Internet Document Notes: 
1.) in the text conversion some spacing between words and  all of the underlines have been removed.
2.) s denotes subsection.
3.) ss denotes subsections
4.) If you have questions relating to the text please refer to an official hard copy available from the PUC.

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DEPARTMENT OF BUDGET AND FINANCE

Adoption of Chapter 6-81
Hawaii Administrative Rules

May 17, 1996



SUMMARY

	Chapter 6-81, Hawaii Administrative Rules, entitled "Universal Service Fund," is adopted.




TITLE 6

DEPARTMENT OF BUDGET AND FINANCE

CHAPTER 81

UNIVERSAL SERVICE FUND


		Subchapter 1  	General Provisions

s6-81-1	Purpose of the rules
s6-81-2	Policy
s6-81-3	Application of additional sources
s6-81-4	Definitions
s6-81-5	Use of the fund
s6-81-6	General requirements
s6-81-7	Implementation date of the fund
s6-81-8	Continuance of basic service
s6-81-9	Designation of telecommunications carriers
		  eligible to receive federal universal
		  service support
s6-81-10	Designation of telecommunications carriers
		  for unserved areas
s6-81-11	Abandonment or discontinuance of
		  service
s6-81-12  Enforcement of chapter 6-81
s6-81-13	Severability clause
s6-81-14 to 18 (Reserved)


		Subchapter 2	Scope of Universal Service

s6-81-19	Universal service - basic exchange
		  service
s6-81-20  Access to telecommunications relay
		  service and enhanced 911 
ss6-81-21 to 25 (Reserved)


		Subchapter 3	Administration of the Fund

s6-81-26	Administration of the fund
s6-81-27	Start-up costs
ss6-81-28 to 32 (Reserved)

		Subchapter 4	Contributions to the Fund

s6-81-33	Contributors to the fund
s6-81-34	Amount of contributions
s6-81-35	Surcharge
ss6-81-36 to 40 (Reserved)


		Subchapter 5	Low Income Customer

s6-81-41	Lifeline telephone program
s6-81-42	Low income assistance program
s6-81-43	Discounted rates
s6-81-44	Eligibility for low income assistance
s6-81-45  Certification of eligibility
s6-81-46  Distribution of universal service fund
		  to the provider of service to 
		  low income customers
ss6-81-47 to 51 (Reserved)


		Subchapter 6	High Cost Area

s6-81-52	High cost area
s6-81-53	Proceeding to determine an area as a
		  high cost area
s6-81-54	Carrier of last resort - general
s6-81-55	Carrier of last resort - selection
s6-81-56  Distribution of universal service fund
		  to the carrier of last resort
s6-81-57  Adjustment of subsidy amount
ss6-81-58 to 62 (Reserved)


		Subchapter 7	Subsidies for Specialized
					Services and Services to
					Public Institutions

s6-81-63  Specialized telecommunications services
s6-81-64	Distribution of universal service fund
	       to provider of specialized services
		  and providers of services to public
		  institutions
s6-81-65	Telecommunications services to health
		  care providers - general

s6-81-2



s6-81-66	Basic telecommunications services and
		  service drops to schools and libraries
s6-81-67	Advanced telecommunications services to
		  public institutions
ss6-81-68 to 72 (Reserved)



SUBCHAPTER 1


GENERAL PROVISIONS


	s6-81-1  Purpose of the rules.  The purpose of this chapter is to adopt standards and procedures governing the implementation of the universal service fund for the State, pursuant to:
	(1)	Act 225, Session Laws of Hawaii 1995, enacted on June 29, 1995; and
	(2)	The Federal Telecommunications Act of 1996, enacted on February 8, 1996.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)



	s6-81-2  Policy.  It is the State's policy to preserve and advance universal service by:
	(1)	Maintaining affordable, just, and reasonable rates for basic exchange service;
	(2)	Assisting customers located in areas of the State that have high costs of basic telecommunications services and assisting low-income customers and customers with disabilities in obtaining and maintaining access to basic services; and
	(3)	Enhancing the deployment of access to basic and advanced telecommunications services to 

s6-81-2



public institutions.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)



	s6-81-3  Application of additional sources.  This chapter:
	(1)	Shall be read in context with any applicable:
		(A)	Federal law and regulation; and
		(B)	State law and commission order and rule, including chapter 269, HRS, and chapter 6-61; and
	(2)	Supersedes any conflicting commission order or rule that may be in effect on the effective date of this chapter. 
		[Eff               ] (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43) 



