Universal Service Fund administrator explains in testimony why another fee increase is needed
Discussions about a potential fee increase on phone bills are coming after the first of the year.
Landline, wireless and Voice over Internet Protocol customers in Oklahomans likely are going to see the state-created Universal Service Fund fee that most pay on a monthly basis climb about another 3%, officials are saying.
Brandy Wreath, administrator of the Oklahoma Universal Service Fund (OUSF) and the director of the Oklahoma Corporation Commission’s Public Utility Division, testified before an administrative law judge at the agency that the increase is needed to meet the fund’s ongoing obligations.
The fund supports companies that provide phone services services in rural areas of Oklahoma to customers (as well as internet services to public libraries, public schools, prisons, mental health facilities, and state and county health departments) to help keep costs for those services affordable.
The current fee users in Oklahoma pay on their monthly bills is 6.28%, which was set by the agency’s elected commissioners in May after years of keeping the fee at lower percentages.
A majority of current elected commissioners previously were opposed to approving many of the requests companies had made for financial support over the past several years because they were concerned about the way Oklahoma’s Legislature had established the program.
The state fund, which is collected separately from a federal universal service fund that is triple its size in percentage but only is collected on revenues phone companies get from customers who pay for interstate communication services, is intended to work with its federal counterpart to help meet keep rural phone services affordable within the state.
Commissioners Todd Hiett and Bob Anthony repeatedly have expressed concerns that demands on the state’s fund will continue to grow as the federal government redirects dollars it collects from helping to support those rural phone services to increasing rural broadband services instead.
Anthony also wants more information about the companies released for public review before the commission considers paying their requests, and also doesn’t like that they can get reimbursed for costs they encounter because of governmental actions that force them to relocate lines or pay for other expenses.
Still, Hiett and Anthony joined Commissioner Dana Murphy earlier this year in authorizing nearly $700,000 in one-time payments and nearly $40,000 more on monthly costs, moving forward, for two phone companies with staff-recommended funding requests that Hiett and Anthony previously had voted to deny.
The commissioners were forced to reverse course on those claims after the companies appealed the denials to Oklahoma’s Supreme Court, which ordered them to be paid.
After that, commissioners agreed to increase the fee to its current 6.28% amount.
Wreath filed notice he intended to ask for another fund increase last month.
In testimony Wreath made before the judge on Dec. 13, he stated numerous factors are related to the pending request to increase the fee’s percentage, including lower-than-projected revenues from the current fee and pent-up demand from companies that sought to make reimbursement claims from the fund but chose to wait for the Supreme Court’s decision on the appealed cases before deciding to proceed.
“Reported revenues by contributing providers are down 20%, or $11.5 million, from the projected level,” Wreath said. “This revenue decline is also being seen at the federal level.”
Meanwhile, he said the fund has delivered significant benefits to Oklahomans, noting internet costs for state schools and libraries has been reduced by 61%, that telemedicine costs are down and that 1,248 Oklahoma schools now are equipped with fiber infrastructure.
He said the fund helps keep rural Oklahomans connected to phone and internet services, ensures rates for services in high-cost areas are reasonable and affordable, supports critical network facilities that help economic development and narrow the digital divide between urban and rural parts of the state.
Wreath also testified he believes a different way to fund the program is needed, saying the support should be based upon actual needs, that earnings investigations should be conducted on all companies that request dollars from the fund, and that support should be limited to carriers that are operating in areas where there are no other unsubsidized competitors.
“Making universal service policy goals clear is the best way to ensure that the fund level is set appropriately,” he testified. “Ultimately, the size of the fund is driven by policy, not the factor (percentage) itself.”
A hearing on the arguments involving the case is set for Jan. 16 before an administrative law judge at the commission, documents show.