New York Establishes High-Cost State USF Fund
New York state established a new high-cost universal service fund Thursday, the New York State Public Service Commission ruled. It said the fund will ensure state residents retain access to phone service in high-cost rural areas. The commission approved the phase 2 USF joint proposal in a 4-0 vote, with one commissioner recusing himself. The fund will provide $17 million to as many as 31 eligible telco recipients over a four-year period.
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The new USF model “ensures that some of these smaller companies will remain viable,” said Chairman Garry Brown. Commissioner Maureen Harris called the agreement “a monumental feat” due to all the different stakeholders involved. Brown emphasized the commission’s commitment to affordable service, in a statement (http://xrl.us/bnky4w) about the new fund.
Cost to consumers will be minimal, PSC Administrative Law Judge Howard Jack assured commissioners at the Thursday meeting. “Fairly small,” he said. Staff has estimated the cost should only be about a penny per line monthly, the joint proposal said and Jack reiterated before the commission. “I'm not sure there’s a history of [companies] restraining themselves,” replied Commissioner James Larocca.
The fund’s $17 million will be staggered over the next four years, the PSC said. Five million dollars will be available in 2013, and $4 million each in 2014, 2015 and 2016, to be administered by the Targeted Accessibility Fund (TAF) administrator, according to the commission. Thirty-one smaller LECs will be able to apply for the funding “if they can demonstrate the need for such funding via a rate case,” the commission said. The benchmark rate for determining need will remain $23 per line a month for basic residential local service, the proposal said. The USF decision “provides stability for both customers and companies in terms of universal service and will help ease upward pressure on local telephone service rates for the next four years,” a PSC statement said. Fund contributions will come from wireline companies and exclude wireless carriers and VoIP providers, according to the proposal that will be encapsulated in a forthcoming order that commissioners just approved (http://xrl.us/bnky4u). Demonstrated need may exceed what’s currently predicted, the proposal said, citing a staff “worst-case estimate of SUSF funding” of $5.6 million a year, “based on a continued $23 per line per month benchmark rate level."
The PSC received the phase-two joint proposal May 8 from several parties with stakes in the state USF. The proposal is the collective endeavor of Verizon, AT&T, CTANY, Cablevision Lightpath, Inc., Cellco Partnership, the Department of Public Service, New York state department’s utility intervention unit, New York State Telecommunications Association, a collection of smaller ILECs, Sprint Nextel, T-Mobile Northeast and Time Warner Cable, said the proposal submitted Wednesday. The PSC’s USF proceeding dates back to August 2009.
New York collected $950,000 in high-cost funds, $32.5 million for Lifeline funds, $6.6 million for relay funds, and $12.7 million for other uses in the 2011-12 fiscal year (http://xrl.us/bnky6q). That’s according to a July report from NARUC’s National Regulatory Research Institute. The report said the $950,000 in high-cost funds is expected to be exhausted in December. ILECs, CLECs, IXCs and a voluntary VoIP provider contribute to New York’s funds, the institute said. In 2016, “the Commission will commence a review to determine whether another successor fund should be established, and if so, its nature and features,” the PSC said. It said the adopted measure “provides for the scheduling of consideration of Phase III issues (intrastate access charges and the New York Targeted Accessibility Fund ("TAF")), and discussions on these issues will commence within 30 days.”