	s6-81-4  Definitions.  As used in this chapter, unless the context clearly requires otherwise:
	"Access" means access to an exchange network for the purpose of enabling a telecommunications carrier to originate or terminate exchange service.
	"Access line" means the medium over which a customer connects to an exchange network.
	"Administrator" means the administrator of the universal service fund.
	"Basic exchange service" or "basic service" means the same as in s6-81-19.
	"Bona fide request" means a written request made in good faith, with earnest intent and without fraud, deceit, or pretense.
	"Business customer" means a customer to whom business service is provided.
	"Business service" means the telecommunications service provided to a customer where the use is 

s6-81-4



primarily or substantially for a business, professional, institutional, or occupational nature.
	"Carrier of last resort" means the telecommunications carrier designated by the commission to be eligible for disbursements from the State universal service fund for a specific high cost area.
	"Commercial mobile radio service" means the same as in 47 U.S.C. ss153(n) and 332(d)(1).  It includes cellular, paging, and personal communications services.
	"Commission" means the public utilities commission of the State. 
	"Consumer advocate" means the department of commerce and consumer affairs, division of consumer advocacy, of the State.
	"Customer" includes any person:
	(1)	Who has requested or applied for telecommunications service from a telecommunications carrier;
	(2)	Currently receiving telecommunications service from a telecommunications carrier; or
	(3)	Who moves to another location within a telecommunications carrier's service territory and requests that telecommunications service be discontinued at the previous location and begun at the new location.
	"Elementary school" means a nonprofit institutional day or residential school that provides elementary education, as determined under State law.
	"Enhanced 911" means the same as "statewide enhanced 911 emergency telephone service," in s269-16.95, HRS.
	"Exchange" means a unit established and described in the tariff of a telecommunications carrier for the provision of service within a specific, prescribed geographical area, such as a city, town, or community and its environs.  An exchange may consist of one or more central offices together with associated 

s6-81-4



facilities used in furnishing telecommunications
service within the specific geographical or exchange area. 
	"Exchange area" means the geographical territory served by an exchange.
	"Exchange service" means the telecommunications service provided to business and residential customers within a given exchange area in accordance with tariffs, including the use of exchange facilities required to establish connections:
	(1)	Between customer locations within the exchange; and
	(2)	Between customer locations and trunks accessing other exchanges.
	"FCC" means the Federal Communications Commission.	
	"Health care provider" means:
	(1)	A post-secondary educational institution offering health care instruction, a teaching hospital, and a medical school;
	(2)	A community health center or a health center providing health care to migrants;
	(3)	A governmental health department or agency;
	(4)	A community mental health center;
	(5)	A not-for-profit hospital;
	(6)	A rural health clinic; and
	(7)	A consortia of health care providers consisting of one or more entities described in paragraphs (1) to (6).
	"High cost area" means a given geographical or exchange area within the State designated as high cost, pursuant to s6-81-52(b).
	"Household" means a family or a group of individuals who live together in the same dwelling, such as a single family home, apartment, or condominium unit, provided that such family or group is not comprised exclusively of individuals who have other primary residences or who are claimed as dependents on the tax returns of other persons.  A household may consist of an individual who shares a dwelling unit with others and contributes toward the 

s6-81-4



expenses of the unit, but maintains a separate, independent livelihood and occupies, on an exclusive basis, a clearly defined area in the dwelling unit.
  	"HRS" means the Hawaii Revised Statutes.
	"Incumbent telecommunications carrier" or "incumbent carrier" means the telecommunications carrier referred to in s269-7.5(c), HRS.
	"Lifeline telephone program" means the program of providing discounted residential telephone rates to elders with limited income and to the handicapped with limited income, as described in s269-16.5(b), HRS.
	"Low income customer" means a residential customer who meets the eligibility criteria to participate in the low income assistance program, pursuant to ss6-81-44 and 6-81-45.
	"Network" includes a telecommunications carrier's facilities used to originate and terminate traffic.
	"Person" includes individuals, partnerships, corporations, associations, joint stock companies, public trusts, organized groups of persons, whether incorporated or not, receivers or trustees of the foregoing, municipalities, including cities, counties, or other political subdivisions of the State, or any agency, authority, or instrumentality of the State, or of any one or more of the foregoing.
	"Public institution" or "public institutional telecommunications user" means an elementary or secondary school, a library, or a health care provider.
	"Resale" or "resell" means the offering or provision of telecommunications service by a telecommunications carrier through the use of services or facilities owned, maintained, or provided by another telecommunications carrier.
	"Residential customer" means a customer to whom residential service is provided.
	"Residential service" means the telecommunications service provided to a customer predominantly for personal or domestic use at the customer's residence or dwelling.
	"Secondary school" means a nonprofit institutional day or residential school that provides 

