46th legislature - STATE OF NEW MEXICO - first session, 2003

RELATING TO TELECOMMUNICATIONS; ENACTING THE UNIVERSAL SERVICE ACT OF NEW MEXICO; DECLARING AN EMERGENCY.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. SHORT TITLE.--This act may be cited as the "Universal Service Act of New Mexico".

Section 2. DECLARATION AND PURPOSE.--

A. The legislature declares that it remains the policy of this state to maintain for all customers availability of access to basic telecommunications services at affordable rates.

B. The purpose of the Universal Service Act of New Mexico is to create a universal service fund that supplements federal universal service mechanisms and helps ensure that all residents of New Mexico, regardless of location or telecommunications carrier, have access to basic telecommunications services at affordable rates.

Section 3. DEFINITIONS.--As used in the Universal Service Act of New Mexico:

A. "administrator" means the administrator of the fund;

B. "affordable rates" means rates for basic service that promote universal service within a local exchange area, giving consideration to the economic conditions and costs to provide service in the area in which service is provided;

C. "basic service" means local exchange telephone service or its equivalent carried on flat rate or measured residential or business lines at a subscriber's location that includes:

(1) primary directory listing;

(2) touch tone dialing service;

(3) access to operator services;

(4) access to directory assistance services;

(5) access to 911 services;

(6) access to toll services; and

(7) low-income telephone assistance plans or other assistance services;

D. "board" means the New Mexico universal service fund board;

E. "commission" means the public regulation commission;

F. "eligible telecommunications carrier" means a telecommunications carrier designated as eligible to receive fund support in accordance with the Universal Service Act of New Mexico;

G. "federal act" means the federal Telecommunications Act of 1996;

H. "fund" means the New Mexico universal service fund;

I. "incumbent local exchange carrier" means a person that:

(1) was designated as an eligible telecommunications carrier by the state corporation commission in Docket #97-93-TC by order dated October 23, 1997, or that provided local exchange service in this state on February 8, 1996; or

(2) became a successor or assignee of an incumbent local exchange carrier;

J. "local exchange area" means a geographic area encompassing one or more local communities, as described in maps, tariffs or rate schedules filed with the commission, where local exchange rates apply;

K. "local exchange service" means the transmission of two-way interactive switched voice communications furnished by a telecommunications carrier within a local exchange area;

L. "long distance service" means telecommunications service between local exchange areas that originates and terminates within the state;

M. "telecommunications carrier" means a provider of telecommunications services, except that the term does not include aggregators of telecommunications services as defined in the federal act; and

N. "telecommunications service" means the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available to the public, regardless of the facilities used.

Section 4. NEW MEXICO UNIVERSAL SERVICE FUND BOARD--APPOINTMENT--DUTIES.--

A. The "New Mexico universal service fund board" is created. The board shall consist of seven members as follows:

(1) one member representing incumbent local exchange carriers with more than two hundred thousand access lines;

(2) one member representing incumbent local exchange carriers with two hundred thousand access lines or fewer;

(3) one member representing long distance carriers;

(4) one member representing other carriers;

(5) one member representing the commission;

(6) one member representing the economic development department; and

(7) one member representing the office of the attorney general or another consumer advocate.

B. A majority of the members shall have a background in telecommunications technologies or applications and, with the exception of the representative of the economic development department, be appointed by the commission. Appointments shall be made for two-year terms. The initial members of the board shall be appointed before June 1, 2003.

C. The board shall be administratively attached to the commission.

D. The board members shall annually elect a chair who shall make and receive all communications to and from the board. The board shall meet at the call of the chair but not less than quarterly. No vote of the board shall be held unless a majority of the members is present. Board members shall not vote by proxy.

E. Public members of the board shall be reimbursed for per diem and mileage expenses pursuant to the Per Diem and Mileage Act. All expenses of the board shall be paid from expenditures of the fund.

F. Members of the board shall not be removed except for incompetence, neglect of duty or malfeasance in office. No removal shall be made without notice of hearing and an opportunity to be heard before the commission. A vacancy in the membership of the board occurring other than by expiration a of term shall be filled in the same manner as the original appointment, but for the unexpired term only.

G. The board shall establish such rules for its own operations as are necessary to achieve the purposes of the Universal Service Act of New Mexico.

H. No later than August 1, 2003, the board shall select a third-party administrator who shall, subject to the oversight of the board, administer the fund. The administrator shall collect, administer and disburse money from the fund consistent with the provisions and purpose of the Universal Service Act of New Mexico. The administrator shall have competence and experience in managing state universal service funds and telecommunications costing and pricing policies and principles. The administrator shall be reasonably compensated, and such compensation shall be paid directly from the fund. The administrator shall at all times be independent from the commission and, for the purposes of this section, neither the commission or any member of its staff may be considered an administrator. No later than September 30, 2004 and September 30 of each subsequent year, the administrator shall submit to the board an accounting of all transactions within the fund. The accounting shall be audited by an independent accounting firm.

