CUB Supports Oregon Universal Fund Modernization (HB 2184) & Oregon Broadband Office (HB 2173)

Of CUB’s 2019 legislative priorities, spurring new broadband investment and offering residential customers good value by updating important consumer protections are on the top of the list. CUB supports two such bills this legislative session. Both will arrive by way of the House Committee on Economic Development and are championed by Representative Pam Marsh.

Oregon Universal Service Modernization – HB 2184

Most Oregonians, particularly the growing number of households who no longer maintain landline home telephone service, remain unaware of the Oregon Universal Service Fund (OUSF). Oregonians are also generally unaware of the need to modernize the fund to correct a long-standing surcharge inequality among voice telephone customers. The Oregon Legislature created the OUSF back in 1999 and directed the Oregon Public Utility Commission to administer the fund to cover the cost of providing reasonably comparable and affordable rates for basic, wired home telephone service across Oregon by supporting local telephone companies operating in high-cost, generally rural areas.

When the Legislature created the OUSF, wired landlines were ubiquitous throughout the state. Wireless phone and home internet usage rates were nothing like we see today, and Oregonians still needed high-quality, low-cost telephone service wired to their homes. Yet the trouble was (and still is) that certain areas of Oregon, especially rural communities, are much higher cost for companies to serve. The Legislature established the OUSF to remedy the high-cost issue, allowing companies serving such areas to recover costs sufficient to maintain rates competitive with those found in lower-cost, generally urban areas.

Obviously, a lot has changed since 1999 in the telecommunications industry. Wireless phone usage is as high as it has ever been, and many customers who want to maintain a separate home telephone line increasingly opt to do so over internet protocol (IP) from their internet service provider, which is often their vestige home telephone company. The trouble is that both wireless telephone and voice over IP (VoIP) services use much of the same infrastructure as existing landline telephone service. At the same time, the cost of serving certain (generally rural) areas is still comparatively high.

This means that, though an 8.5 percent surcharge applied exclusively to landline telephone customers maintains the OUSF, the fund covers a substantial portion of the costs associated with delivering wireless and VoIP service within Oregon (or “intrastate”). CUB thinks this is inherently unfair, both to landline telephone customers in high-cost areas, and to the companies supporting increasingly high-cost services. Such ‘cost-coverage’ inequality is bad public policy that CUB believes calls for a legislative remedy.

HB 2184 seeks to do just that by lowering the surcharge and spreading the financial burden across customers and companies currently delivering intrastate voice service in Oregon, including wireless and VoIP. This will create a significantly larger pool of funds to (1) stabilize the existing high-cost program; (2) provide a state matching fund for federal “E-Rate” dollars earmarked to connect rural schools and libraries; and (3) establish a broadband grants program.

With CUB playing a leading negotiation role alongside legislative champion, Pam Marsh, and the Oregon Telecommunications Association, policy details are still being hashed out with telephone companies, as well as wireless and cable industry groups. As always, CUB’s focus is to protect the interests of residential customers.

Creation of State Broadband Office – HB 2173

The State of Oregon does not currently have a central coordinating office for broadband policy. In fact, Oregon is an outlier in this regard. Increasingly, states, cities, counties, and even smaller towns understand the critical role broadband internet technology plays in underpinning effective public policy, from transportation, to healthcare, education, addressing climate change, and everything in between.

HB 2173 calls for creation of an Oregon Broadband Office, to be located in the Oregon Business Development Department (more often referred to as “Biz Oregon”). As spelled out in the bill, the proposed office’s activities include:

• Advocate for the adoption of public policies that close the continuing digital divide by removing barriers to and supporting broadband infrastructure deployment;
• Develop broadband investment and deployment strategies for unserved and underserved areas;
• Promote private sector, public sector and cooperative broadband solutions;
• Support and promote local and regional broadband planning;
• Promote technology and service provider neutrality by focusing on desired outcomes rather than specific technological solutions;
• Pursue and leverage federal sources of broadband funding to achieve state goals related to broadband;
• Manage and award funds allocated to the Oregon Business Development Department for use by the office for broadband projects;
• Engage with stakeholders representing a wide variety of interests, including but not limited to elected officials, government officials, healthcare providers, educators, business and agricultural community leaders and other community leaders and broadband service providers, to facilitate communications and collect information necessary to help make a business case for broadband investments;
• Promote digital literacy, equity and inclusion;
• Generate public awareness of the value of broadband technologies and applications;
• Promote adoption and utilization of broadband technologies and applications;
• Develop, maintain and provide public access to: A statewide broadband map as a platform for data collection to track the availability of broadband services and to measure progress; and Other information relating to broadband;
• Convene relevant state and federal agencies and advise the Governor, state agency leadership and the Oregon Congressional Delegation on actions to leverage state government activities to pursue state goals related to broadband; and
• Support and coordinate efforts with the Oregon Broadband Advisory Council.

HB 2173 would also remove the 2020 sunset for the existing Oregon Broadband Advisory Council and make needed changes to the Council’s mission and composition. As with HB 2184, Representative Pam Marsh is the legislative champion for these efforts. CUB supports HB 2173 and applauds Representative Marsh on her steady and proactive work to improve information and communications technology policy in Oregon.

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