Why many Texans could see an increase in their monthly phone bill

Public Utility Commission of Texas increases rate amid funding shortfall for rural telephone companies

Some Texans can expect their phone bills to go up starting this month after the Public Utility Commission of Texas adopted a rate hike in July.

SAN ANTONIO – Many Texans are about to see an increase in their monthly cellphone bill because of a rate hike adopted by the Public Utility Commission (PUC) in July.

The PUC implemented the hike to replenish the Texas Universal Service Fund (USF) that helps about 4 million Texans in rural parts of the state obtain basic telecommunications services.

Depending on the provider and usage, it can be an increase of anywhere from 40 cents to $3-$4 a month, Texas Telephone Association officials said.

“The Texas Universal Service Fund actually has existed for 50 years, and recently, because of some decisions made by the Public Utility Commission, that fund is replenished by a small fee that all telephone customers pay a little bit of the calls they make in-state into a fund. And that fund helps to keep the cost of rural service affordable,” said Mark Seale, executive director of the Texas Telephone Association.

Two years ago, the USF began to run low on funds, in part because the PUC reportedly did not make adequate payments from the fund to support these rural telephone companies.

“We’re talking about a fund that has $250 million in it for various programs, including this rural program. But it began to run out of money, and the PUC didn’t do anything,” said Seale. “The PUC decided really the only mechanism they had to increase the money and to pay us out was to increase that fee. The fee is going to go for most customers.”

Seale said rural telephone companies warned the PUC about the potential spike and inability to pay companies. Rural telephone companies sued the PUC to restore funding for the USF.

“Two years ago, the PUC decided not to gently increase that fund from 3.3 percent to about 6 percent,” said Seale. “They just didn’t follow the law. The court told them to follow the law, and now they’ve had to make up for their past decisions with the current decision to jump the rate from 3 percent to 24 percent,” said Seale.

“It’s something that we are not happy with. Anywhere from 50 cents up to $3-$4 is the impact on a customer’s bill. It really just depends on what their usage is,” said Craig Cook, CEO of Hill Country Telephone Cooperative (HCTC).

Cook said HCTC covers a 3,000-square-mile area in the Hill Country and services thousands of customers.

“Rural broadband, rural telecommunications is essential. It’s something that impacts the entire state of Texas and the nation,” said Cook. “It’s critically important that the USF allows us to do what we do, and that’s to provide critical services to rural Texans.”

The USF also helps fund 911 and cellphone network services in rural areas. Cook said it’s vital for connectivity in many parts of the state.

“What we’re ending up with, at least for our company, was a shortage of over $5 million over that period of time. And so what that means is it directly impacts the ability of us to continue to provide services to our customers in these rural areas,” said Cook.

“Without universal service, rural broadband doesn’t happen. So it’s very important that we continue it and keep those rural networks vibrant,” said Seale.


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About the Authors:

RJ Marquez is co-host of KSAT News Now and reports for Good Morning San Antonio. He's been at KSAT since 2010 and covered a variety of stories and events across the San Antonio area. He also covers the Spurs for on-air and digital platforms, including his Spurs newsletter. RJ has reported stories for KSAT Explains.