A. The commission shall implement and maintain a "state rural universal service fund" to maintain and support universal service that is provided by eligible telecommunications carriers, including commercial mobile radio services carriers, as are determined by the commission. As used in this section, "universal service" means basic local exchange service, comparable retail alternative services at affordable rates, service pursuant to a low-income telephone assistance plan and broadband internet access service to unserved and underserved areas as determined by the commission.

B. The fund shall be financed by a surcharge on intrastate retail public telecommunications services to be determined by the commission, excluding services provided pursuant to a low-income telephone assistance plan billed to end-user customers by a telecommunications carrier, and excluding all amounts from surcharges, gross receipts taxes, excise taxes, franchise fees and similar charges. For the purpose of funding the fund, the commission has the authority to apply the surcharge on intrastate retail public telecommunications services provided by telecommunications carriers, including commercial mobile radio services and voice over internet protocol services, at a competitively and technologically neutral rate or rates to be determined by the commission. The commission may establish the surcharge as a percentage of intrastate retail public telecommunications services revenue or as a fixed amount applicable to each communication connection. For purposes of this section, a "communication connection" means a voice-enabled telephone access line, wireless voice connection, unique voice over internet protocol service connection or other uniquely identifiable functional equivalent as determined by the commission. Such surcharges shall be competitively and technologically neutral. Money deposited in the fund is not public money, and the administration of the fund is not subject to the provisions of law regulating public funds. The commission shall not apply this surcharge to a private telecommunications network; to the state, a county, a municipality or other governmental entity; to a public school district; to a public institution of higher education; to an Indian nation, tribe or pueblo; or to Native American customers who reside on tribal or pueblo land.

C. The fund shall be competitively and technologically neutral, equitable and nondiscriminatory in its collection and distribution of funds, portable between eligible telecommunications carriers and additionally shall provide a specific, predictable and sufficient support mechanism as determined by the commission that ensures universal service in the state.

D. The commission shall:

(1) establish eligibility criteria for participation in the fund consistent with federal law that ensure the availability of universal service at affordable rates. The eligibility criteria shall not restrict or limit an eligible telecommunications carrier from receiving federal universal service support;

(2) provide for the collection of the surcharge on a competitively neutral basis and for the administration and disbursement of money from the fund;

(3) determine those services and areas requiring support from the fund;

(4) provide for the separate administration and disbursement of federal universal service funds consistent with federal law; and

(5) establish affordability benchmark rates for local residential and business services that shall be utilized in determining the level of support from the fund. The process for determining subsequent adjustments to the benchmark shall be established through a rulemaking.

E. All incumbent telecommunications carriers and competitive carriers already designated as eligible telecommunications carriers for the fund shall be eligible for participation in the fund. All other carriers that choose to become eligible to receive support from the fund may petition the commission to be designated as an eligible telecommunications carrier for the fund. The commission may grant eligible carrier status to a competitive carrier in a rural area upon a finding that granting the application is in the public interest. In making a public interest finding, the commission may consider at least the following items:

(1) the impact of designation of an additional eligible carrier on the size of the fund;

(2) the unique advantages and disadvantages of the competitor's service offering; and

(3) any commitments made regarding the quality of telephone service.

F. The commission shall adopt rules, including a provision for variances, for the implementation and administration of the fund in accordance with the provisions of this section. The rules shall enumerate the appropriate uses of fund support and any restrictions on the use of fund support by eligible telecommunications carriers. The rules shall require that an eligible telecommunications carrier receiving support from the fund pursuant to Subsection K, L or M of this section must expend no less than sixty percent of the support it receives to deploy and maintain broadband internet access services in rural areas of the state. The rules also shall provide for annual reporting by eligible telecommunications carriers verifying that the reporting carrier continues to meet the requirements for designation as an eligible telecommunications carrier for purposes of the fund and is in compliance with the commission's rules, including the provisions regarding use of support from the fund.

