STAND. COM. REP. NO. 1371

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 1279
                                     S.D. 2
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred S.B. No. 1279, S.D. 2, H.D. 1, entitled:

     "A BILL FOR AN ACT RELATING TO THE UNIVERSAL SERVICE FUND,"

begs leave to report as follows:

     The purpose of this bill is to clarify the purpose and
intent of the Universal Service Program to better serve the
telephone service needs of customers.

     Specifically, the bill:

     (1)  Transfers the placement of the Universal Service Fund
          outside of the state treasury;

     (2)  Exempts the Fund from the central services expenses and
          departmental administrative expenses surcharges;

     (3)  Restricts the use of the Fund to the Universal Service
          Program;

     (4)  Clarifies the source of the Fund and use of interest
          earned therefrom; and

     (5)  Appropriates funds from the Universal Service Fund for
          the purposes of the Universal Service Program; provided

 
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          that the appropriation shall be a temporary loan from
          the Public Utilities Special Fund.

     Your Committee finds that the Universal Service Program was
established to ensure affordable telephone service to all Hawaii
residents including low-income customers and customers in high-
cost areas.

     This bill clarifies and enhances the Universal Service
Program and Fund to ensure the equitable provision of quality
telephone service to Hawaii's telephone customers.

     Your Committee received favorable testimony on this bill
from the Consumer Advocate, the Public Utilities Commission,
AT&T, GTE, and GST Telecom Hawaii.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 1279, S.D. 2, H.D. 1, and recommends that it
be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,



                                   ______________________________
                                   RON MENOR, Chair

 
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