s6-81-4



secondary education, as determined under State law, except that the term does not include any education beyond grade 12.
	"State" means the State of Hawaii.
	"Tariff" means the documents that describe the service or product offered by a telecommunications carrier and prescribe the terms and conditions and the schedule of the rates and charges under which the service or product is offered.
	"Telecommunications carrier" means the same as in s269-1, HRS, and includes the incumbent telecommunications carrier.
	"Telecommunications relay service" means the same as relay services for the deaf, hearing-impaired, and speech-impaired, under s269-16.6, HRS.
	"Telecommunications service" means the same as in s269-1, HRS.
	"U.S.C." means the United States Code.
	"Universal service" means the offering and providing of basic exchange service to all customers in the State at affordable, just, and reasonable rates.
	"Universal service fund" or "fund" means the State universal service fund.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)  



	s6-81-5  Use of the fund.  (a)  The universal service fund may be used for any of the following purposes:
	(1)	To defray the costs of administering the fund, including the costs of completing an annual, independent audit;
 	(2)	To subsidize telecommunications carriers that provide basic service to:
		(A)	Low income customers; and
		(B)	Customers in high cost areas; and
	(3)	To the extent provided in this chapter, to subsidize telecommunications carriers that 

s6-81-7



provide basic service and advanced telecommunications service to public institutions.
	(b)	Nothing in this chapter prohibits a provider of commercial mobile radio service from qualifying for disbursements from the universal service fund.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)  



	s6-81-6  General requirements.  (a)  The State's universal service fund is a fund of last resort.  A telecommunications carrier may not receive universal service funding from the State unless:
	(1)	It first applies for funding from the federal universal service fund or any other source of funding, to the extent applicable, and is denied or declined such funding, or demonstrates that such funding is insufficient; or
	(2)	It is ineligible for funding, other than from the State universal service fund.
	(b)	Whenever a telecommunications carrier is entitled to a subsidy from the universal service fund, the carrier may elect to have the amount of the subsidy treated as an offset to its obligation to contribute to the universal service fund.
	(c)	The commission may require the posting of a performance bond by any telecommunications carrier, at an amount set by the commission, as a condition for providing universal service in the State.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)  



	s6-81-7  Implementation date of the fund.  The commission shall determine when contributions to the fund and payments from the fund may begin.  The 

s6-81-7



commission shall inform all telecommunications carriers required to contribute to the fund and those entitled to payments from the fund of the start dates.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254) 



	s6-81-8  Continuance of basic service.   On the effective date of this chapter, the incumbent telecommunications carrier shall continue to provide basic service in the geographical or exchange areas it is then serving, unless:
	(1)	It is allowed to discontinue the service pursuant to chapter 6-80, subchapter 10;
	(2)	The customer chooses another telecommunications carrier as its provider of such service; or
	(3)	Another telecommunications carrier is designated by the commission as a carrier of last resort for a given high cost area, pursuant to subchapter 6.  	  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)



	s6-81-9	Designation of telecommunications carriers eligible to receive federal universal service support.  (a)  Pursuant to 47 U.S.C. s 214, the commission will, upon the written petition of a common carrier or the commission's own motion, designate telecommunications carriers as eligible to receive federal universal service support.  Carriers designated as eligible telecommunications carriers shall, throughout the service area for which the designation is received:
	(1)	Offer the services supported by federal universal service support mechanisms using 

s6-81-10



either its own facilities or a combination of its own facilities and resale of another carrier's services (including the services offered by another eligible telecommunications carrier); and
	(2)	Advertise the availability of such services and the charges thereof using media or general distribution.
	(b)	Upon request and consistent with the public interest, convenience, and necessity, the commission may, in the case of a high cost area, and shall, in the case of all other service areas (as defined by the commission), designate more than one carrier as an eligible telecommunications carrier.  Before designating an additional telecommunications carrier for a high cost area, the commission must find that the designation is in the public interest.              [Eff               ]  (Auth:  HRS ss269-6) (Imp:  47 U.S.C. s214)



	s6-81-10  Designation of telecommunications carrier for unserved areas.  In no event shall any geographical area or community be without basic service or any other service supported by the State or federal universal service support mechanisms.  If no telecommunications carrier will provide any of the services that are supported by either the State or the federal universal service support mechanisms to any unserved community (or any portion of the community) that requires such service, the commission shall:
	(1)	Determine which telecommunications carrier or carriers are best able to provide such service to the unserved community (or portion of the community); and
	(2)	Order such carrier or carriers to provide such service to that community (or portion of the community).
	Any telecommunications carrier or carriers ordered to provide such service are eligible for support from the State universal service fund or the 

