Senate Bill 773 and Senate Bill 834 both were heard in the Texas Senate Business and Commerce Committee on Tuesday, March 8th, 2011. Senator Zaffirini introduced SB 773 and Senator Deulle introduced SB 834. Both of these bills extends the telecommunication discount that will end in January, 2012 unless the legislature takes action. SB 773 extends the discount until 2024 and SB 834 extends it until 2020.
Mark Gabehart, the CTO from Abilene ISD, and myself provided testimony on behalf of the bills. Mark pointed out how an increase in the cost of providing telecommunications services and the potential loss of the Technology Allotment would be devastating to his district. Several school district superintendents also gave testimony in favor of the bill. Testimony supportive of these two bills was also given by people who represented Texas A&M, University of Texas, Texas State University, the Texas Library Association and the medical community. There were other associations and individuals that submitted a card stating their support of these bills.
Verizon and AT&T provided testimony against the extension of the discounts. Their main arguments were that the discounts have outlived their original purpose and that the E-rate program supplies the same discount. There were others that opposed SB 773 and SB 834. They were largely from the business community that felt the free-market should drive the cost and not legislative action. A representative of the Texas Public Policy Foundation testified that he thought the discounts created a defacto tax or fee because the providers just passed along the cost to their customers.
It is important to remember that providers are making money even when these discounts are applied. The law requires the vendors who participate in this portion of the law to charge either 105% or 110%. These companies are recouping the cost to provide the service and receiving either 5% or %10 profit.
The bills were left pending in the committee. Chairman Carona encouraged AT&T and Verizon to work with Senator Zaffirini and Senator Deuell to come up with a compromise. We will watch to see how this plays out. There is more than one way to make a change in the law. It can be done by a single bill such as SB 773 or SB 834 or it can be attached to another bill later in the session. Both of these methods would accomplish our goal.
You can watch a recording of the committee hearing here.