STATE OF CALIFORNIA ARNOLD SCHWARZENEGGER, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

March 4, 2005 Agenda ID #4373

TO: PARTIES OF RECORD IN RULEMAKING 04-12-001

This is the draft decision of Administrative Law Judge (ALJ) Karen Jones. It will not appear on the Commission's agenda for at least 30 days after the date it is mailed. The Commission may act then, or it may postpone action until later.

When the Commission acts on the draft decision, it may adopt all or part of it as written, amend or modify it, or set it aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.

Parties to the proceeding may file comments on the draft decision as provided in Article 19 of the Commission's "Rules of Practice and Procedure." These rules are accessible on the Commission's website at http://www.cpuc.ca.gov. Pursuant to Rule 77.3 opening comments shall not exceed 15 pages. Finally, comments must be served separately on the ALJ and the assigned Commissioner, and for that purpose I suggest hand delivery, overnight mail, or other expeditious method of service.

/s/ ANGELA K. MINKIN

Angela K. Minkin, Chief

Administrative Law Judge

ANG:jva

Attachment

190385

ALJ/KAJ/jva DRAFT Agenda ID #4373

Quasi-Legislative

Decision DRAFT DECISION OF ALJ JONES (Mailed 3/4/2005)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking Into Implementation of Federal Communications Commission Report and Order 04-87, As It Affects The Universal Lifeline Telephone Service Program.

Rulemaking 04-12-001

(Filed December 2, 2004)

DECISION ADOPTING NEW UNIVERSAL LIFELINE TELEPHONE SERVICE CERTIFICATION AND VERIFICATION PROCESSES

Table of Contents

Title Page

DECISION ADOPTING NEW UNIVERSAL LIFELINE TELEPHONE SERVICE CERTIFICATION AND VERIFICATION PROCESSES 2 2

I. Summary 2 2

II. Background 4 4

A. The FCC's Lifeline/Linkup Order 4 4

B. Implementation of FCC's Order 5 5

C. Implementation Timeline 6 6

D. Scope of Proceeding 8 8

III. Income-Based Eligibility Requirements 9 9

A. The FCC's Income-Based Requirement 9 9

B. Income Certification for Non-ETCs 12 12

C. Impact of Not Implementing the FCC's Order 13 13

D. Adoption of Income Certification Process 14 14

E. Acceptable income documentation 14 14

IV. Program-based Eligibility 16 16

A. Program-based Eligibility in the FCC's Order 17 17

B. The Need for Program-based Eligibility 19 19

C. When Does Certification Occur? 21 21

D. List of programs 22 22

V. Verification 24 24

A. Scope of Verification 25 25

B. Certification of Existing ULTS Customer Base 26 26

VI. Third-Party Administrator 27 27

A. Cost of Establishing TPA 30 30

B. Safeguarding Customer Information 31 31

C. Web-based system 32 32

D. The Role of CBOs 35 35

E. Exchange of Information Between the TPA and Carriers 38 38

IX. Auto Enrollment 39 39

VII. Miscellaneous Implementation Issues 42 42

VIII. Comments on Draft Decision 43 43

IX. Assignment of Proceeding 43 43

Findings of Fact 43 43

Conclusions of Law 46 46

ORDER 48 48

DECISION ADOPTING NEW UNIVERSAL LIFELINE TELEPHONE SERVICE CERTIFICATION AND VERIFICATION PROCESSES

I. Summary

California's Universal Lifeline Telephone Service (ULTS) program is, by far, the most comprehensive telephone lifeline service program in the United States. Currently we have 3.4 million authorized participants signed up for the ULTS program.¹

In this decision, we take the initial steps necessary to make certain that the state will continue to receive the $330 million in federal Lifeline/Link-Up funds to protect the financial viability of the ULTS program. Specifically, we adopt a program of income certification and annual verification, as required by the Federal Communications Commission's (FCC's) Lifeline Order.²

At the same time, we adopt program-based eligibility, to facilitate participation in the program by all eligible customers. Program-based eligibility is based on the customer's participation in specific means - tested programs. It is our goal to maximize to the greatest extent possible the number of eligible households that subscribe to ULTS. To that end we are adopting two options for low income customers-income documentation or program-based eligibility-to qualify for the ULTS program. We make other program changes to facilitate ULTS enrollment.

We have determined that the certification and verification processes adopted here should be performed by a Third Party Administrator (TPA). We have crafted a program that satisfies the FCC requirements, but also meets the universal service goals of the California Legislature and ensures continued strong enrollment by all segments of eligible populations, including the disabled population, non-English speakers, and those that may have difficulty documenting their income.

¹ Based on reimbursement requests from the telecommunications carriers, there were 3.427 million low-income households enrolled in ULTS in December 2004. ² Lifeline and Link-Up Report and Order and Further Notice of Proposed Rulemaking, WC Docket No. 03-109, FCC 04-87 (rel. April 29, 2004).