s6-81-10



federal universal service fund, as the case might be.   [Eff               ]  (Auth:  HRS s269-6)  (Imp:
47 U.S.C. s214)



	s6-81-11  Abandonment or discontinuance of service.  Section 6-80-122 applies to any proposed abandonment or discontinuance of a service supported by the State or federal universal service support mechanisms, except that, as necessary, before allowing a telecommunications carrier to abandon or discontinue any service supported by the State or federal universal service support mechanisms, the commission shall require:
	(1)	The other telecommunications carriers receiving support from the State or federal universal service support mechanisms in the area served by the carrier seeking to abandon or discontinue service to ensure that all customers served by the carrier abandoning or discontinuing service will continue to be served; and
	(2)	Sufficient notice to permit the purchase or construction of adequate facilities by the other telecommunications carriers.
	The purchase or construction required under paragraph (2) must be completed within one year of the date the commission approves the abandonment or discontinuance of service.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s214)



	s6-81-12  Enforcement of chapter 6-81.  Chapter 269, HRS, and any other applicable State law and commission rule and order apply in the enforcement of this chapter.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43)
s6-81-19



	s6-81-13  Severability clause.  If any provision of this chapter, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of this chapter which can be given effect without the invalid provision or application, and to this end the provisions of this chapter are severable.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43)



	ss6-81-14 to 18 (Reserved)



SUBCHAPTER 2


SCOPE OF UNIVERSAL SERVICE


	s6-81-19  Universal service - basic exchange service.  (a)  On the effective date of this chapter, basic exchange service consists of single-line dial tone; touch tone dialing; access to operator service; access to enhanced 911; telecommunications relay service; telephone directory; and access to directory assistance service via 411 dialing.
	(b)	For purposes of this section:
	(1)	"Dial tone" means the ability to make or receive telephone calls with or without operator intervention;
	(2)	"Single-line" means single-party line or a one-party line; and
	(3)	"Touch tone dialing" means dual tone multi-frequency, as opposed to dial pulse signalling.
	(c)	The commission may by rule or order, from time to time, redefine basic service to include or exclude a particular service.  In determining whether 

s6-81-19



basic service should be redefined to include or exclude a particular service, the commission shall consider the following factors:
	(1)	The extent to which the service is readily available, is in demand, and, through the operation of market choices by customers, has been subscribed to by a substantial majority of the residents in the State;
	(2)	The extent to which the service has gained common acceptance in the community and is being deployed in the public telecommunications networks by telecommunications carriers;
	(3)	The extent to which the service is essential to education, public health, or public safety;
	(4)	The extent to which the service is consistent with public interest, convenience, and necessity; and
	(5)	Any other factors deemed relevant by the commission.
	(d)	Any person by a written petition or the commission on its own motion may initiate a proceeding to review the definition of basic service or to redefine it.  The commission shall hold a hearing in such a proceeding.  The consumer advocate shall be a party to the proceeding.  In addition, any telecommunications carrier required to contribute to the fund and any other interested persons may intervene as parties or otherwise participate in the proceeding.
	(e)	In its review of the definition of basic service, the commission may investigate whether it is in the public interest to include any of the following in basic service:
	(1)	Access to all telecommunications services that are used by a majority of residents located in the metropolitan areas of the State; and
	(2)	Access to advanced telecommunications services.


s6-81-26



	(f)	In addition to the services included in the definition of basic service, the commission may designate additional services for support through the universal service fund for schools, libraries, and health care providers for the purposes of subchapter 7.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)  



	s6-81-20  Access to telecommunications relay service and enhanced 911.  Every telecommunications carrier, including a carrier of last resort, offering or providing basic exchange service, shall make provisions to ensure access by its customers to:
	(1)	Telecommunications relay service, as provided in s269-16.6, HRS; and
	(2)	Enhanced 911, as provided in s269-16.95, HRS.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-16.6, 269-16.95, 269-35, 269-38, 269-41 to 43, 47 U.S.C. ss254, 255)



	ss6-81-21 to 25 (Reserved)



