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COM/MP1/avs Date of Issuance 11/18/2011
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking into the Review of the California High Cost Fund-A Program.
PUBLIC UTILITIES COMMISSION
NOVEMBER 10, 2011
SAN FRANCISCO, CALIFORNIA
ORDER INSTITUTING RULEMAKING REGARDING
CALIFORNIA HIGH COST FUND-A PROGRAM
TABLE OF CONTENTS
TABLE OF CONTENTS
APPENDIX A - Wireless Subscribership Facts
APPENDIX B - CHCF-A Support to Small ILECS (In Dollars) 1998-2010
APPENDIX C - Small ILECs' Revenue Requirement
Requests to the CHCF-A (In Dollars)
APPENDIX D - Number of Access Lines per Small ILEC
APPENDIX E - History of CHCF-A Surcharge Rate
APPENDIX F - Communications Expenditures per Household
per Month in Dollars
APPENDIX G - CHCF-A Small ILECs' Basic Residential
Service Rates as of February 2010
APPENDIX H - Proceeding Flow Chart
APPENDIX I - Small ILECs' Key Financial Statistics
CHCF-A Subsidized vs. Unsubsidized
APPENDIX J - Comparison of High Cost Funds A and B
With this Order Instituting Rulemaking (OIR), the Commission begins a review of the California High Cost Fund-A (CHCF-A) program. This OIR was issued pursuant to the Commission's Decision (D.) 10-02-016.1 A detailed review of the program is warranted in response to market, regulatory, and technological changes since the California High Cost Fund program was first established in 1987. In this OIR, we seek comment on how the program can more efficiently and effectively meet its stated goals. To the extent deficiencies are identified, we solicit constructive proposals on whether the program should continue and if so, how should it be modified.
In Order Instituting Rulemaking (R).06-06-028 and the resultant D.07-09-020,2 the Commission recognized that the California telecommunications market has significantly changed since the last modifications were made to the high cost fund programs. When the High Cost Fund programs were created over two decades ago, landline telephone service was the only widely-available form of affordable telecommunications technology. Now consumers are increasingly communicating in ways other than through traditional landline telephones. For example, in 1987 there were less than 900,000 wireless subscribers in the entire country.3 By the end of 2000, wireless subscribership in America exceeded 100 million and digital wireless users outnumbered analog subscribers.4 By June of 2010, there were approximately 293 million wireless subscribers in the U.S. who now also use their wireless devices to access other services such as text messaging5 (see Appendix A), email, internet access, and other data applications. In addition to wireless technologies, Internet-based communications including Voice over Internet Protocol (VoIP) have become widely available and have greatly expanded the range of affordable telecommunications services offered to consumers in California.
In this context, the CHCF-A program should be modified to reflect the modernization of telecommunications services. Furthermore, the current CHCF-A subsidy mechanism now faces new challenges since major Incumbent Local Exchange Carriers' (ILECs) rates became fully deregulated in 2011. We must determine whether the program remains necessary to achieve the fundamental statutory goal of enhancing universal service and, if so, what changes are necessary to further this goal in today's telecommunications environment where varied technologies compete to fulfill the communication needs of consumers.
The CHCF-A is funded by a surcharge assessed on an end-user's billed intrastate telecommunications services, therefore we have an obligation to ensure that the funds obtained from ratepayers are being spent wisely.6 To this end, this rulemaking seeks comment on several questions, including the following fundamental question:
What is the most appropriate, efficient, and effective means of minimizing rate disparity and promoting California's goal of providing universal service?7
1 D.10-02-016 Ordering paragraph 4: The Communications Division shall draft an Order Instituting Rulemaking for our consideration to be placed on the Commission's agenda within 90 days of the effective date of this decision to address all relevant issues regarding high-cost support for Small Local Exchange Carriers.
2 R.06-06-028, Order Instituting Rulemaking into the Review of the California High Cost Fund B Program. D.07-09-020, Interim Opinion Adopting Reforms to the High Cost Fund-B Mechanism.
3 CTIA Survey Mid Year 2010.
5 CTIA Survey Mid Year 2010.
6 Public Utilities (Pub. Util.) Code § 709.
7 See D.07-09-020, Interim Opinion Adopting Reforms to the High Cost Fund-B Mechanism, Ordering Paragraphs (OP) 6 and 7.