Tennessee should keep separate state funding to speed broadband d...

The Tennessee Rural Affordability Fund (TRAF), authorized but not yet mandated into existence, would be funded much as the federal universal service fund is, the report said. The proposed legislation covers phone companies serving the most remote areas -- rural incumbent local exchange carriers and rural phone cooperatives with fewer than a million lines. The bill would require such carriers to reduce their intrastate switched access rates to their interstate switched rate levels. “The revenue loss resulting from these reductions will be recovered from funds paid into the TRAF,” the report said. The authority urged legislators to focus on “keeping local phone rates affordable” and to make sure that “any funding to support rural broadband deployment should be established as a separate portable fund.” Legislators should not set a statewide benchmark rate for local phone service “as a litmus test to determine support from TRAF,” the authority said. The bill should include a sunset provision requiring a report and recommendation from the authority before legislators consider extending the fund’s life, it said. The fund should be capped as determined by the state regulator, the report said. Recipients of money from the new universal service fund should be designated “carriers of last resort” and should have to provide Lifeline, Link-up and other “social and safety services,” it said. Companies electing market regulation should not be allowed to draw from the fund, the authority said. “Because a carrier operating pursuant to market regulation can adjust its rates to respond to competition, the need for specific subsidies such as that from the TRAF would become unnecessary,” it said. “Therefore it is appropriate to cease such TRAF assistance if the carrier elects Market Regulation.” Carriers paying into the federal USF also should pay into the TRAF, the authority said, asking that the Legislature empower the regulator “to assess and collect fees” and “establish criteria and procedures for assessing, collecting and dispensing fees, and for monitoring the operation of the TRAF.” If the bill is enacted, it should include a provision delaying implementation for a year to give the authority time to write procedures and criteria for running the fund, the report said.