Sec. 56.023.  COMMISSION POWERS AND DUTIES.  (a)  The commission shall:
(1)  in a manner that assures reasonable rates for basic local telecommunications service, adopt eligibility criteria and review procedures, including a method for administrative review, the commission finds necessary to fund the universal service fund and make distributions from that fund;
(2)  determine which telecommunications providers meet the eligibility criteria;
(3)  determine the amount of and approve a procedure for reimbursement to telecommunications providers of revenue lost in providing tel-assistance service under Subchapter C;
(4)  establish and collect fees from the universal service fund necessary to recover the costs the department and the commission incur in administering this chapter and Chapter 57;
(5)  approve procedures for the collection and disbursal of the revenue of the universal service fund; and
(6)  audit voucher payments and other expenditures made under the specialized telecommunications assistance program established under Subchapter E.
(b)  The eligibility criteria must require that a telecommunications provider, in compliance with the commission's quality of service requirements:
(1)  offer service to each consumer within an exchange in the company's certificated area for which the incumbent local exchange company receives support under a plan established under Section 56.021(1) and to any permanent residential or business premises to which the company is designated to provide services under Subchapter F; and
(2)  render continuous and adequate service within an exchange in the company's certificated area for which the incumbent local exchange company receives support under a plan established under Section 56.021(1) and to any permanent residential or business premises to which the company is designated to provide services under Subchapter F.
(c)  A company designated under Subchapter F to provide services to permanent residential or business premises within an uncertificated area and that complies with Subsection (b) shall receive universal service fund distributions to assist the provider in providing those services.  In addition, the commission shall designate the provider as an eligible telecommunications carrier under 47 U.S.C. Section 214(e)(2), as amended, for those permanent residential or business premises.
(d)  The commission shall adopt rules for the administration of the universal service fund and this chapter and may act as necessary and convenient to administer the fund and this chapter.  The rules must include procedures to ensure reasonable transparency and accountability in the administration of the universal service fund.
(e)  A successor utility, as that term is defined by Section 54.301, that is or becomes an eligible telecommunications carrier under 47 U.S.C. Section 214(e)(2), as amended, is entitled to receive universal service fund distributions for costs in accordance with Subchapter G.
(f)  Except as provided by Subsection (g), for an incumbent local exchange company or cooperative that served greater than 31,000 access lines in this state on September 1, 2022, or a company or cooperative that is a successor to such a company or cooperative, the support that the company or cooperative is eligible to receive on December 31, 2023, under a plan established under Section 56.021(1)(A) is reduced:
(1)  on January 1, 2024, to 75 percent of the level of support the company or cooperative is eligible to receive on December 31, 2023;
(2)  on January 1, 2025, to 50 percent of the level of support the company or cooperative is eligible to receive on December 31, 2023;
(3)  on January 1, 2026, to 25 percent of the level of support the company or cooperative is eligible to receive on December 31, 2023; and
(4)  on January 1, 2027, to zero percent of the level of support the company or cooperative is eligible to receive on December 31, 2023.
(g)  After the commission has adopted rules under Subsection (j), an incumbent local exchange company or cooperative that is subject to Subsection (f) may petition the commission to initiate a contested case proceeding as necessary to determine the eligibility of the company or cooperative to receive support under a plan established under Section 56.021(1)(A).  A company or cooperative may not file more than one petition under this subsection.  On receipt of a petition under this subsection, the commission shall initiate a contested case proceeding to determine the eligibility of the company or cooperative to receive continued support under a plan established under Section 56.021(1)(A) for service in the exchanges that are the subject of the petition.  To be eligible to receive support for service in an exchange under this subsection, the company or cooperative must demonstrate that it has a financial need for continued support.  The commission must issue a final order on the proceeding not later than the 330th day after the date the petition is filed with the commission.  Until the commission issues a final order on the proceeding, the company or cooperative is entitled to receive the total amount of support the company or cooperative was eligible to receive on the date the company or cooperative filed the petition.  A company or cooperative that files a petition under this subsection is not subject to Subsection (f) after the commission issues a final order on the proceeding.  If the commission determines that a company or cooperative has demonstrated financial need for continued support under this subsection, it shall set the amount of support in the same proceeding.  The amount of support set by the commission for an exchange under this subsection may not exceed:
(1)  100 percent of the amount of support that the company or cooperative will be eligible to receive on December 31, 2023, if the petition is filed before January 1, 2024;
(2)  75 percent of the amount of support that the company or cooperative will be eligible to receive on December 31, 2023, if the petition is filed on or after January 1, 2024, and before January 1, 2025;
(3)  50 percent of the amount of support the company or cooperative is eligible to receive on December 31, 2023, if the petition is filed on or after January 1, 2025, and before January 1, 2026;
(4)  25 percent of the amount of support that the company or cooperative is eligible to receive on December 31, 2023, if the petition is filed on or after January 1, 2026, and before January 1, 2027; or
(5)  zero percent of the amount of support that the company or cooperative is eligible to receive on December 31, 2023, if the petition is filed on or after January 1, 2027, and before January 1, 2028.