I. On or before December 1 of each year, the board shall report to the legislature. The report shall include information on the status of the fund, historical and planned surcharges, disbursements, receipts and the work done and fees charged by the administrator. The board may require the administrator to submit information necessary to prepare the report.

Section 5. UNIVERSAL SERVICE FUND CREATED--SURCHARGE.--

A. Consistent with the provisions of the Universal Service Act of New Mexico, the "New Mexico universal service fund" is created to provide support to telecommunications carriers for the provision, maintenance or upgrading of facilities and services necessary to enable New Mexicans to have equitable access to basic service at affordable rates, regardless of location or telecommunications carrier. Money deposited in the fund is not public money, and the administration of the fund is not subject to the provisions of law regulating public funds.

B. The fund shall be financed by a surcharge on all intrastate retail telecommunications services, paid by consumers and collected by the providers of the services to which the surcharge applies, as a percentage of the services charged to consumers. The amount of the surcharge shall be implemented by the commission based solely upon the determination of the administrator.

C. The amount of the surcharge shall be sufficient to meet the financial requirements of the fund, including the expenses of the board, the expenses and compensation for the administrator and the expenses and compensation for the independent accounting firm performing the annual audit of the fund.

D. Beginning July 1, 2003 through the period ending December 31, 2003, the surcharge shall be one and one-half percent of monthly intrastate retail telecommunications services billings. By November 1, 2003, the administrator shall determine and the commission shall implement an annual surcharge rate to be effective January 1, 2004. By September 1, 2004 and each year thereafter by that date, the administrator shall make a determination of the amount of the surcharge necessary to provide ten million dollars ($10,000,000) in expenditures from the fund for the upcoming year. In making such determinations, the administrator shall consider any actual or projected surplus or shortfall in the fund for the current year. When determining the amount of the surcharge, the administrator shall exclude from revenue all amounts from surcharges, gross receipts taxes, excise taxes, franchise fees and similar charges. The administrator also shall exclude from revenue all amounts of revenue from services provided pursuant to a low-income telephone assistance plan billed to end-user customers by a telecommunications carrier. Wireless and commercial mobile radio services carriers shall determine their intrastate revenue for the subject reporting period by application of the "safe harbor" presumption of apportionment of interstate and intrastate revenues, as prescribed by the federal communications commission for purposes of computing contributions to the federal universal service fund.

E. All telecommunications carriers shall collect the surcharge on a uniform basis directly from their retail end-user customers through imposition of a competitively neutral, explicit, line item percentage charge on the customers' billing statements, which shall commence with the first billing period beginning after July 1, 2003. Customers who are enrolled in a low-income telephone assistance plan shall be exempt from the surcharge.

F. The commission shall implement the surcharge as determined by the administrator by January 1, 2005, and each year thereafter, effective January 1.

G. The commission shall require that the surcharge be applied on all intrastate retail telecommunications services in a competitively and technologically neutral manner.

H. Beginning with September 15, 2003, each telecommunications carrier shall make payment to the administrator for the fund representing the total monthly surcharges collected in accordance with the Universal Service Act of New Mexico. The payment shall be remitted within forty-five days after the end of each month.

Section 6. ELIGIBILITY FOR FUND SUPPORT.--

A. Fund support shall only be available to eligible telecommunications carriers. No carrier or entity that does not contribute to the fund shall be eligible to receive fund support.

B. A contributor seeking designation as an eligible telecommunications carrier shall file a petition with the commission. The petition shall:

(1) include a description of the proposed service area, consistent with the federal act, for which it seeks designation; and

(2) demonstrate that the contributor is an eligible telecommunications carrier as defined in the federal act.

C. The commission shall, after notice and hearing, enter its order approving or denying a contributor's petition. An order approving a petition shall specify the service area for which designation is made.

D. A telecommunications carrier designated as an eligible telecommunications carrier as of June 30, 2003 shall be deemed to be an eligible telecommunications carrier as of that date without any further action by the commission.

E. An eligible telecommunications carrier receiving support from the fund shall self-certify annually to the administrator by filing a sworn affidavit of an authorized officer stating that it is qualified to participate in the fund and that all support received from the fund was used for the intended purpose of the fund.

F. In carrying out its duties pursuant to Section 254(e) of the federal act, the commission shall permit eligible telecommunications carriers receiving support from the federal universal service fund to self-certify annually to the commission by filing a sworn affidavit of an authorized officer stating that any support received by the eligible telecommunications carrier from federal universal service funds will be used only for the provision, maintenance and upgrading of facilities for which the support is intended consistent with the federal act. Within ten days after the receipt of the self-certification, the commission shall submit to the federal communications commission its written certification that the eligible telecommunications carrier is eligible to receive federal support during the applicable period and that the carrier will only use the support for the provision, maintenance and upgrading of facilities and services for which the support is intended.

