# Tenn. Code Ann. § 65-5-107: Universal service - Funding > Tennessee · Statutes · In force URL: https://www.frixlaw.com/law-library/statutes/STATE_TN_T65_C5_S65-5-107 ## Section - **Citation:** Tenn. Code Ann. § 65-5-107 - **Heading:** Universal service - Funding - **Jurisdiction:** Tennessee - **Kind:** Statutes - **Status:** In force - **Text as of:** August 14, 2026 - **Source:** Compiled text - **Location:** TN Code / Title 65 / Chapter 5 / Section 65-5-107 ## Text (a) In order to ensure the availability of affordable residential basic local exchange telephone service, the commission shall formulate policies, promulgate rules and issue orders which require all telecommunications service providers to contribute to the support of universal service. (b) The commission shall create an alternative universal service support mechanism that replaces current sources of universal service support only if it determines that the alternative will preserve universal service, protect consumer welfare, be fair to all telecommunications service providers, and prevent the unwarranted subsidization of any telecommunications service provider's rates by consumers or by another telecommunications service provider. To accomplish these objectives, the commission, if it creates or subsequently modifies an alternative universal service support mechanism, shall: (1) Restrict recovery from the mechanism by any telecommunications service provider to an amount equal to the support necessary to provide universal service; (2) Consider provision of universal service by incumbent local exchange telephone companies and by other telecommunications service providers; (3) Order only such contributions to the universal service support mechanism as are necessary to support universal service and fund administration of the mechanism; (4) Administer the universal service support mechanism in a competitively neutral manner, and in accordance with established commission rules and federal statutes; (5) Determine the financial effect on each universal service provider caused by the creation or a modification of the universal service support mechanism, and rebalance the effect through a one-time adjustment of equal amount to the rates of that provider; (6) When ordering a modification, include changes in the cost of providing universal service in the rebalancing required by subdivision (b)(5); (7) When performing its duties under subdivisions (b)(5) and (6), order no increase in the rates for any interconnection services; and (8) Consider, at a minimum: (A) The amount by which the embedded cost of providing residential basic local exchange telephone service exceeds the revenue received from the service, including the cost of the carrier-of-last-resort obligation, for both high- and low-density service areas; (B) The extent to which rates for residential basic local exchange telephone service should be required to meet the standards of § 65-5-108(c) ; and (C) Intrastate access rates and the appropriateness of such rates as a significant source of universal service support. (c) The commission shall monitor the continued functioning of universal service mechanisms and shall conduct investigations, issue show cause orders, entertain petitions or complaints, or adopt rules in order to assure that the universal service mechanism is modified and enforced in accordance with the criteria set forth in this section. (d) Nothing in this section shall be construed to require the commission to raise residential basic local exchange telephone service rates. (e) Any universal service support mechanism created pursuant to this part shall hereafter be known as the universal service program. To implement any such universal service program, there is established a special reserve account in the state's general fund to be funded and allocated in accordance with this section and rules promulgated by the commission. Such fund shall be known as the universal service program support mechanism fund. Moneys from the fund may be expended in accordance with such universal service program. Any moneys deposited in the fund shall remain in such account until expended for purposes consistent with such program and shall not revert to the general fund on any June 30 h this section and rules promulgated by the commission. Such fund shall be known as the universal service program support mechanism fund. Moneys from the fund may be expended in accordance with such universal service program. Any moneys deposited in the fund shall remain in such account until expended for purposes consistent with such program and shall not revert to the general fund on any June 30. Any interest earned by deposits in such account shall not revert to the general fund on any June 30 but shall remain in such account until expended for purposes consistent with the universal service program. Amended by 2013 Tenn. Acts, ch. 61,s 1, eff. 3/26/2013. Acts 1995, ch. 408, § 4; 2001, ch. 124, § 1; T.C.A. § 65-5-207. (a) In order to ensure the availability of affordable residential basic local exchange telephone service, the commission shall formulate policies, promulgate rules and issue orders which require all telecommunications service providers to contribute to the support of universal service. (b) The commission shall create an alternative universal service support mechanism that replaces current sources of universal service support only if it determines that the alternative will preserve universal service, protect consumer welfare, be fair to all telecommunications service providers, and prevent the unwarranted subsidization of any telecommunications service provider's rates by consumers or by another telecommunications service provider. To accomplish these objectives, the commission, if it creates or subsequently modifies an alternative universal service support mechanism, shall: (1) Restrict recovery from the mechanism by any telecommunications service provider to an amount equal to the support necessary to provide universal service; (2) Consider provision of universal service by incumbent local exchange telephone companies and by other telecommunications service providers; (3) Order only such contributions to