(h)  Except as provided by Subsection (i), for an incumbent local exchange company that is an electing company under Chapter 58 or 59 or a cooperative that served greater than 31,000 access lines in this state on September 1, 2022, or a company or cooperative that is a successor to such a company or cooperative, the support that the company or cooperative is eligible to receive on December 31, 2024, under a plan established under Section 56.021(1)(B) is reduced:
(1)  on January 1, 2025, to 75 percent of the level of support the company or cooperative is eligible to receive on December 31, 2024;
(2)  on January 1, 2026, to 50 percent of the level of support the company or cooperative is eligible to receive on December 31, 2024;
(3)  on January 1, 2027, to 25 percent of the level of support the company or cooperative is eligible to receive on December 31, 2024; and
(4)  on January 1, 2028, to zero percent of the level of support the company or cooperative is eligible to receive on December 31, 2024.
(i)  After the commission has adopted rules under Subsection (j), an incumbent local exchange company or cooperative that is subject to Subsection (h) may petition the commission to initiate a contested case proceeding as necessary to determine the eligibility of the company or cooperative to receive support under a plan established under Section 56.021(1)(B).  A company or cooperative may not file more than one petition under this subsection.  On receipt of a petition under this subsection, the commission shall initiate a contested case proceeding to determine the eligibility of the company or cooperative to receive continued support under a plan established under Section 56.021(1)(B) for service in the exchanges that are the subject of the petition.  To be eligible to receive support for service in an exchange under this subsection, the company or cooperative must demonstrate that it has a financial need for continued support.  The commission must issue a final order on the proceeding no later than the 330th day after the date the petition is filed with the commission.  Until the commission issues a final order on the proceeding, the company or cooperative shall continue to receive the total amount of support it was eligible to receive on the date the company or cooperative filed a petition under this subsection.  A company or cooperative that files a petition under this subsection is not subject to Subsection (h) after the commission issues a final order on the proceeding.  If the commission determines that a company or cooperative has demonstrated financial need for continued support under this subsection, it shall set the amount of support in the same proceeding.  The amount of support set by the commission for an exchange under this subsection may not exceed:
(1)  100 percent of the amount of support that the company or cooperative will be eligible to receive on December 31, 2024, if the petition is filed before January 1, 2025;
(2)  75 percent of the amount of support that the company or cooperative will be eligible to receive on December 31, 2024, if the petition is filed on or after January 1, 2025, and before January 1, 2026;
(3)  50 percent of the amount of support that the company or cooperative is eligible to receive on December 31, 2024, if the petition is filed on or after January 1, 2026, and before January 1, 2027;
(4)  25 percent of the amount of support that the company or cooperative is eligible to receive on December 31, 2024, if the petition is filed on or after January 1, 2027, and before January 1, 2028; or
(5)  zero percent of the amount of support that the company or cooperative is eligible to receive on December 31, 2024, if the petition is filed on or after January 1, 2028, and before January 1, 2029.
(j)  The commission by rule shall establish the standards and criteria for an incumbent local exchange company or cooperative to demonstrate under Subsection (g) or (i) that the company or cooperative has a financial need for continued support for residential and business lines under a plan established under Section 56.021(1).
