House Bill 2128, the state telecommunications deregulation bill, was passed by the 74th Texas Legislature and enacted on September 1, 1995, as the Public Utility Regulatory Act of 1995. Lawmakers envisioned three goals for HB 2128: a) allow for a competitive telecommunications market, b) encourage investment in the state, and c) provide a world class telecommunications infrastructure in Texas.
Provisions implementing the primary goal of HB 2128 in Texas were designed to open competition for local service in order to both keep rates down and generate new services, such as high-speed Internet access. The legislature took special care to ensure that a telecommunications infrastructure that connects public entities such as schools, libraries, institutions of higher education, non-profit telemedicine centers, and public hospitals was established at a reasonable rate.
To that end, several discounts were established under Chapters 57, 58 and 59 of the Texas Utilities Code for the benefit of these entities. In particular, a discount on contracts for private network services (i.e. customer specific contracts that include T1, T2, and T3 lines/trunks) was set to expire in 2005, but SB 5 (Second Called Session of the 79th Regular Session) extended these discounts through January 2012.
These discounts allow libraries, schools, and hospitals to purchase high speed services from incumbent local exchange carriers at 105% to 110% of long run incremental costs (LRIC). Approximately 877 public entities are currently utilizing these discounts. In 2005, the Public Utility Commission of Texas (PUC) approximated the value of these discounts at almost $100 million annually and anticipated a rapid increase in these values.
Senator Zaffirini’s bill will extend these discounts until January 2024. If this bill is not enacted into law, school districts receiving discounts under the 1995 bill (HB 2128) could experience a cost increase in eligible telecommunication services. Considering the budget crises that school districts currently face, this increase might make it difficult for them to continue the same level of service they receive today.
TCEA has been working with other associations on extending the discounts of the eligible telecommunications services. We are grateful that Senator Zaffirini has taken the leadership on this issue by authoring SB 773.