texas. Connected Texas indicates it is working on behalf of the
Texas Rural Funders Collaborative
, which is made up of a number of charitable and education-related foundations. Connected Texas’s indicates it will be creating a granular broadband availability map to accurately reflect where, and at what speed, residential broadband service is available throughout the state.
Wes Robinson of Eastex, TTA regulatory chairman, provided Connected Texas’ representative a number of publicly-available sources showing detailed broadband availability, including
USAC’s CAF Broadband Map
. Connected Texas has contacted TTA members directly seeking granular company-specific broadband coverage information.
TTA has invited Connected Texas to attend its annual meeting later this month and has offered a booth in the vendor showcase. Members are free to provide broadband coverage information to Connected Texas if they so choose, but they are under no obligation to do so.
To date, most of TTA’s member companies have indicated they would prefer not to supply broadband coverage information directly to Connected Texas. Please let us know how we can help.
NCTA takes aim at pole attachment rates
NCTA – The Internet and Television Association on July 22 filed a
letter
with the FCC on the economic impact caused by municipalities’ and electric cooperatives’ exemption from federal pole attachment regulations.
The NCTA submitted a report from Dr. Michelle Connolly, a former FCC chief economist, that demonstrates the monopoly pole attachment rates charged by exempt municipalities and electric cooperatives “are more than double the rates charged by investor-owned utilities.”
NCTA made the filing in response to a recent paper submitted by the National Rural Electric Cooperative Association that suggested there is no need for the FCC to be concerned about excessive pole attachment rates charged by municipalities and electric cooperatives. Dr. Connolly points out in her paper that not only does the certainty of currently excessive pole attachment rates deter broadband deployment, but the prospect of unregulated increases in those rates once broadband has been deployed can hamper the deployment of additional broadband facilities. Further, Dr. Connolly points out that these concerns are exacerbated in cases where the municipal or electric cooperative is an actual or potential competitor in the broadband market.
TTA and its members worked diligently this past legislative session to add provisions to Texas law that require electric cooperatives that deploy broadband facilities to have just and reasonable pole attachment rates. It was a significant win that would not have occurred without TTA and its member companies’ organized efforts. However, these changes do not specifically require Texas electric cooperatives to use FCC formulas in setting pole attachment rates.
