On July 1, the key provisions of Washington State’s new temporary Universal Service Fund (“USF”) statute became effective. Together with implementing rules recently enacted by the Washington Utilities and Transportation Commission (“WUTC”), the statute creates a temporary USF program aimed at supporting small incumbent local exchange carriers (“ILECs”) and smaller wireless carriers.  The legislature’s goals for the program include “support[ing] the legacy public telephone network of Washington’s smaller incumbent communications providers and ensur[ing] access to the network during this transition to broadband services.”  In passing HB 1971, the enabling statute for the temporary program, the Washington legislature announced the goal of avoiding unreasonable rates or cessation of service during the “migration from customer reliance on access lines for voice service to the use of broadband for a number of communications applications.”

Petitions for participation in the USF during 2015 are due by August 1.  To qualify for support, carriers must serve fewer than 40,000 access lines in the state, provide basic residential and business exchange telecommunications services (as defined in WAC 480-120-021 and RCW 80.36.630), be designated as an eligible telecommunications carrier (“ETC”) for purposes of high-cost federal universal service fund support in the supported areas, and have rates no lower than a WUTC benchmark based on the FCC’s urban rate floor.  FCC-licensed wireless carriers are also eligible for support if they serve fewer than the equivalent of 40,000 access lines in Washington and have been designated a high-cost ETC.

Participating carriers will receive single distributions of USF funds shortly after January 1st of each year that the carrier participates.  The amount of the distribution cannot exceed the sum of (1) the amount the carrier cumulative received in 2012 under Washington State’s former “traditional USF,” and (2) the carriers’ cumulative reduction, up through the program year, of support from the federal Connect America Fund.  The new program is limited to $5 million per fiscal year in expenditures, and support will be pro-rated if the total requests exceed the size of the fund.

The new USF is temporary, and (unless extended) the statutory provisions authorizing the fund will sunset on July 1, 2020.  Prior to that date, by December 1, 2017, the WUTC will report to the legislature on the funding levels for small telecommunications carriers and the impact of the USF’s termination.