SUBCHAPTER 3


ADMINISTRATION OF THE FUND


	s6-81-26  Administration of the fund.  (a)  A neutral third party designated by the commission shall administer the universal service fund. 
	(b)	The commission shall select the administrator based on competitive bids, pursuant to 

s6-81-26



chapter 103D, HRS, or by any other means duly authorized by law.
	(c)	No telecommunications carrier or any of its affiliates, subsidiaries, agents, officials, or employees is eligible to serve as the administrator.
	(d)	The administrator's general duties are:
	(1)	Collecting and receiving contributions to the fund;
	(2)	Distributing moneys from the fund;
	(3)	Managing the daily operations and affairs of the fund; and
	(4)	Conducting periodic audits of telecommunications carriers to ensure that the carriers are accurately reporting and making proper contributions to the universal service fund.
	The commission may specify other duties that it deems appropriate in the administrator's contract.
	(e)  The fund is subject to an annual audit by an independent certified public accountant selected by the commission.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)



	s6-81-27  Start-up costs.  The commission may advance reasonable commission funds for any start-up costs associated with the implementation of the universal service fund.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)



	s6-81-28 to 32 (Reserved)



s6-81-33



SUBCHAPTER 4


CONTRIBUTIONS TO THE FUND


	s6-81-33  Contributors to the fund.  (a)  All telecommunications carriers operating or providing telecommunications service within the State shall contribute to the universal service fund. 
Telecommunications carriers subject to this subsection include:
	(1)	The incumbent telecommunications carrier; and
	(2)	All carriers certified by or registered with the commission pursuant to s269-7.5(b), HRS, or s6-80-18(a) or (b), including:
		(A)	Carriers or providers of commercial mobile radio service; 
		(B)	Resellers; and 
		(C)	Narrow and broadband personal communications service providers, private network providers, cable television firms, power companies, enhanced service providers, and very small aperture satellite service providers.
	(b)	The commission may require any person other than a telecommunications carrier to contribute to the universal service fund if, after written notice and hearing, the commission determines: 
	(1)	The person is offering a commercial service (i.e., for compensation or profit) within the State that directly benefits from the telecommunications infrastructure situated within the State; and
	(2)	The commercial service directly competes with a telecommunications service provided within the State by a telecommunications carrier that is required to make a contribution to the fund.


s6-81-33



	(c)	The commission may exempt a telecommunications carrier or class of carriers from the requirement to contribute to the universal service fund if the carrier's telecommunications activities are limited to such an extent that the level of such carrier's contribution to the preservation and advancement of universal service would be de minimis.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)



	s6-81-34  Amount of contributions.  (a)  The commission shall annually, by order, set the amount of the contribution required to be made to the universal service fund by each telecommunications carrier, based on a percentage of the carrier's gross operating revenues from the retail provision of intrastate telecommunications services during the preceding calendar year; provided that the commission may:
	(1)	Set a minimum amount to be paid by any carrier;
	(2)	Establish different percentages to be applied to different classes or types of carriers; and
	(3)	Periodically review and readjust the percentage or minimum amount, or both, based on the fund's actual and forecast income and disbursements.  
	(b)	Each telecommunications carrier shall pay its contribution directly to the administrator at dates or intervals set by the commission.
	(c)	Interest shall be charged on any late payment at the rate of ten percent per year.  A payment is late if not made within fifteen days of the due date.
	(d)	All contributions and interest payments made to the administrator shall be deposited into the 

s6-81-41



universal service fund account.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)



	s6-81-35  Surcharge.  (a)  A telecommunications carrier contributing to the universal service fund may impose a surcharge on its customers, both residential and business, to recover the amount of its contribution.
	(b)	The carrier shall separately and clearly identify and explain on its customers' bills the surcharge assessed for the universal service fund.
	(c)	The surcharge shall not be imposed until at least thirty days' written notice is provided to the commission.  The notice must specify the amount of the proposed surcharge and the form in which the surcharge will be designated on customers' bills.
	(d)	The commission, as appropriate, may order modifications in the amount of the surcharge or in the form of the designation on customers' bills.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)  



	s6-81-36 to 40 (Reserved)



SUBCHAPTER 5


LOW INCOME CUSTOMER


	s6-81-41  Lifeline telephone program.  On the effective date of this chapter, the program of providing discounted residential telephone rates to  

s6-81-41



elders with limited income and to the handicapped with limited income, then in effect pursuant to s269-16.5, HRS, continues in full force and effect.  Upon the full implementation of the universal service fund and at a time designated by the commission, the lifeline program shall be incorporated into the low income assistance program provided in this subchapter.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-16.5, 269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)



	s6-81-42  Low income assistance program.  The low income assistance program is to provide basic service at discounted rates to residential customers who qualify for the discounted rates under ss6-81-44 and 6-81-45.  The difference between the discounted rates and the tariffed residential basic service rates shall be subsidized by the universal service fund, as provided in this subchapter.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254) 



	s6-81-43  Discounted rates.	The discounted rates payable by those eligible to participate in the low income assistance program are:
	(1)	Fifty per cent of the tariffed residential basic service rate; and
	(2)	Fifty per cent of the tariffed access and connection charges for residential basic service.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43,
		47 U.S.C. s254)




