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PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Telecommunications Division

    RESOLUTION T-16353

    Public Programs Branch *

Date: October 21, 1999

R E S O L U T I O N

SUMMARY

This Resolution adopts the Universal Lifeline Telephone Service Marketing Board (ULTSMB) proposed contract (contract) with Deen and Black Public Relations (Deen and Black) required to implement an interim marketing campaign for the Universal Lifeline Telephone Service (ULTS) program. The contract will enable the ULTSMB to retain Deen and Black, an advertising agency, to develop and implement a comprehensive and competitively neutral marketing and outreach campaigns for the ULTS program for twelve (12) months, in the amount of $4,491,762.00. The campaign is intended to inform, promote, and increase the awareness of the ULTS program, consistent with our goal to achieve a 95% telephone subscribership rate for all residential customer groups, particularly among qualified low-income households in the state.

NOTICE/PROTESTS

Pursuant to D.98-10-050, the ULTSMB filed the proposed contract with the Commission on August 18, 1999. A notice of the filing was posted on the Commission Daily Calendar on August 26, 1999. No comments or protests have been received to date.

BACKGROUND

The Commission established the ULTSMB in D.96-10-066, as amended by D.97-12-105, as an entity responsible for marketing the ULTS program in a competitive environment. The focus of the ULTS marketing campaign is to achieve the ULTS program goal of providing basic telephone service to all qualifying low-income households. The ULTS program provides subsidized basic telephone service to qualifying low-income households. Presently, there are approximately 3.2 million ULTS subscribers in California. Specifically, the Commission required the ULTSMB: 1) to develop a budget for marketing the ULTS program; 2) to devise competitively neutral ULTS marketing plans; and 3) to oversee the implementation of ULTS marketing and outreach programs, designed to bring basic telephone service to qualifying households currently without phone service, and to close the gap between the total number of households with phone service who qualify for the ULTS program and the number of such households that actually use the program.

In compliance with D.97-12-105, the ULTS began its operations in January 1998 and is in the process of developing a request for proposal (RFP) for a market study of ULTS demographics in California. The information resulting from this study will be used to develop permanent marketing campaigns and outreach programs for the ULTS program sometime in the year 2000. Given the amount of time required to develop and implement RFPs and contracts for market study and outreach programs, and given that no marketing campaigns or outreach programs have been conducted for the ULTS program since October 1996, the Commission directed the ULTSMB in D.98-10-050 to implement a generic interim marketing program that does not require a detailed market study. D.98-10-050 also increased the ULTSMB annual budget cap from $5.0 million to $7.0 million for the 1999 calendar year in order to provide adequate funding for a market study and for the implementation of an interim marketing program. A budget of approximately $7.4 million was adopted for the ULTSMB for the 1999 calendar year in Resolution T-16245 on December 3, 1998.

Pursuant to D.98-10-050, the ULTSMB submitted a proposed RFP and draft contract for Commission approval on November 20, 1998. The proposed RFP and draft contract were designed to solicit bids from advertising agencies to create multi-lingual and multi-cultural marketing campaigns to increase ULTS program awareness. The Commission approved the proposed RFP and draft contract in Resolution T-16257, dated December 17, 1998. The ULTSMB released the RFP and draft contract for bids on February 18, 1999. Using the State-established RFP and contracting processes, the ULTSMB selected Deen and Black on May 3, 1999 to serve as the vendor for the ULTS interim marketing and outreach program.

DISCUSSION

The ULTSMB proposed contract with Deen and Black will enable Deen and Black to design and implement a marketing campaign for the ULTS program for approximately twelve (12) months in the amount of $4,491,762.00. Specifically, the contract would require Deen and Black to develop competitively neutral marketing campaigns to promote the ULTS program among low-income households. Consistent with our requirements in Resolution T-16257, the contract calls for the development of a marketing campaign that provides ULTS program awareness to all low-income households for all demographic groups in the state, particularly the African American, Cambodian, Filipino, Hispanic, Hmongs, Korean, Laotian, and Vietnamese groups with low-income households for which current data suggests have lower telephone penetration rates in the state. The marketing plan includes the design of language and culture specific advertising and outreach programs and would include the use of mass-media advertising, such as television, radio, print, radio, mass mailing and community-based outreach programs. The plan also includes the use of the 800 Call Receipt Center (EECC) currently in use at the Commission to provide customer education on the electric service deregulation. The toll-free 800-referral system will be used to provide potential ULTS customers with information on eligibility and how to subscribe to the ULTS program.

After review of the ULTSMB proposed contract with Deen and Black, we find that the proposed contract contains the relevant elements of a contract, it is reasonable, and meets the state contracting rules. However, we will adopt the ULTSMB proposed contract subject to the following clarifications:

Contract Term and Budget

The ULTSMB proposed contract with Deen and Black is for a term of twelve (12) months, from November 1, 1999 through October 31, 2000. We will modify this date to state that the contract shall be in effect for a period of (12) months, beginning November 1, 1999 or from the effective date of this resolution, whichever comes later. We will also allow the ULTSMB to extend the term of this contract, if necessary, up to the time a permanent ULTS marketing campaign is implemented,1 by giving notice to Deen and Black and to the Director of the Telecommunications Division not less than ninety (90) days before the end of the initial contract term.

The maximum amount of this contract is $4,491,762.00. The ULTSMB shall not exceed this contract amount unless specifically authorized by the Commission. Upon a request by the ULTSMB to extend the term of this contract, the ULTSMB may subsequently request a change in the contract amount by submitting a notice to the Director of the Telecommunications Division, who shall then prepare a Resolution for Commission consideration.

