BEFORE THE PENNSYLVANIA HOUSE CONSUMER AFFAIRS COMMITTEE

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Justin McKenzie
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1 BEFORE THE PENNSYLVANIA HOUSE CONSUMER AFFAIRS COMMITTEE Testimony Of Tanya J. McCloskey Acting Consumer Advocate Regarding House Bill 1417 Harrisburg, Pennsylvania August 24, 2015 Office of Consumer Advocate 555 Walnut Street Forum Place, 5th Floor Harrisburg, PA (717) Office (717) Fax tmccloskey@paoca.org

2 Chairman Godshall, Chairman Daley And Members of the House Consumer Affairs Committee My name is Tanya McCloskey. I am the Acting Consumer Advocate for the Office of Consumer Advocate and have worked at the Office of Consumer Advocate since Thank you for inviting me to give comments before this Committee regarding House Bill In February of this year, I appeared before this Committee to provide a general overview of the regulated utility industry in Pennsylvania and to identify legislative priorities. In the portion of that testimony regarding telecommunications service, I testified about the significant changes in the regulatory framework that have occurred since the initial passage of Chapter 30 of the Public Utility Code in 1993 and its reenactment in As I discussed in that testimony, it was my view that the competition in the telecommunications industry facilitated by Chapter 30 has benefitted many Pennsylvania consumers, particularly those who can afford to buy bundled packages of services. It was the combination of competition and limited regulation in Chapter 30, including the carefully drawn category of protected services that has enabled Pennsylvania to maintain universal telecommunications service at affordable rates. But as I pointed out, even with the advances in telecommunications service in recent decades there are still some parts of Pennsylvania where consumers have little choice but to rely on the basic telephone service provided by their local telephone company. Also, parts of Pennsylvania depend on the legislatively mandated broadband requirements that are part of Chapter 30. My primary concern for consumers regarding telecommunications service in Pennsylvania remains the assurance of universal service at reasonable and affordable rates for every Pennsylvanian who wishes to have such service. Universal service has been such a fundamental telecommunications policy for decades because the more people that are connected 1

3 to the telephone network, the more everyone benefits. Universal telephone service benefits every telephone user, rich or poor, urban or rural. Universal service is not just important so that the residents in Elk County can call their family and businesses in Pittsburgh; it is equally important so that people and businesses in Pittsburgh can connect with the residents of Elk County. Universal telephone service enables Pennsylvania residents, businesses, schools, health care facilities, governments and public safety providers to be interconnected, even if one end of the call is wireless or digital voice. Universal service has been particularly important in ensuring access to affordable telecommunications service in our most rural and sparsely populated communities where the cost of providing service to each individual is the highest. The Pennsylvania Universal Service Fund was established in 2001 to assist Pennsylvania rural incumbent local exchange companies in providing landline telecommunications service at affordable rates consistent with the policy goals of the original Chapter 30. Act 183 of 2004 updated Chapter 30 of the Public Utility Code and continued the Commonwealth s policy of maintaining universal telecommunications service at affordable rates. 66 Pa.C.S. 3011(2). The Pennsylvania Universal Service Fund helps to ensure that the Public Switched Telephone Network is extended and maintained throughout each rural company s service territory to meet the needs of all customers for telecommunications service at affordable rates. House Bill 1417 recognizes in its declaration of policy, and furthers through its provisions, the Commonwealth s policy of ensuring affordable, universal telecommunications service throughout the Commonwealth. Particularly important for rural areas of Pennsylvania, HB 1417 establishes the means to continue the provision of reliable, affordable landline service in high cost areas of Pennsylvania through continuation of the Pennsylvania Universal Service 2

4 Fund and continuation of the obligation to provide landline, carrier of last resort service under Section 1501 of the Public Utility Code. A strong and sustainable Pennsylvania Universal Service Fund is even more important today for rural Pennsylvania as the Federal Communications Commission devotes more resources to promote broadband deployment while reducing the support for the landline telephone networks. I would also note, though, that the landline telephone network has been an essential component of providing broadband service to many of our rural communities. Chapter 30 also envisioned that every telephone customer in Pennsylvania would have at least one option to obtain broadband service, as made available by Pennsylvania s incumbent local exchange carriers by Pennsylvania s rural carriers accepted the option provided in Chapter 30 of accelerating the universal deployment of broadband service from 2015 to 2008 in exchange for the ability to increase non-competitive service revenues. This means that, by the end of 2008, all of our smallest and most rural telephone companies provided their customers with the ability to purchase some form of high-speed internet service, typically through digital subscriber line (DSL) service at a speed of at least megabits per second. CenturyLink and Windstream, the other companies serving predominantly rural areas, completed their broadband deployment by Pennsylvania s support for affordable landline telephone service through Chapter 30 and the Pennsylvania Universal Service Fund has provided rural telephone customers with this continuing opportunity to connect to the internet at a reasonable price. HB 1417 also provides the mechanism for the Public Utility Commission to review the Pennsylvania Universal Service Fund over the next few years. While the Pennsylvania Universal Service Fund is vital to maintaining affordable telecommunications service for rural Pennsylvanians in my view, a comprehensive review of the Fund in light of 3

5 changes made by the Federal Communications Commission and changes in the telecommunications industry will be useful in determining the best way to ensure that the Fund is adequately supported and to ensure universal service in all parts of Pennsylvania in the future. In my view, HB 1417 identifies many of the key concerns that need to be reviewed, including the appropriate base of fund contributors and the appropriate funding level. The legislation will ensure that a thorough review of the needs of rural consumers is considered when examining the future of the Pennsylvania Universal Service Fund. The continuation of the landline, carrier of last resort obligation fulfilled by the rural telecommunications companies is critical for rural consumers and the economic vitality of rural Pennsylvania. No other provider has an obligation to serve these high cost areas. Cable and wireless companies can choose to serve the areas that best meet their business plans, leaving some high cost areas unserved. Maintaining the Pennsylvania Universal Service Fund and the carrier of last resort obligation as contemplated by HB 1417 will benefit the consumers of rural telecommunications companies in Pennsylvania as well as all telecommunications customers in Pennsylvania. For these reasons, I lend my support to HB Thank you for allowing me to testify and I look forward to any questions you may have. 4

Testimony of Jeanne Shearer, Regional Vice President of State Government Affairs Windstream Communications, Inc.

Testimony of Jeanne Shearer, Regional Vice President of State Government Affairs Windstream Communications, Inc. Before the House Consumer Affairs Committee Regarding HB 1417 August 24, 2015 Chairman Godshall,