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Bill targets phone subsidies
Funding would be phased out sooner

In just three years, phone bills could drop a few bucks.

While that may seem like a long time, if House Bill 855 doesn’t pass, that wait could be closer to 20 years.

The legislation, authored by District 23 state Rep. Mark Hamilton essentially shortens the length of time small telecommunications companies would receive subsidies funded by consumers of larger ones.

Several Tier 2 local exchange companies, or smaller telecommunications firms, currently receive a disbursement from the Universal Access Fund, an account overseen by the Georgia Public Service Commission.

The fund is supported through fees paid by customers of larger companies such as Comcast, Charter and AT&T, explained Hamilton, a Republican from Cumming.

"Last year that fund paid out about $16 million," he said. "This year they’re requesting $20 million."

The issue dates back to mid-1990s federal and state legislation designed to replace regulated monopoly services with a competitive market. The subsidies were designed to offset money lost when the intrastate access rates were lowered.

The fund was supposed to be phased out in 2000, but continued in order to provide support for universal service, a federal mandate that requires phone access be provided to all Georgians.

Serving less populous areas is cost prohibitive, so the continued subsidy offered assistance.

In 2001, five companies participated, receiving less than $3 million in subsidies, Hamilton said.

Flash forward to 2012, and 17 of the 20 companies in the state that are eligible to participate do so.

None of the companies operate in Forsyth County. Among the areas Hamilton said the measure could apply include Blue Ridge, in north Georgia, and Brantley and Bulloch counties in southeast Georgia.

A law passed in 2010 will eliminate the distributions within the next 20 years. Hamilton said the House wants to end it immediately.

His bill, which caps both the dollar amount and the duration, is a fair compromise.

The measure would reduce the subsidy to $9 million this year, $6 million in 2013 and $3 million in 2014.

Hamilton said the local phone companies have lost customers to cell phone, cable and other competitors. Still, there are 10 firms in the state that have managed to stay relevant without the subsidy.

"There are other telecommunication companies out there that aren’t asking for this money, so obviously there’s a business model out there that works," Hamilton said. "They don’t want to compete with a company that’s being subsidized by other companies, so we’re trying to make this a fair competition.

"The market has changed dramatically over the years … we’re just saying these rural telecommunications companies need to change their business model to reflect that."

Part of the problem is the way some of the Tier 2 companies are reporting information.

Instead of installing a standard phone line, the companies might install fiber lines, which can provide support for cable and other services. But the profit made from the additional services is not being reported as phone line earnings.

"We feel like that revenue is not being considered in the equation," Hamilton said.

AT&T Spokeswoman Stephanie Walker said the company supports the measure "because it will end, once and for all, the state subsidies that our customers pay to rural phone providers."

"This subsidy fund has been misused and should be sunset by the legislature," she said.

Hamilton noted there will be opposition to his measure, largely from those rural telecommunications companies that stand to lose the subsidy.

He said they likely will appeal to legislators and ask them not to support the measure "saying this is going to cost them revenue."

The local companies can try to pass along the cost to consumers, but rates are regulated by the PSC.

"My intension is not to hurt anybody," Hamilton said. "My intent with this legislation is to truly make it a fair, competitive situation and protect the consumer."