9. Should the Nominal $75 Application Fee
Be Increased? Should We Require a Minimum
Annual User Fee, and If So, How Much Should
That Annual Fee Be?

DRA and UCAN support the OIR's proposal to increase the current registration fee to $500 to help offset the additional expense for expanded background checks and reviews of civil and regulatory records. According to UCAN, this fee increase will not deter law-abiding applicants from registering. UCAN also supports the OIR's proposal to adopt a minimum annual fee to fund Commission regulatory activities and to help reduce the number of NDIECs who are not actually providing services.

DRA states that it has surveyed other states and found application fees ranging from $0 to $1000, and that increasing the application fee for a new license to $500 will not be a substantial burden to registration applicants. DRA also recommends that all registrants, including those reporting no intrastate revenues, pay a $300 license renewal user fee.

CALTEL states that the OIR's proposals, including the proposal to require license renewal and to charge renewal fees, impose a penalty on existing NDIECs without evidence of wrongdoing.

We will increase the fee to obtain or transfer a license to help offset the costs of processing registration license applications, including the additional costs associated with expanded background checks. However, we will not at this time increase the application fee to $500. Instead, we find that it is reasonable to increase the application fee for new and transferred licenses to $250 until we have more experience with the revised rules adopted in this Decision. Increasing the application fee to $250 for new and transferred registration licenses will not be a substantial burden on registration applicants and will help offset the costs of processing registration license applications.

We also adopt the OIR's proposal to establish a minimum annual user fee of $100 for registration licensees. A minimum annual user fee for registration license holders will ensure that all registrants contribute a fair share toward the Commission's annual operating budget.

Currently, the Commission determines annually the user fee to be paid by the telecommunications carriers based on a carrier's gross intrastate revenue, excluding inter-carrier sales, equipment sales and directory advertising.³⁰ The current user fee is set at a rate of 0.18% of gross intrastate revenues.³¹ However, carriers, including registrants, reporting no intrastate revenues pay no fee, even though the Commission incurs ongoing costs to maintain records and databases, and to perform other regulatory activities that benefit those carriers. Therefore, establishing a minimum annual user fee of $100 for registration license holders to help fund Commission regulatory activities is reasonable.

Registration license holders must pay an annual user fee based on the Commission-established rate in effect at the time (currently set at 0.18% of gross intrastate revenue) or $100, whichever is greater. This minimum annual user fee of $100 applies only to registration license holders at this time.

Although this Decision approves an increase from $75 to $250 for the NDIEC registration application fee, we believe that the application fees for all telecommunications carriers, including CLCs, NDIECs that obtained CPCNs through formal application, and others, should be increased from $75 to $250. We also believe that the minimum annual user fee of $100 for registration license holders established in this Decision should be applicable to all telecommunications providers.

The OIR made all other telecommunications carriers respondents to this rulemaking so that they have notice that proposed changes adopted in this rulemaking may be extended in the future to competitive local exchange carriers CLCs, NDIECs that obtained CPCNs through formal application, or others. We intend to consider increasing the application fee for telecommunications carriers to $250 and to establish a minimum annual user fee of $100 for all telecommunications providers, and will seek legislative authority to the extent required to implement these proposed fee increases.

In its comments on the PD, DRA recommends that the Commission explicitly delegate authority to the Director of the Communications Division to administratively revoke or suspend a registration license, effective immediately, without the need for further Commission action, if a registration license holder fails to pay the annual user fee, and to administratively reinstate a registration license holder's operating authority upon the payment of the fee and a late fee.

The Commission has not had the opportunity to carefully consider the recommendation, and does not adopt it.

³⁰ See Pub. Util. Code §§ 401-10, 431-435.

³¹ See Resolution M-4819.