II. Parameters

Any review of the programs must begin with the original purposes and goals of the program, as articulated by the Legislature in statutes and in our decisions adopting the program. We seek comment on whether the programs are meeting their respective statutory purposes and requirements. To the extent deficiencies are identified, constructive remedial proposals should be provided. Reaching customers potentially eligible for the programs and regular reporting requirements are also topics to be addressed.

When the programs were created, landline telephone service provided by monopoly service providers was the only widely-available form of telecommunications service. Since then, new technologies, such as wireless telephones and Internet-based communications, such as Voice over Internet Protocol (VoIP) have greatly expanded the range of telecommunications services available. In this context, the statutory goals and specifications of the Telecommunications Public Policy Programs may require modernization. The first inquiry is whether the programs remain necessary to achieve the fundamental statutory goal of enhancing universal service and, if so, whether changes are necessary to further this goal in today's competitive and technologically varied telecommunications environment.

At the core of our review of these programs is our duty to be accountable to the people of California. These programs are funded by surcharges on the telephone bills of Californians. We will ensure that the funds obtained from the surcharges are being wisely spent to provide the most advanced telecommunications services to all Californians. Our review will seek ways to streamline program administration and increase efficiency. A demonstration of cost-effectiveness and progress toward defined goals will be required for each program. We do not foresee the need to increase the total program budgets. We welcome proposals for prudent budget reductions or to redeploy funds, whether within or among programs, to better address current needs.

Our review of California's Telecommunications Public Policy Programs must recognize the important role of similar programs authorized by the Federal Communications Commission. These federal programs complement and provide significant funding for California's Programs. For example, the federal E-Rate Program provided more than $220 million in support to California schools and libraries in 2005, and the LifeLine/Link-Up program provides 55% of the total funding for the California LifeLine program. The federal program, however, provides these funds only when the low-income customer is served by a carrier that is registered with the federal program.2 Currently, only 11% of California's customers are not served by registered carriers, but the absence of federal fund contributions is made up with California LifeLine revenue. Consequently, these carriers cost the California LifeLine program approximately twice as much to serve a LifeLine customer as a federally registered carrier. As this example illustrates, deviations from federal requirements can have significant ramifications, and any changes to California Programs must be carefully reviewed with federal requirements in mind.

2 Such a carrier is referred to as an ETC, which is an acronym for Eligible Telecommunications Carrier.

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