Members of various Community Based Organizations (CBOs) currently serve on the ULTSMB. Some of these CBOs have affiliations with other various local, state and national CBOs whose participation as contractors or service providers in the ULTS marketing program could conflict with the goals and objectives of the ULTSMB marketing efforts. To avoid potential conflict of interest, we stated in D.97-12-105 that no organization may receive funds from the ULTSMB if the organization has a representative on the ULTSMB.2 However, in Resolution T-16257, we urged the advertising agency (or prime contractor) selected by the ULTSMB for the ULTS marketing program to employ the services of CBO(s) as subcontractors in order to ensure the effectiveness of the marketing campaign and outreach activities.3

We believe that CBOs will provide essential functions in customer outreach and we encourage their participation in the ULTS marketing efforts. Therefore, we again urge Deen and Black to employ the services of CBOs as subcontractors in this ULTS marketing program. However, we will continue to exclude CBOs from serving as prime contractors for all ULTS marketing programs and from receiving funds directly from the ULTSMB. In addition, we will require CBO representatives on the ULTSMB to abstain from deliberating and/or voting on matters before the ULTSMB which directly affect their respective organizations.

COMMENTS

The draft resolution of the Telecommunications Division in this matter was mailed on September 21, 1999 in accordance with the PU Code Section 311(g) to the parties in OIR 98-09-005, OII/OIR 95-01-020/021 and OII 83-11-05. Notice was mailed to all telecommunications carriers advising them of the availability of this draft resolution in the Commission web site: www.cpuc.ca.gov. No comments or protests were received.

FINDING OF FACTS:

1. The Universal Lifeline Telephone Service Marketing Board (ULTSMB) proposed contract with Deen and Black Public Relations for the ULTS interim marketing campaign for twelve (12) months in the amount of $4,491,762.00, is reasonable and should be adopted.

2. The ULTSMB proposed contract meets the State contracting rules.

3. To ensure the effectiveness of the ULTS marketing efforts, it is reasonable to employ the services of Community Based Organizations (CBOs) as subcontractors for the ULTS marketing and outreach programs.

4. To avoid potential conflicts of interest, we will continue to exclude CBOs, their members, and affiliates as prime contractors for all ULTS marketing and outreach programs.

5. To avoid potential conflicts of interest, we will continue to exclude CBOs from receiving funds directly from the ULTMB.

6. To avoid potential conflicts of interest, it is reasonable to require CBO representatives on the ULTSMB to abstain from deliberating and/or voting on matters before the ULTSMB which directly affect their respective organizations.

THEREFORE, IT IS ORDERD that:

1. The Universal Lifeline Telephone Service Marketing Board (ULTSMB) contract with the Deen and Black for the ULTS interim marketing campaign for twelve (12) months, for the sum of $4,491,762.00, is adopted subject to the clarifications set forth in this Resolution.

2. The ULTMB contract with the Deen and Black for the ULTS interim marketing campaign shall be in effect for a period of (12) months, beginning November 1, 1999, or from the effective date of this resolution, whichever comes later.

3. The maximum amount of this contract is $4,491,762.00. The ULTSMB shall not exceed this contract amount or extend the term of this contract, unless specifically authorized by the Commission.

4. To extend the term of this contract and/or to exceed the contract amount of $4,491,762.00 authorized herein, the ULTSMB shall submit a notice to Deen and Black and to the Director of the Telecommunications no less than ninety (90) days before the end of the initial contract term. The Director of the Telecommunications shall then prepare a Resolution for Commission consideration to extend the term of this contract and/or to exceed the contract amount authorized herein.

5. To avoid conflicts of interest, Community Based Organizations (CBOs), with representatives on the ULTSMB, shall not serve as prime contractors, but may participate as subcontractors for all ULTS marketing programs.

6. To avoid conflicts of interest, CBOs with representatives on the ULTSMB shall not receive funds directly from the ULTSMB.

7. To avoid conflicts of interest, CBOs with representatives on the ULTSMB shall abstain from deliberating and/or voting on matters before the ULTSMB, which directly affect their organizations.

8. The Telecommunications Division shall post this Resolution on the Commission web site, www.cpuc.ca.gov, within 5 business days from the effective date of this Resolution.

9. The Executive Director shall serve the Notice of Availability contained in Appendix A of this Resolution on all parties on the service list of the universal service proceeding in OIR 98-09-005, OII/OIR 95-01-020/021 and OII 83-11-05.

This Resolution is effective today.

I certify that this Resolution was adopted by the Public Utilities Commission at its regular meeting on October 21, 1999. The following Commissioners approved it:

APPENDIX A

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFONIA

NOTICE OF AVAILABILITY

OF RESOLUTION T-16353

This is to notify you that Resolution T-16353 is available for viewing and downloading from the Commission's web site, www.cpuc.ca.gov/telecommunications/resdtail.htm. This resolution was adopted by the Commission at its regular meeting on October 21, 1999. This Resolution adopts a contract between the Universal Lifeline Telecommunications Service (ULTS) Marketing Board and Deen and Black Public Relations (Deen and Black). The contract requires Deen and Black to develop and implement an interim marketing and outreach campaign for the ULTS program for twelve (12) months, beginning November 1, 1999, in the amount of $4,491,762.00.

Parties may also obtain a hard copy of this Resolution by contacting the Commission's Telecommunications Division at (415) 703-3051.

1 Pursuant to D.97-12-105, the ULTSMB is developing an RFP that will be used to conduct a market study of ULTS demographics in the state. The results of this study will be used to develop and implement a permanent marketing campaigns and outreach programs for the ULTS sometime in the year 2000.

2 D.97-12-105, p. 22.

3 Resolution T-16257, p. 5. In D.97-12-105, we stated that if a revision to the conflict-of-interest rules applicable to the ULTSMB is warranted, we shall issue a decision or resolution, as appropriate, to implement the change.

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