Phone companies, regulators and public interest groups lauded a recent Public Service Commission ruling protecting Lifeline phone service for 16,000 Utahns who may have lost the service under a Utah Supreme Court decision.

In a May 13 ruling, the PSC, Contel and US WEST Communications, formerly Mountain Bell, agreed to continue Lifeline, which offered phone service to as many as 16,000 low-income Utahns, on a "company-specific basis."Although 36 phone users serviced by smaller, exempted phone companies will lose service under the ruling, "damage control has done a good job in keeping the vast majority of people in service," Utah Issues Director Bill Walsh said.

The agreement follows a Supreme Court decision ruling Lifeline's funding mechanism, which pooled surcharges from all telephone ratepayers to support the program, was unlawful.

US WEST successfully challenged the requirement, arguing that because they had more ratepayers, they were unfairly forced to subsidize the other companies' low-income customers.

Although the court praised the program's intent, it ruled April 28 the funding mechanism had "unequal effect" on US WEST, Justice Christine R. Durham wrote in the majority opinion.

PSC Chairman Ted Stewart feared the ruling would kill the program, but a May 10 meeting with industry representatives amended the rule so that only companies with more than 5,000 ratepayers will have a Lifeline program.

"We have been working with the commission to come up with a reasonable solution to the Supreme Court ruling, and we're pleased that we could find a solution that would keep Lifeline service with no interruption," said US WEST spokesman Ken Hill.

Stewart called the agreement an equitable solution "allowing Lifeline to stand on its own." Without the ruling, the Legislature may have had to step in to study a means to fund the program.

Under the ruling, which the PSC made effective immediately so as not to "threaten the public safety," smaller telephone companies with fewer than 5,000 ratepayers will be exempt from participating in the program.

To support the program, ratepayers pay a surcharge into a fund administered by the PSC, Commission Chairman Ted Stewart said.

US WEST will lower the surcharge from 18 cents, the charge established when the program was born in 1986, to 10 cents, because there were fewer Lifeline participants than expected, Hill said.

Eligibility requirements for the program include being eligible for one of many public assistance programs, the commission said.

"There are a lot of people who definitely need a phone, so it's really important that they maintain what services they have," Walsh said.

Walsh criticized US WEST for challenging the 1986 law that established the surcharge pool.

"I just wonder how much Mountain Bell (US WEST) spent to take this through the court. . . . It sure seems the community would have been better served by helping people who can't afford it to have phones," he said.

But Hill defended the phone company, saying US WEST has always been in favor of supporting Lifeline but was against the surcharge pool because it created a potentially bad precedent for future funding mechanisms.

"We presented the concept in the first place. . . . The only question we have with it is in terms of the funding mechanism," he said.