the universal service support mechanism as are necessary to support universal service and fund administration of the mechanism; (4) Administer the universal service support mechanism in a competitively neutral manner, and in accordance with established commission rules and federal statutes; (5) Determine the financial effect on each universal service provider caused by the creation or a modification of the universal service support mechanism, and rebalance the effect through a one-time adjustment of equal amount to the rates of that provider; (6) When ordering a modification, include changes in the cost of providing universal service in the rebalancing required by subdivision (b)(5); (7) When performing its duties under subdivisions (b)(5) and (6), order no increase in the rates for any interconnection services; and (8) Consider, at a minimum: (A) The amount by which the embedded cost of providing residential basic local exchange telephone service exceeds the revenue received from the service, including the cost of the carrier-of-last-resort obligation, for both high- and low-density service areas; (B) The extent to which rates for residential basic local exchange telephone service should be required to meet the standards of § 65-5-108(c) ; and (C) Intrastate access rates and the appropriateness of such rates as a significant source of universal service support. (1) Restrict recovery from the mechanism by any telecommunications service provider to an amount equal to the support necessary to provide universal service; (2) Consider provision of universal service by incumbent local exchange telephone companies and by other telecommunications service providers; (3) Order only such contributions to the universal service support mechanism as are necessary to support universal service and fund administration of the mechanism; (4) Administer the universal service support mechanism in a competitively neutral manner, and in accordance with established commission rules and federal statutes; telephone companies and by other telecommunications service providers; (3) Order only such contributions to the universal service support mechanism as are necessary to support universal service and fund administration of the mechanism; (4) Administer the universal service support mechanism in a competitively neutral manner, and in accordance with established commission rules and federal statutes; (5) Determine the financial effect on each universal service provider caused by the creation or a modification of the universal service support mechanism, and rebalance the effect through a one-time adjustment of equal amount to the rates of that provider; (6) When ordering a modification, include changes in the cost of providing universal service in the rebalancing required by subdivision (b)(5); (7) When performing its duties under subdivisions (b)(5) and (6), order no increase in the rates for any interconnection services; and (8) Consider, at a minimum: (A) The amount by which the embedded cost of providing residential basic local exchange telephone service exceeds the revenue received from the service, including the cost of the carrier-of-last-resort obligation, for both high- and low-density service areas; (B) The extent to which rates for residential basic local exchange telephone service should be required to meet the standards of § 65-5-108(c) ; and (C) Intrastate access rates and the appropriateness of such rates as a significant source of universal service support. (A) The amount by which the embedded cost of providing residential basic local exchange telephone service exceeds the revenue received from the service, including the cost of the carrier-of-last-resort obligation, for both high- and low-density service areas; (B) The extent to which rates for residential basic local exchange telephone service should be required to meet the standards of § 65-5-108(c) ; and (C) Intrastate access rates and the appropriateness of such rates as a significant source of universal service support. (c) The commission shall monitor the continued functioning of universal service mechanisms and shall conduct investigations, issue show cause orders, entertain petitions or complaints, or adopt rules in order to assure that the universal service mechanism is modified and enforced in accordance with the criteria set forth in this section. (d) Nothing in this section shall be construed to require the commission to raise residential basic local exchange telephone service rates. (e) Any universal service support mechanism created pursuant to this part shall hereafter be known as the universal service program. To implement any such universal service program, there is established a special reserve account in the state's general fund to be funded and allocated in accordance with this section and rules promulgated by the commission. Such fund shall be known as the universal service program support mechanism fund. Moneys from the fund may be expended in accordance with such universal service program. Any moneys deposited in the fund shall remain in such account until expended for purposes consistent with such program and shall not revert to the general fund on any June 30. Any interest earned by deposits in such account shall not revert to the general fund on any June 30 but shall remain in such account until expended for purposes consistent with the universal service program. Amended by 2013 Tenn. Acts, ch. 61,s 1, eff. 3/26/2013. Acts 1995, ch. 408, § 4; 2001, ch. 124, § 1; T.C.A. § 65-5-207. ## Nearby sections - [Tenn. Code Ann. § 65-5-101 Power to fix rates of public utilities](https://www.frixlaw.com/law-library/statutes/STATE_TN_T65_C5_S65-5-101.md) - [Tenn. Code Ann. § 65-5-102 Commission may require filing of schedules](https://www.frixlaw.com/law-library/statutes/STATE_TN_T65_C5_S65-5-102.md) - [Tenn. Code Ann. § 65-5-103 Changes in utility rates, fares, schedules - Implementation of alternative regulatory methods to allow for public utility rate reviews and cost recovery in lieu of a general rate case proceeding](https://www.frixlaw.com/law-library/statutes/STATE_TN_T65_C5_S65-5-103.md) - [Tenn. 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