s6-81-45



	s6-81-44  Eligibility for low income assistance.  Any residential basic service customer who meets the following criteria is eligible to participate in the low income assistance program:
	(1)	The customer has only one telephone access line in the household;
	(2)	The household is the customer's primary residence;
	(3)	The telephone is listed in the customer's name; and
	(4)	The total annual income of all individuals living in the customer's household does not exceed $10,000.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)



	s6-81-45  Certification of eligibility.  (a)  A telecommunications carrier providing basic service to residential customers shall provide a standard form on which any of its limited income residential customers may certify as to the customer's eligibility to participate in the low income assistance program.  Certification is valid for a year, and a customer continuing to be eligible shall recertify on an annual basis.
	(b)	A certification of eligibility is prima facie evidence that the customer meets the eligibility criteria.  The carrier, at its cost, bears the responsibility of verifying the accuracy of any certification.  Such verification may be on a random and case-by-case basis and performed only as the carrier deems necessary.  The commission may, as it deems necessary, conduct periodic reviews of any telecommunications carrier's verification process.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)


s6-81-46



	s6-81-46  Distribution of universal service fund to the provider of service to low income customers.  Telecommunications carriers providing basic service to residential customers eligible to participate in the low income assistance program may apply to the administrator of the universal service fund for subsidies to recover the difference between the discounted rates paid by the customers in the low income assistance program and the tariffed rates.  The administrator shall pay the subsidies from the universal service fund under the terms and conditions, and in the manner, prescribed by the commission.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)



	ss6-81-47 to 51 (Reserved)	



SUBCHAPTER 6


HIGH COST AREA


	s6-81-52  High cost area.  (a)  The commission may designate a given geographical or exchange area within the State as a high cost area.  A high cost area is one in which the cost of providing basic exchange service is high in comparison to the cost of providing basic exchange service in other areas of the State.
    	(b)	A determination that a given area is a high cost area may be made upon the written petition of any interested person filed with the commission or upon the commission's own motion.  The necessary disparity between the cost of providing basic exchange service in a given area and the cost of providing basic exchange service in the rest of the State to qualify 

s6-81-52



the given area as a high cost area shall be determined by the commission on a case-by-case basis.  In determining whether an area should be deemed a high cost area, the commission shall consider the following factors:
	(1)	The cost of providing basic exchange service per access line in the area by the current provider of the service;
	(2)	The statewide weighted average cost of providing basic service per access line;
	(3)	The presence or absence of effective competition in the area for the provision of basic service;
	(4)	The area's remoteness and rural quality;
	(5)	The area's topography and geographic size; 
	(6)	The number of residences or households and businesses in the area; 
	(7)	The number of residences or households in the area that do not subscribe to exchange service;
	(8)	Benefits to the public interest; and
	(9)	Any other factors deemed relevant by the commission.
	An area is not a high cost area unless the cost of providing basic service per access line in the area is more than one hundred twenty per cent of the statewide weighted average cost of providing basic service per access line. 
	(c)	In delineating the boundaries of a proposed high cost area, the commission shall consider:
	(1)	The current exchange boundaries;
	(2)	Maintenance of the integrity of areas served by common switching equipment and associated engineering functions;
	(3)	The inclusion of adjacent areas, comprised of low cost or profitable customers, that may be appropriately served by the same switching equipment; and
	(4)	Any other factors deemed relevant by the commission.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) 

s6-81-52



(Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254) 



	s6-81-53  Proceeding to determine an area as a high cost area.  (a)  Any petition to have an area declared a high cost area must:
	(1)	Address the factors set forth in s6-81-52(b); and
	(2)	Describe the boundaries of the proposed high cost area, taking into account the factors set forth in s6-81-52(c), and include any maps.
	(b)  A copy of any petition or commission order to determine whether an area should be declared a high cost area shall be served on: 
	(1)	The administrator of the universal service fund; and
	(2)	The consumer advocate.
The administrator of the universal service fund shall notify all contributors to the universal service fund in writing of the petition or order.  The commission shall cause to be published a written notice of the petition or order in a newspaper of general circulation in the State and in a newspaper published and generally circulated in the county in which the proposed high cost area is situated.
	(c)  The commission may conduct a public hearing or hearings in the area affected by the petition or order.  It may also hold an evidentiary hearing.  In any evidentiary hearing, the following persons shall be parties:
	(1)	The current telecommunications provider of basic exchange service in the area;
	(2)	The consumer advocate;
	(3)	The administrator of the universal service fund; and
	(4)	Any other persons allowed by the commission to intervene as parties or to participate.


