As the federal government struggles to implement its universal service fund program, the state of Texas has been quietly collecting fees from telecom providers there under a similar assessment program for two years.
Texas’ Telecom Infrastructure Fund, created Sept. 1, 1995, has collected about $239.1 million as of November. Of that total, wireless communications companies contributed roughly $64 million. These figures come from Rhonda Hill, director of finance and administration for the TIF Board, the entity responsible for distributing the money collected by the state.
The TIF was created to provide money for loans to public schools, health-care facilities and libraries for computers and other communications equipment and for the installation costs, program development and employee training for the new technology. The overall purpose is to connect the institutions to one information-sharing network.
Of the money raised so far, $155.8 million funded four grant programs, Hill said. The first two grant programs were competitive grants, one to provide Internet connectivity for rural and poor school districts and the other to provide Internet connectivity for school districts with fewer than 1,000 students.
The third grant program was a non-competitive grant to provide Internet connections to school districts without any Internet or network connections, with a maximum award of $100,000 each. The fourth grant program also was non-competitive and provided Internet connectivity to public libraries.
At the behest of the Texas State Legislature, the board also appropriated about $60 million to the Texas Education Agency, which is the regulatory agency for all public schools in the state. Another $2 million went to the TIF board’s operating budget.
According to the most recent Federal Communications Commission order regarding its universal service fund, the government hopes to raise about $625 million to wire schools and libraries and another $50 million to do the same for health-care facilities nationwide.
That the TIF could serve as an example for the federal government is not lost on the state, as its master plan reads: “Texas is … a potential model for the country in terms of how it harnesses technology to service its diverse population and vast geography.”
But the road to TIF was not a smooth one. Since enacted, the wireless industry struggled-and succeeded-in replacing the TIF’s original floating assessment rate with a flat rate of 1.25 percent of all sales taxable revenue.
According to Al VanAllen, tax specialist for the state’s comptroller office, Texas plans to collect $1.5 billion in a 10-year period through the TIF. He said the state will end the assessment once the $1.5 billion is collected, even if that time comes before the 10 years are complete.
With millions of dollars from its coffers going to the TIF, the eyes of the telecom industry in Texas rarely stray from the TIF board. The board is an advisory board, much like a planning commission, made up of prominent citizens with telecom and technology backgrounds, educators, hospital administrators and lawyers. Six of the nine members are appointed by the governor and three by the lieutenant governor.
The board evaluates grant proposals and administers funds to various grant programs. The grants finance three levels of activity: basic connectivity, planning and demonstration projects. According to the TIF board’s master plan, the goal is to “level the playing field” in terms of connectivity, especially for rural and underserved areas of the state. Preference will be given to grant applicants with such needs for the first three to five years.
The TIF board is broken into three committees. The Finance and Audit Committee oversees accounting and establishes loan procedures. The Libraries and Telemedicine Committee looks for technology applications and products that might improve health-care and library information sharing and ensures that such programs are included in the loan and grant process. The Curriculum, Training and Evaluation Committee identifies schools’ technology needs, evaluates emerging technologies to fit those needs and ensures that such technology requests are incorporated into the loan and grant process.
Once basic connectivity is established, the focus will shift to subsidizing “innovative telecommunications projects,” according to the master plan. Some of these innovative projects may receive funding on a competitive grant process aimed at identifying potential model projects. According to information found on the board’s Web site, grant applications are rated on their level of innovation, collaboration with other entities, efficient use of existing funding, sustainability and the potential for the program to act as a model for others in the future.
Interested schools and libraries submitted grant applications to each program and, if accepted, received a portion of the funds appropriated to each. The remaining funds, and funds to be collected in the future, will continue to be used for these and other grant programs, Hill said.
According to the statute enabling the fund to exist, the Texas legislature believes that wireless communications providers will “benefit from the public telecommunications network by the ability to originate and terminate calls that traverse the mobile and cellular network; and will benefit by the advancement of the public telecommunications network through projects funded” by the TIF.
