STAND. COM. REP. NO. 383

                                   Honolulu, Hawaii
                                                     , 1999

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




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

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

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

begs leave to report as follows:

     The purpose of this measure is to ensure the viability of
universal telecommunications service in the State by precluding
the use of moneys in the Universal Service Fund (Fund) for
purposes other than those related to the provision of universal
telecommunications service.

     The Public Utilities Commission (PUC) presented testimony in
support of the measure.  The Consumer Advocate, Oceanic
Communications, AT&T, GTE, TelHawaii, Inc., GST Telecom Hawaii,
and the AARP State Legislative Committee, though not present at
the hearing, submitted written testimony in support of the
measure. 
 
     Your Committee finds that the principles of the Universal
Service Program are:

     (1)  To maintain affordable, just, and reasonable rates for
          basic residential telecommunications service; and

     (2)  To assist individuals or entities who cannot afford to
          or who need assistance in obtaining or maintaining
          basic services or equipment.  


 
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                                   STAND. COM. REP. NO. 383
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The Universal Service Fund was created to cover the costs of the
program's activities.  This measure ensures that the moneys in
the Fund will be available to meet the goals of universal service
and will not be diverted for other purposes or applied towards
administrative expenses.

     Your Committee has amended this measure by:

     (1)  Authorizing the PUC to temporarily borrow funds from
          the Public Utilities Special Fund to start the Fund and
          to repay the amounts borrowed when sufficient moneys
          are collected in the Fund; 

     (2)  Appropriating $300,000, from the Public Utilities
          Special Fund for fiscal year 1999-2000, to carry out
          the purposes of the Universal Service Program; and

     (3)  Adding two new sections to prevent the actions taken in
          this measure that amend sections 36-27 and 36-39,
          Hawaii Revised Statutes, from being repealed under
          Act 216, Session Laws of Hawaii 1997 and Act 142,
          Session Laws of Hawaii 1998. 

     Your Committee intends that the dollar amount inserted into
the appropriation provision is an approximation only and that
this amount should be further reviewed by the Committee on Ways
and Means.

     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 1279, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as S.B.
No. 1279, S.D. 1, and be referred to the Committee on Ways and
Means.


 
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                                   STAND. COM. REP. NO. 383
                                   Page 3


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



                                   ______________________________
                                   BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Co-Chair

 
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