G. The commission shall, upon implementation of the fund, select a neutral third-party administrator to collect, administer and disburse money from the fund under the supervision and control of the commission pursuant to established criteria and rules promulgated by the commission. The administrator may be reasonably compensated for the specified services from the surcharge proceeds to be received by the fund pursuant to Subsection B of this section. For purposes of this subsection, the commission shall not be a neutral third-party administrator.

H. The fund established by the commission shall ensure the availability of universal service as determined by the commission at affordable rates in rural areas of the state; provided, however, that nothing in this section shall be construed as granting any authority to the commission to impose the surcharge on or otherwise regulate broadband internet access services.

I. The commission shall ensure that intrastate switched access charges are equal to interstate switched access charges established by the federal communications commission as of January 1, 2006. Nothing in this section shall preclude the commission from considering further adjustments to intrastate switched access charges based on changes to interstate switched access charges.

J. To ensure that providers of intrastate retail communications service contribute to the fund and to further ensure that the surcharge determined pursuant to Subsection B of this section to be paid by the end-user customer will be held to a minimum, the commission shall adopt rules, or take other appropriate action, to require all such providers to participate in a plan to ensure accurate reporting.

K. The commission shall authorize payments from the fund to incumbent local exchange carriers, in combination with revenue-neutral rate rebalancing up to the affordability benchmark rates. Beginning in 2018, the commission shall make access reduction support payments in the amount made from the fund in base year 2014, adjusted each year thereafter by:

(1) the annual percentage change in the number of access lines served by the incumbent local exchange carriers receiving such support for the prior calendar year, as compared to base year 2014; and

(2) changes in the affordability benchmark rates that have occurred since 2014.

L. The commission shall determine the methodology to be used to authorize payments to all other carriers that apply for and receive eligible carrier status; provided, however, that nothing in this section shall limit the commission's authority to adopt rules pursuant to Subsection F of this section regarding appropriate uses of fund support and any restrictions on the use of the fund support by eligible telecommunications carriers.

M. The commission may also authorize payments from the fund to incumbent rural telecommunications carriers or to telecommunications carriers providing comparable retail alternative services that have been designated as eligible telecommunications carriers serving in rural areas of the state upon a finding, based on factors that may include a carrier's regulated revenues, expenses or investment, by the commission that such payments are needed to ensure the widespread availability and affordability of universal service. The commission shall decide cases filed pursuant to this subsection with reasonable promptness, with or without a hearing, but no later than six months following the filing of an application seeking payments from the fund, unless the commission finds that a longer time will be required, in which case the commission may extend the period for an additional three months.

N. The commission shall adopt rules that establish and implement a broadband program to provide funding to eligible telecommunications carriers for the construction and maintenance of facilities capable of providing broadband internet access service. Such rules shall require that the commission consider applications for funding on a technology-neutral basis and shall require that the awards of support be consistent with federal universal service support programs and be based on the best use of the fund for rural areas of the state. Each year, a minimum of five million dollars ($5,000,000) of the fund shall be dedicated to the broadband program.

O. The total obligations of the fund determined by the commission pursuant to this section, plus administrative expenses and a prudent fund balance, shall not exceed a cap of thirty million dollars ($30,000,000) per year. The commission shall evaluate the amount of the cap in an appropriate proceeding to be completed by June 30, 2019 and consider whether, based on the then-current status of the fund, the cap should be modified, maintained or eliminated.

P. By December 31, 2019, the commission shall make a report to the legislature regarding the status of the fund, including relevant data relating to implementation of the broadband program and expansion of broadband internet access services in rural areas of the state. The report shall also make recommendations for any changes to the structure, size and purposes of the fund and whether the cap on the fund provided for in Subsection O of this section should be modified, maintained or eliminated.

History: Laws 1999, ch. 295, § 6; 2005, ch. 335, § 1; 2013, ch. 194, § 4; 2017, ch. 89, § 1.

