Phone bills may drop about 1 percent starting in January if a proposed $144 million cut to the state's telecom taxes is approved Friday as expected.

The Texas' Universal Service Fund has some of the highest telecom taxes in the nation.

The proposed cut was the result of a compromise agreement between the Public Utilities Commission, which wanted an even larger reduction, and the phone companies, which wouldn't accept anything higher without a legal fight.

If the PUC approves the negotiated cut at its Friday meeting, it will be the second reduction to Texas' telecom taxes. The first came last year, when legislators killed the Telecommunications Infrastructure Fund that added 1.25 percent to telecom bills.