Cable Industry, Competitive Carriers File Appeal over Telecom Ruling by State Public Service Commission

(October 7, 2014 -- Atlanta)  The trade associations representing cable operators and competitive telecommunications carriers throughout the state are appealing a ruling by the Georgia Public Service Commission (PSC) involving telecom subsidies.   In pleadings filed Monday in Fulton County Superior Court, the Georgia Cable Association and Competitive Carriers of the South (CompSouth) say Georgians are paying millions of dollars in excessive subsidies each year that are being misused by local phone companies to operate broadband Internet and video businesses. 

 “Local phone companies are required to use the Universal Access Fund to keep basic phone service affordable in rural Georgia,” says Stephen Loftin, Executive Director of the Georgia Cable Association, which represents cable operators such as Comcast, Charter, and Mediacom. “Instead, and contrary to state law, a recent decision by the PSC allows fees collected from telecommunications companies and their customers throughout the state to be used to underwrite unregulated broadband and video services,” said Loftin.

 Since 1995, all local phone providers, including competitive carriers, have paid into a Universal Access Fund (UAF) administered by the PSC for the purpose of issuing disbursements to local phone companies to offset the high cost of providing local phone service throughout rural Georgia.  In 2012, the General Assembly authorized all local phone providers to disclose and pass-through to customers’ bills the state imposed charges.  In recent years the high-cost service portion of the fund has hovered around $15 million annually. 

 In January of 2013 a proceeding under Docket 35068 was initiated, specifically examining whether the PSC should adopt a cost allocation methodology that better reflects the ‘shared’ nature of the subsidized phone network; one that would back out costs associated with unregulated broadband services before any disbursements are issued.  On April 1, 2014, in a 4-1 decision, the PSC declined to consider any change to its current methodology despite evidence in the case demonstrating that between 34 and 82 percent of subsidized local phone lines are used to provide unregulated Broadband Internet and video services jointly with basic local phone service.    Nevertheless, the current PSC methodology assigns 100% of the line costs to basic local service alone, resulting in excessive subsidies to recipient phone companies.

The petitioners filed a notice of appeal on May 30, 2014.  The case has been assigned to Fulton County Superior Court Judge Shawn LaGrua.

“The fundamental issue in the case is whether the PSC can continue to rely on an outdated, one-size-fits-all federal formula that does not adjust for each company’s unique use of the subsidized phone network to provide unregulated services,” said Mark Baxter, counsel for the Georgia Cable Association.  “We are asking the court to remand the case back to the Public Service Commission and compel the agency to adopt a new cost methodology that complies with state law and does not harm consumers and competition,” he said.