The 2017 amendment, effective June 16, 2017, updated state rural universal service fund provisions and established a broadband program administered by the public regulation commission to facilitate expansion of broadband service in rural areas; in Subsection A, deleted "No later than January 1, 2000", after "shall implement", added "and maintain", after "maintain and support", deleted "at affordable rates those public telecommunications services and comparable retail alternative service" and added "universal service that is", after "provided by", deleted "telecommunications carriers that have been designated as", and deleted "All of the balances in the existing New Mexico universal service fund as of July 1, 1999 shall be transferred into the state rural universal service fund" and added the last sentence; in Subsection B, after "telecommunications services provided by telecommunications carriers", deleted "and to comparable retail alternative services provided by telecommunications carriers", after "commercial mobile radio services", added "and voice over internet protocol services", after "rates to be determined by the commission", added the next two sentences, after "as determined by the commission", deleted "In prescribing" and added "Such surcharges shall be", after "technologically neutral", deleted "surcharge rates, the commission may make distinctions between services subject to a surcharge, but it shall require all carriers subject to the surcharge to apply uniform surcharge rates for the same or comparable services", and added "or to Native American customers who reside on tribal or pueblo land"; in Subsection C, after "determined by the commission that", deleted "reduces intrastate switched access charges to interstate switched access charge levels in a revenue-neutral manner and"; in Subsection D, Paragraph D(1), after "ensure the availability of", added "universal", in Paragraph D(3), after "services", added "and areas"; in Subsection E, in the introductory paragraph, after "finding, the commission", deleted "shall" and added "may", deleted former Paragraph E(1) and renumbered Paragraphs E(2) through E(4) as Paragraphs E(1) through E(3), respectively, and deleted former Paragraph E(5); in Subsection F, after "eligible telecommunications carriers", deleted "and", after the next period, added the next sentence, and added "The rules also"; in Subsection H, after "ensure the availability of", deleted "local telecommunications" and added "universal", after "affordable rates in rural", deleted "high-cost", and added the remainder of the subsection; in Subsection I, deleted "Beginning April 1, 2006, the commission shall commence the phase-in of reductions in intrastate switched access charges. By May 1, 2008", and after "on changes to interstate switched access charges", deleted "after May 1, 2008"; in Subsection J, after "ensure that the surcharge", added "determined pursuant to Subsection B of this section", after "held to a minimum,", deleted "no later than November 1, 2005", and after "ensure accurate reporting", deleted "and shall establish a cap on the surcharge"; in Subsection K, in the introductory paragraph, after "affordability benchmark rates", deleted "in an amount equal to the reduction in revenues that occurs as a result of reduced intrastate switched access charges" and added the remainder of the introductory paragraph, added Paragraphs K(1) and K(2), and after Paragraph K(2), added new subsection designation "L." and redesignated former Subsection L as new Subsection M; in Subsection L, deleted "Any reductions in charges for access services resulting from compliance with this section shall be passed on for the benefit of consumers in New Mexico" and added the remainder of the subsection; in Subsection M, after "telecommunications carriers serving in", deleted "high-cost" and added "rural", after "may include a carrier's", added "regulated", and after "availability and affordability of", deleted "residential local exchange" and added "universal"; and deleted former Subsection M, which related to the access reductions report by the fund administrator, and added Subsections N through P.

The 2013 amendment, effective June 14, 2013, changed the administration and uses of the rural universal service fund; in Subsection A, in the first sentence, after "telecommunications services", added "and comparable retail alternative services provided by telecommunications carriers that have been designated as eligible telecommunications carriers, including commercial mobile radio services carriers"; in Subsection F, after "this section", deleted "no later than November 1, 2005" and added the second sentence; in Subsection J, at the end of the sentence, added "and shall establish a cap on the surcharge"; in Subsection L, at the beginning of the section, deleted "In a rate proceeding filed pursuant to Subsection F of Section 63-9H-7 NMSA 1978"; and in Subsection L, in the first sentence, after "fund to incumbent rural telecommunications carriers", added "or to telecommunications carriers providing comparable retail alternative services that have been designated as eligible telecommunications carriers", after "high-cost areas of the state", deleted "that have reduced access charges", and after "upon a finding", added "based on factors that may include a carrier's revenues, expenses or investment" and added the second sentence.

