- Associated Press - Wednesday, May 4, 2016

COLUMBIA, S.C. (AP) - The South Carolina House approved legislation Wednesday that spreads the cost of phone services to cellphone customers, lowering fees on landline bills.

The 103-2 vote follows the Public Service Commission’s ruling in January requiring cellphone companies to pay into the state’s universal service fund. Landline customers have been paying since the Legislature created the fund in 1996 to ensure affordable phone service for people in rural areas, where it’s costly to extend and maintain lines.

More than 20 local telephone companies sought last fall’s hearing after the bill stalled in the Legislature. The coalition of wireless companies that fought the expansion is challenging the commission’s order in the state Court of Appeals.

The measure advanced Wednesday “allows for an orderly implementation of the commission’s decision,” said Dukes Scott, director of the Office of Regulatory Staff, which is tasked with representing the public interest in utility regulation.

The legislation also requires cellphone customers to begin contributing toward services for hearing- and speech-impaired residents. That fee was not addressed by the commission.

Rep. Jim Merrill, R-Charleston, fought to defeat the measure, saying he hoped that would lead to the order’s reversal.

“This is a regressive tax” on cellphones, he said. “It’s applied to everyone regardless of income, no matter how much you use.”

House Labor Commerce and Industry Chairman Bill Sandifer countered that it’s a matter of fairness to extend the fees to everyone who benefits from landline connections. Other supporters noted even wireless calls are relayed over landlines between cellphone towers.

Sandifer said the legislation is needed despite the ruling, as it applies transparency and caps collections. The measure requires an accountability study of the USF and calls for random audits. It also specifies that the fees would not extend to Voice over Internet Protocol users.

Merrill argued the study should occur before the fees are extended.

Adjustments to cellphone and landline phone bills are slated to begin in January, Scott said.

Fees will be lowered for the state’s 1 million landline customers by extending them to 4.5 million cellphones.

Currently, landline customers pay 25 cents monthly to ensure nearly 25,000 disabled customers can communicate by phone, plus nearly 3 percent of their bill for rural landlines. That would change to 6 cents and roughly 2 percent, respectively, applied to all phone bills.

The legislation would cap supplements to so-called telephone “carriers of last resort” at about $40 million, down from $170 million currently allowed by state law. Last year, 44 rural providers received $28 million, ranging from $20,000 to several million each, depending on their customers, according to the Office of Regulatory Staff.

The supplement is paid for by a shrinking number of landline customers. Without legislation, their current state USF fee will continue to climb, Scott said.

Another perfunctory vote in the House would return the amended bill to the Senate, which narrowly approved the measure last April.

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