7.__Assessment.__Prior to requiring contributions pursuant to subsection 6 to a universal service fund required under subsection 5, the commission shall assess the telecommunications needs of the State's consumers and determine the level of support required to meet those needs.

8.__Requirements.__Rules and the requirements of a universal service fund required under subsection 5 that are established by the commission pursuant to this section must:

A.__Be reasonably designed to maximize federal assistance available to the State for universal service purposes;

B.__Meet the State's obligations under the federal Telecommunications Act of 1996, Public Law 104-104, 110 Stat. 56;

C.__Be consistent with the goals of the federal Telecommunications Act of 1996, Public Law 104-104, 110 Stat. 56;

D.__Ensure that any requirements regarding contributions to a universal service fund required under subsection 5 be nondiscriminatory and competitively neutral;

E.__Require explicit identification on customer bills of contributions to any state universal service fund required under this section; and

F.__Allow consideration in appropriate rate-making proceedings of contributions to any universal service fund required under subsection 5.

9.__Administration.__When the commission establishes a universal service fund pursuant to subsection 5, the commission shall contract with an appropriate independent fiscal agent that is not a state entity to serve as administrator of the universal service fund.__Funds contributed to a universal service fund are not state funds.

10.__Just and reasonable rates.__Nothing in this section limits the requirement that intrastate telephone utilities charge just and reasonable rates as required by section 301.

Emergency clause. In view of the emergency cited in the preamble, this Act takes effect when approved.

SUMMARY

The purpose of this bill is to ensure that a state universal service fund, or USF, is established to ensure that the reduction of access rates required by the Maine Revised Statutes, Title 35- A, section 7101-B can continue as envisioned by the Legislature. There have recently been a series of access rate reductions planned and put into effect at the federal level that Maine companies will be required to match pursuant to section 7101-B. However, there has been explicit recognition at the federal level that there have long been embedded subsidies within the access rates that have allowed basic rates to remain at the affordable level that exists today. In order to offset the loss of the embedded subsidies without causing basic rates to increase dramatically, the Federal Communications Commission has created and funded the Universal Service Fund. The federal fund, however, applies only to interstate activities and thus does not address the state reduction on intrastate access rates. In order to match the reduction in federal access rates, Maine rate-of- return-regulated-local-exchange carriers must receive a similar USF offset to prevent basic rates from escalating sharply.

A state universal service fund is needed immediately as a result of the ongoing access rate reductions required by the Maine Revised Statutes, Title 35-A, section 7101-B in order to create a mechanism that is equally applicable to all rate-of- return-regulated-local-exchange carriers that will allow companies to reduce their access rates while still maintaining a reasonable rate of return and maintaining affordable and comparable rates for local exchange customers throughout the State.