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COM/JB2/tcg Date of Issuance 11/23/2010
Decision 10-11-033 November 19, 2010
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Rulemaking on the Commission's Own Motion to Review the Telecommunications Public Policy Programs.
(Filed May 25, 2006)
DECISION ADOPTING FORWARD LOOKING MODIFICATIONS TO
CALIFORNIA LIFELINE IN COMPLIANCE WITH THE MOORE
UNIVERSAL TELEPHONE SERVICE ACT 1
1. Summary 2
2. Background 4
3. Program History, and Technological and Regulatory Change 6
3.1. California LifeLine Today 12
4. Positions of the Parties 15
4.1. Comments in Response to 2007 Scoping Memo 15
4.2. Opportunity to Update Information and Provide Supplemental Comments 29
5. Discussion 34
5.1. Methodology to Calculate California LifeLine Subsidy 39
5.1.1. Delinking LifeLine Price from Basic Residential Service
22.214.171.124. Set Price Option 41
126.96.36.199. Floating Subsidy Option 42
188.8.131.52. Specific Support Option 44
5.1.2. Adopted Rate Scheme: Specific Support Amount 46
5.2. Voluntary Participation in California LifeLine for Non-Traditional Carriers 66
5.2.1. AB 2213 73
5.3. California LifeLine Discounts for Data Services for DDTP
Equipment Recipients 74
5.4. Expanded Discount - Matching California Alternate Rates
for Energy's (CARE) 200% Federal Poverty Guideline 80
5.5. Reimbursement of Administrative Costs and Bad Debt Losses 82
5.5.2. Calculating Allowing Administrative Costs 86
5.5.3. Reimbursement of Administrative Costs and Bad Debt
5.5.4. Discontinuing the Payment of Bad Debt Losses 92
5.5.5. Administrative Costs and Bad Debt Losses 93
5.6. Pre-Qualification 94
5.7. Non-ETC Make-Up 95
5.8. Consumer Education Plan 101
6. Next Steps 102
7. Comments on Proposed Decision 106
8. Assignment of Proceeding 122
Findings of Fact 122
Conclusions of Law 132
DECISION ADOPTING FORWARD LOOKING MODIFICATIONS
TO CALIFORNIA LIFELINE IN COMPLIANCE WITH
THE MOORE UNIVERSAL TELEPHONE SERVICE ACT
In 2006, the Commission opened this Rulemaking to evaluate whether California's universal service public policy programs should be updated to reflect changes in the telecommunications industry. Through this Rulemaking, the Commission set out to reform California LifeLine in order to guarantee high-quality communication services were affordable and widely available to all. This decision adopts a new methodology for providing LifeLine support to consumers and in doing so ensures that the Commission will continue to monitor impacts on ratepayers, make sure that the basic rate remains just and reasonable, and that the LifeLine rate remains affordable.
This decision recognizes significant technological and regulatory changes in the telecommunications industry and the flexibility of the statutory structure underlying the Moore Universal Telephone Service Act,1 which we now refer to as the California LifeLine Program (California LifeLine or LifeLine).2 Our work over the past four years to evaluate whether and how to reform California LifeLine has proved quite prescient as the pace of change that drove the rulemaking has only increased since 2006. Consumers have accelerated their use of communication options that have never been subject to traditional utility regulation and have not participated in the California LifeLine Program. A challenge for the Commission is how to make those communication services that consumers are choosing available to LifeLine customers. This decision clarifies that non-traditional carriers may participate and offer their services to consumers eligible for California LifeLine.
This decision targets reforms to the most pressing problems confronting the California LifeLine Program and adopts the following changes to the program:
· "De-links" California LifeLine from the AT&T basic rate structure in order to ensure ongoing compliance with Section 874 of the Public Utilities Code, and determines that a Specific Support Amount methodology is the best option to continue to meet the goals of the Moore Act and our overall universal service goals.
· Sets a Specific Support Amount at 55 percent of the highest basic rate of the State's URF carriers of last resort. Each carrier will receive the Specific Support Amount (with some exceptions), and the initial Specific Support amount shall be set at $11.50, effective July 1, 2011.
· Each carrier's LifeLine rate will be capped at no more than 50 percent of its basic service rate.
· Each carrier may reset its LifeLine rate on an annual basis. Each carrier's LifeLine rate will be calculated by subtracting the Specific Support amount and any applicable Federal Lifeline and Linkup subsidy from its basic rate.
· Caps the current California LifeLine rate at $6.84 for the next two years for most customers.
· Eliminates the current price floor and allows carriers to charge customers less than AT&T's 2006 basic service rates. However, this decision also requires carriers offering LifeLine to charge LifeLine customers at least $5 per month (exclusive of tribal customers receiving federal Tier 4 subsidy).
· Expands the LifeLine program to include data services for consumers that receive wireless equipment through the CPUC's Deaf and Disabled Telecommunications Program (DDTP).
· Allows non-traditional carriers, such as wireless carriers and voice over internet protocol (VoIP) companies, to participate in the California LifeLine program consistent with current requirements. This decision establishes a separate phase to consider implementation changes needed to facilitate participation in LifeLine for non-traditional carriers, including data services for DDTP - eligible consumers, wireless carriers, and other non-traditional carriers.
· Eliminates excess payments to carriers for administration, bad debt, and to make up for forgone Federal support.
1 The formal name specified in Pub. Util. Code § 871 for the program which has come to be known as the "California LifeLine Program."
2 The entire program is established in Pub. Util. Code §§ 871-884.