ATLANTA – State Representative Mark Hamilton (R-Cumming) announced today the introduction of legislation that would place limits on phone subsidies paid by all phone customers to independently-owned, local telephone companies.
House Bill 855 would rein-in disbursements from the state Universal Access Fund (UAF). These disbursements have been growing at approximately 30 percent per year since landmark telecommunications reform intended to shrink the subsidies was passed in 2010 (HB 168). The measure ratchets down and ends the fund by capping this year’s disbursements at $9 million, $6 million in 2013 and $3 million in 2014, the final year of the fund.
“The stated intent of the original legislation was to promote competition and reduce subsidies paid by Georgia consumers, but that was not the result,” said Rep. Hamilton. “Instead of limiting subsidies to only eight companies who were subject to regulation at the time, we now have twenty companies that are eligible to receive or are requesting subsidies. The fund has grown from just over $9.3 million when the bill passed to $16 million last year and another $20.2 million requested this year.”
As originally envisioned, the UAF, administered by the Georgia Public Service Commission, offsets high-cost phone service throughout Georgia. It is funded through contributions from traditional telephone service providers, such as AT&T, and new providers, such as Comcast and Charter cable companies, but it is consumers who ultimately pay these costs through rates. Critics say the fund is now being used as revenue replacement for local telephone companies feeling the effects of competition.
“Subsidies harm competition because they distort the market place and discourage private companies with capital from investing in these areas,” said Rep. Hamilton. “As these local phone companies lose customers to cellular service, cable and other competitors, they need to change their business model and reduce costs, which is exactly how ten of these independently-owned companies manage to operate without subsidy. One family-owned company reportedly received over $2 million in subsidies this year even after posting over $2 million in dividends to its owners on top of lucrative executive pay. If a company can retain earnings to write itself dividends, phone customers in other parts of the state do not need to be subsidizing them.”
For more information on HB 855, please click here.
Representative Mark Hamilton represents the citizens of District 23, which includes parts of Cherokee and Forsyth counties. He was elected into the House of Representatives in 2006 and currently serves as Chairman of the Governmental Affairs Committee. He also serves on the Appropriations, Energy, Utilities, & Telecommunications, Industrial Relations, and Transportation committees.
###