 	s6-81-54



	(d)  Upon review, the commission may declare the whole or a part of the area as a high cost area, or it may determine that no part of the area should be declared a high cost area.  [Eff               ]  
(Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)



	s6-81-54  Carrier of last resort - general.  (a)  The commission shall designate a single telecommunications carrier as the carrier of last resort for a high cost area.  Such carrier is the ultimate carrier responsible for ensuring that all persons in the high cost area are provided with basic service.  It shall provide such service either using its own facilities or a combination of its own facilities and resale of another carrier's service, including the service offered by another telecommunications carrier authorized to provide basic service in the high cost area.  The carrier of last resort is also the only carrier eligible for subsidies or disbursements from the State universal service fund for the provision of basic service in the high cost area.
	(b)  Nothing in subsection (a) precludes any other telecommunications carrier, designated by the commission pursuant to 47 U.S.C. s214 and s6-81-9, from providing basic service in the high cost area through the support mechanisms of the federal universal service fund.
	(c)	The carrier of last resort is subject to the applicable requirements of chapter 6-80, including the provisions on access, interconnection, resale, unbundling, and network termination and the provisions on access to poles, ducts, conduits, and rights-of-way, unless otherwise provided in this chapter or ordered by the commission.
	(d)	The commission, from time to time, shall:


s6-81-54



		(1)	Review the carrier of last resort's provision of basic service to the designated high cost area; and
		(2)	Review and determine the continuing necessity for designating the area as a high cost area and for designating a carrier of last resort.  [Eff               ] (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. ss214, 254)



 	s6-81-55  Carrier of last resort - selection.  (a)	The commission shall select the carrier of last resort for a high cost area through a bidding process.  The commission shall formulate specifications for providing basic exchange service in the high cost area and prepare a solicitation for bids.  The commission shall cause a notice of the bid solicitation to be published, at least once, in a newspaper of general circulation in the State and in a newspaper published and generally circulated in the county where the high cost area is situated.  Any telecommunications carrier certified or authorized to provide telecommunications services in the State, including any carrier temporarily certified to participate in the bidding process, may submit a bid.  The successful bidder shall provide basic exchange service in the high cost area in accordance with the terms and conditions set forth in the specifications and as otherwise required by the commission.
	(b)  The commission shall consider the following factors in determining the successful bidder:
	(1)	Ability to adhere to the requirements of the specifications; 
	(2)	Quality and level of service to be provided;
	(3)	Investment commitment;
	(4)	Qualifications of the bidder;
	(5)	Cost to the customers in the area;
	(6)	The amount of the subsidies required;
s6-81-56



	(7)	Protection of the public interest; and
	(8)	Any other factors deemed relevant by the commission.
	The commission may, as it deems appropriate and in the public interest, reject all bids, redraft the specifications, and re-start the bidding process.
	(c)	Every carrier (including the incumbent carrier providing basic exchange service in the area) submitting a bid shall include in its projected cost the undepreciated balance of the facilities of the incumbent carrier then being used to provide basic exchange service in the area.  The undepreciated balance is the undepreciated value of the facilities as carried on the books of the incumbent carrier.  The commission shall establish a procedural schedule for the incumbent carrier to present its claim of the cost of the undepreciated balance of the facilities, for comments to be made by the consumer advocate and other carriers, and for adjudication of this matter by the commission in advance of the submission of bids.
[Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)



	s6-81-56  Distribution of universal service fund to the carrier of last resort.  (a)  Except as otherwise provided by the commission, a carrier of last resort may apply for subsidies from the universal service fund to recover the amount required by its bid.
	(b)	Upon the receipt of an application for universal service fund subsidies, the administrator of the universal service fund shall pay the subsidies to the carrier of last resort, on the terms and conditions, and in the manner, prescribed by the commission.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)  


s6-81-57



	s6-81-57	Adjustment of subsidy amount.  The commission may, on its own motion or on the motion of the carrier of last resort, readjust the subsidy amount that the carrier may receive from the universal service fund if, during the course of the carrier's contract period, the definition of universal service is expanded or contracted by State or federal law or by commission order.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)  



 	ss6-81-58 to 62 (Reserved)