(k)  Subsections (g) and (i) do not authorize the commission to initiate a contested case hearing concerning a local exchange company that has elected to participate in a total support reduction plan under 16 T.A.C. Section 26.403 that requires the company to forego funding under a plan established under Section 56.021(1) after January 1, 2024.  This section does not affect any obligation of a local exchange company subject to such a total support reduction plan.
(l)  Subsections (f), (g), (h), and (i) do not apply to an incumbent local exchange company that elects, not later than March 1, 2014, to eliminate, not later than September 1, 2018, the support it receives under a plan established under Section 56.021(1).
(m)  Nothing in this chapter relieves any party of an obligation entered into in the commission's Docket No. 40521.
(n)  Nothing in this section is intended to affect the rate rebalancing proceeding in the commission's Docket No. 41097.
(o)  Expired.
(p)  If an incumbent local exchange company or cooperative is ineligible for support under a plan established under Section 56.021(1) for services in an exchange, a plan established under Section 56.021(1) may not provide support to any other telecommunications providers for services in that exchange, except that an eligible telecommunications provider that is receiving support under Section 56.021(1)(A) in that exchange shall continue to receive such support until the commission determines that the support should be eliminated under Subsection (r).  Until the commission eliminates the support under Subsection (r), the support received by the eligible telecommunications provider shall be at the same monthly per line support level in effect for that exchange as of the date the incumbent local exchange provider or cooperative ceases receiving funding in that exchange.
(q)  Notwithstanding the period for continued support specified by Subsection (p), if the eligible telecommunications provider receiving continued support under that subsection is a cooperative or an affiliate of a cooperative, the telecommunications provider is entitled to continued support through December 31, 2023, at the same monthly per line support amount as the provider is receiving as of the date the support ceases for that exchange for the incumbent local exchange company or cooperative.  Support authorized under this subsection ceases December 31, 2023.
(r)  If the number of access lines served by competitive eligible telecommunications providers receiving support in an exchange described by Subsection (p) declines by at least 50 percent from the number of lines that were served by those providers in that exchange on December 31, 2016, the commission shall review the per line support amount for that exchange at least once every three years to determine whether continuing the support is in the public interest.  The commission by rule shall establish the criteria to determine whether the support should be eliminated.  The first review under this subsection for an exchange must be completed not later than the end of the year following the year in which the number of access lines first declines by at least 50 percent.
(s)  The support for eligible telecommunications providers under Subsections (p) and (r) expires December 31, 2023.
(t)  Not later than September 1 of every fourth year beginning September 1, 2023, the commission shall review and may adjust the standards and criteria to demonstrate financial need for continued support under Subsection (f).
(u)  Not later than September 1 of every fourth year beginning September 1, 2024, the commission shall review and may adjust the standards and criteria to demonstrate financial need for continued support under Subsection (h).
Acts 1997, 75th Leg., ch. 166, Sec. 1, eff. Sept. 1, 1997.  Amended by Acts 1999, 76th Leg., ch. 1212, Sec. 24, eff. Sept. 1, 1999;  Acts 2001, 77th Leg., ch. 651, Sec. 3, eff. Sept. 1, 2001;  Acts 2003, 78th Leg., ch. 76, Sec. 6, eff. Sept. 1, 2003.
Amended by: 
Acts 2011, 82nd Leg., R.S., Ch. 98 (S.B. 980), Sec. 10, eff. September 1, 2011.
Acts 2013, 83rd Leg., R.S., Ch. 532 (S.B. 512), Sec. 3, eff. September 1, 2013.
Acts 2013, 83rd Leg., R.S., Ch. 751 (S.B. 583), Sec. 1, eff. June 14, 2013.
Acts 2015, 84th Leg., R.S., Ch. 22 (S.B. 804), Sec. 1, eff. September 1, 2015.
Acts 2017, 85th Leg., R.S., Ch. 1161 (S.B. 1476), Sec. 1, eff. June 15, 2017.
Acts 2017, 85th Leg., R.S., Ch. 1161 (S.B. 1476), Sec. 2, eff. June 15, 2017.
Acts 2023, 88th Leg., R.S., Ch. 946 (S.B. 1710), Sec. 1, eff. June 18, 2023.