Section 7. DISTRIBUTIONS FROM THE FUND.--

A. The administrator shall provide one-time lump sum distributions from the fund on a per-project basis to eligible telecommunications carriers to help support telecommunications projects that meet the criteria for the support and have been applied for by the eligible telecommunications carrier and approved in advance by the administrator. No distributions shall be made from the fund for an approved project until the eligible telecommunications carrier certifies to the administrator that the project has been completed.

B. Eligible telecommunications carriers seeking fund support shall apply for support from the administrator through an application process approved by the board. The administrator shall accept applications for distributions from the fund from January 1 until March 31 of each year, commencing in 2004. The application shall include, at a minimum:

(1) the description of the project;

(2) the size of the local exchange area where the project will be located;

(3) an explanation as to why the project furthers the goals of universal service in New Mexico;

(4) the total cost of the project;

(5) the revenues the company expects to receive from the customers upon completion of the project;

(6) the number of requests the carrier has received from individuals for the services covered by the proposed project;

(7) whether the project will benefit potential end-user customers that are without access to basic service; and

(8) the projected time frame in which the project will be completed.

C. Applications timely received by the administrator shall be considered together on or before June 1 of each year commencing in 2004. The administrator shall deliver to the board and to all eligible telecommunications carriers that timely filed an application a written decision on the annual distribution from the fund. That decision shall provide for distribution of the available amounts in the fund, except for the portion required for the expenses and compensation of the administrator, the expenses of the board and the expenses and compensation of the independent accounting firm retained to perform the annual audit of the fund.

D. The administrator shall make its distribution decisions consistent with the following requirements:

(1) support shall be distributed only for projects in local exchange areas with fewer than five thousand access lines;

(2) an eligible telecommunications carrier that collects from its customers a surcharge pursuant to the Universal Service Act of New Mexico shall be eligible to receive distributions from the fund if the eligible telecommunications carrier timely submits an application for support from the fund that complies with the Universal Service Act of New Mexico and furthers its purposes;

(3) support from the fund shall be limited to recovery of the costs of provisioning, maintaining and upgrading basic services. The costs that are eligible to be recovered from the fund are limited to reasonable construction costs, including material, labor and labor-related overheads, construction and vehicle costs, engineering costs and right-of-way and easement procurement costs. In determining the amount of support that an eligible telecommunications carrier is eligible to receive, the administrator shall offset the total planned cost of the project with:

(a) the amount of estimated revenue that the eligible telecommunications carrier will receive from the provision of basic services to the end-user customers benefiting from the project for a five-year period after the project is completed;

(b) the amount of aid-to-construction the eligible telecommunications carrier will charge to the end-user customers in order to complete the project; and

(c) the estimated incremental amount of federal high-cost loop support associated with the project that the eligible telecommunications carrier will receive over a five-year period after the project is completed;

(4) the remaining costs, after taking the offsets pursuant to Paragraph (3) of this subsection, shall be eligible for support from the fund if all other criteria for receiving support are met; and

(5) support shall not be provided for projects in which a real estate developer could reasonably be expected to pay for the costs of installing telecommunications services.

E. If, after applying the criteria of Subsection D of this section, the total amount of funding requests in applications timely received by the administrator is greater than the total available money in the fund, the administrator shall consider the following in determining the projects to be funded:

(1) the amount of resources available in the fund;

(2) the cost of the proposed project;

(3) whether the project will benefit potential end-user customers that are without access to basic service;

(4) whether the area to be served by the project in question is then unserved by any eligible telecommunications carrier and should accordingly be given higher priority than projects in areas already served by an eligible telecommunications carrier;

(5) whether the proposed project is targeted to primarily benefit residential customers;

(6) with respect to projects that would benefit a specific customer or a small group of residential end-user customers, whether the normal aid-to-construction charges to a residential customer would impede construction, and should accordingly be given priority over projects where the normal aid-to-construction charges would be less; and

(7) the extent to which the proposed project would meet existing consumer demand and should accordingly be given priority over projects that are based on anticipated future consumer demand.

F. An eligible telecommunications carrier that receives support from the fund shall account for the funds received by crediting the amount received to the asset accounts of the company, thereby reducing intrastate fixed assets of the company by the amount of the support.

G. Commencing August 1, 2003, all telecommunications carriers shall report to the administrator on a monthly basis the total amount of revenue generated from the billing of intrastate retail telecommunications services to end users in the prior month and any information that the administrator deems necessary to quantify or reconcile contributions to the fund or distributions from the fund. The information shall be provided to the administrator on a confidential basis.

Section 8. TEMPORARY PROVISION--TRANSFER.--On the effective date of this act, any unexpended or unencumbered balance remaining in the state rural universal service fund shall be transferred to the New Mexico universal service fund.

Section 9. REPEAL.--Section 63-9H-6 NMSA 1978 (being Laws 1999, Chapter 295, Section 6) is repealed.

Section 10. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.