SUBCHAPTER 7


SUBSIDIES FOR SPECIALIZED TELECOMMUNICATIONS
  SERVICES AND SERVICES TO PUBLIC INSTITUTIONS


	s6-81-63	Specialized telecommunications services.  Services included in basic exchange service that are, for technical, physical, or practical purposes, provided by a single telecommunications carrier, such as the relay services for the deaf, hearing-impaired, and speech-impaired under s269-16.6, HRS, may be subsidized by payment from the universal service fund directly to the carrier providing that service.  The amount of the subsidy is limited to the cost of providing the specialized service.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-16.6, 269-35, 269-38, 269-41 to 43)



	s6-81-64  Distribution of universal service fund to providers of specialized services and providers of 

s6-81-65



services to public institutions.  A telecommunications carrier seeking a subsidy for providing a specialized service described in s6-81-63 and service to a public institution described in this subchapter must apply for the subsidy.  Upon receipt of an application for a subsidy, the administrator of the universal service fund shall review the application and, if appropriate, pay the requested subsidy to the carrier on the terms and conditions and in the manner prescribed by the commission.  [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. s254)



	s6-81-65	Telecommunications services to health care providers - general.  (a)  Upon the receipt of a bona fide request, a telecommunications carrier shall provide telecommunications services that are necessary for the provision of health care services, including instruction relating to such services, to any public or nonprofit health care provider, that serves persons who reside in a high cost area, at rates that are reasonably comparable to the rates charged for similar services in the urban areas in the State.  For purposes of this section, the following areas in the State are deemed urban areas:
	(1)	The entire island of Oahu; and
	(2)	Areas on the neighbor islands where the rates charged health care providers are no greater than the rates charged ordinary businesses on the island of Oahu.
	(b)	The rates to be charged a health care provider under subsection (a) shall be tariffed.  The tariff, when filed with the commission, is subject to protest, in which event, the provisions of s6-80-40(c) apply.  The tariff is also subject to commission review.  Upon review, the commission may:
	(1)	Deny or reject the tariff;
	(2)	Revise or modify the tariff; or
	(3)	Allow the tariff to take effect.


s6-81-65



	(c)	A carrier providing service to a health care provider in a high cost area at rates prescribed in subsection (a) may secure a subsidy from the universal service fund for any difference between the carrier's rates and the rates for similar services provided to customers in other high cost areas in the State.  The amount of this subsidy is exclusive of the costs for basic service subsidized pursuant to this chapter.  [Eff               ]  (Auth:  HRS s269-6) (Imp:
47 U.S.C. s254)



	s6-81-66  Basic telecommunications services and service drops to schools and libraries.  Upon receipt of a bona fide request, a telecommunications carrier shall provide basic telecommunications service and service drops to elementary schools, secondary schools, and libraries situated in the carrier's geographical area for educational purposes at rates less than the amounts charged for similar services to other parties.  The amount of the discount may not exceed fifty per cent.  The carrier may secure a subsidy from the universal service fund for the difference between the discounted rates and the rates charged for similar services to other parties.  "Service drop," as used in this section, means the wire or cable from the carrier's service pole or terminal located outside a school or library premises to the demarcation point on the school or library premises.  [Eff               ]  (Auth:  HRS s269-6) (Imp: 47 U.S.C. s254)



	s6-81-67  Advanced telecommunications services to public institutions.  Upon establishment of FCC regulations pursuant to 47 U.S.C. s254(h)(2), a telecommunications carrier shall, to the extent technically feasible and economically reasonable and in conformance with FCC regulations, offer to all public and non-profit elementary and secondary school 

s6-81-72



classrooms, health care providers, and libraries situated in the carrier's service area, access to advanced telecommunications and information services.   [Eff               ]  (Auth:  HRS ss269-6, 269-35, 269-38, 269-41 to 43) (Imp:  HRS ss269-35, 269-38, 269-41 to 43, 47 U.S.C. ss254, 706)



	ss6-81-68 to 72 (Reserved)


DEPARTMENT OF BUDGET AND FINANCE


	Chapter 6-81, Hawaii Administrative Rules, on Summary Page dated May 17, 1996, was adopted on May 17, 1996, following public hearing held on March 4, 5, 6, 7, and 8, 1996, after public notice was given in the Honolulu Advertiser on February 2, 1996, The Garden Island on February 2, 1996, the Maui News on February 2, 1996, the Hawaii Tribune-Herald on February 4, 1996, and West Hawaii Today on February 4, 1996.

The adoption of chapter 6-81 shall take effect ten days after filing with the Office of the Lieutenant Governor.



					_____________________________
					Earl I. Anzai
					Director of Finance
					Department of Budget and
					  Finance



					_____________________________
					Yukio Naito
					Chairman
					Public Utilities Commission


					APPROVED:



					_____________________________
					Benjamin J. Cayetano
					Governor
					State of Hawaii


					Dated:  _____________________



APPROVED AS TO FORM:



_______________________
Deputy Attorney General



					_____________________________
							Filed




81- 81- 81-