The 2005 amendment, effective June 17, 2005, deleted references to "revenues" in Subsection B; provided in Subsection B that the surcharge shall be imposed on services to be determined by the commission; deleted the authority in Subsection B to apply the surcharge on comparable retail alternative services provided by non-telecommunications carriers, including operator services and aggregator services, offered by providers other than telecommunications carriers; deleted the former provision in Subsection B that the commission shall require telecommunications and non-telecommunications carriers to apply uniform surcharge rates; provided in Subsection B that the commission shall require all carriers subject to the surcharge to apply uniform surcharge rates; provided in Subsection B that the commission shall not apply the surcharge to the state, a county, a municipality or other governmental entity; to a public school district; to a public institution of higher education; or to an Indian nation, tribe or pueblo; deleted in Subsection C the former provision that the fund shall be targeted to high-cost rural areas and the former provision that the fund shall reduce implicit subsidies; provided in Subsection C that the fund reduce intrastate switched access charges to interstate switched access charge levels in a revenue-neutral manner; deleted the former provision in Subsection D(1), which provided that the criteria ensure service at affordable rates without unreasonably increasing rates for basic service while still granting carriers a reasonable profit on supported services in areas requiring support from the fund and that the criteria shall not require any investigations of costs or rates of the carrier receiving support; added Subsection D(5) to provide that the commission shall establish rates that will be used to determine the level of support from the fund; added Subsection E to provide for eligibility for participation in the fund and the criteria for determining eligibility; provided in Subsection F that the commission's rules shall include a provision for variances and that rules shall be adopted no later than November 1, 2005; deleted the former provision in Subsection F, which provided that the cost basis for establishing the fund and determining the rate of distribution of the fund shall be the same cost of and be consistent with federal support mechanisms for providing supported service by geographic area as determined by the federal communications commission and include the same rate of return authorized by the federal communications commission and that the revenue basis with fewer that fifty thousand access lines shall include only revenue from public telecommunications services; deleted the former provision in Subsection G, which provided that the administrator shall consult with the advisory board established by the commission; added a new Subsection I to provide for changes in intrastate switched access charges; changed "long distance service" to "retail communications service" and "December 31, 1999" to "November 1, 2005" in Subsection J; deleted former Subsection I, which provided that upon the replacement of implicit subsidies with explicit subsidies, the commission shall reduce rates for intrastate service, excluding rates affected by the low-income telephone assistance program, in an amount equal to payment received by a rural carrier from the fund; provided in Subsection K for payments from the fund in combination with revenue-neutral rate rebalancing in an amount equal to the reduction in revenues that result from reduced intrastate switched access charges and for the methodology for authorizing payment to other carriers; added Subsection L to provide for payments from the fund to carriers in high-cost areas that have reduced access charges; and added Subsection M to provide for a report by the fund administrator.

Public regulation commission orders. — A party challenging a public regulation commission (PRC) order must establish that the order is arbitrary and capricious, not supported by substantial evidence, outside the scope of the agency's authority, or otherwise inconsistent with law. Under 63-9H-11 NMSA 1978, a PRC order must be upheld if the order substantially complies with the Rural Telecommunications Act of New Mexico, 63-9H-1 NMSA 1978 et seq. N.M. Exch. Carrier Grp. v. N.M. Pub. Regulation Comm'n, 2016-NMSC-015.

Where the public regulation commission's (PRC) surcharge rate order, adopting a three percent consumer surcharge rate to be collected and placed in the state rural universal telephone communication services fund, would have resulted in a projected fund deficit, the order was arbitrary, not supported by substantial evidence, and in violation of the PRC's own rules which required that the surcharge be large enough to allow for a prudent fund balance. N.M. Exch. Carrier Grp. v. N.M. Pub. Regulation Comm'n, 2016-NMSC-015.

Where the public regulation commission adopted a rule order which amended 2005 rules which set forth the procedures for administering and implementing the state rural universal service fund, there was not substantial evidence in the record to support a finding that the newly adopted funding formula was adequate to satisfy the requirements of 63-9H-6(C) and (K) NMSA 1978, that the surcharge be large enough to allow for a prudent fund balance. N.M. Exch. Carrier Grp. v. N.M. Pub. Regulation Comm'n, 2016-NMSC-015.