8. Assignment of Proceeding
John A. Bohn is the assigned Commissioner and Maribeth A. Bushey is the assigned Administrative Law Judge in this proceeding.
1. California LifeLine has helped achieve the universal service goal of a 95% penetration rates for many years.
2. The California LifeLine Program should be updated to reflect the principle of competitive and technological neutrality consistent with Federal and State law.
3. The Commission has extended the basic rate cap until January 1, 2011.
4. Based on the information we have available to us, it appears that the market has yielded a system of rates that approximates the costs of providing the service.
5. Based on information we have available to us, it appears that market-based rate regulation has produced just and reasonable basic service rates.
6. The Commission has closely monitored all of the rate changes and will continue to closely watch the cost of basic service to ensure it remains just and reasonable.
7. There is no evidence that usage patterns of low-income customers differ from those of other customers, or that competition in the voice communications market will not benefit low-income customers.
8. The goals of the Moore Act and California's universal service goals will be fulfilled by modifying California LifeLine to use a Specific Support Amount methodology.
9. Under the Specific Support Amount methodology, the Commission would designate a state monthly subsidy amount, initially $11.50, to be paid to carriers to directly reduce the monthly bills of California LifeLine customers
10. California LifeLine will be a larger program with or without changes; however, fixing the current LifeLine price in perpetuity is more likely to result in the most expensive option to consumers.
11. Commission staff has the ability to annually review the basic rate amounts charged by URF COLRs in California and establish a Specific Support Amount.
12. URF COLRs will submit basic rates as of July 31, 2011, to the Director of the Communications Division by August 1, 2011.
13. Commission staff has the ability to develop a proposal for a) a method for determining the highest basic rate of the URF COLRs, b) a process for making the annual changes, and c) the Specific Support Amount for 2011 and each year thereafter.
14. Commission staff can review rate changes on an ongoing basis, and adjust the Specific Support Amount as necessary to ensure compliance with the 50% subsidy requirement in the Moore Act.
15. An initial $11.50 California LifeLine support amount for July 2011 is calculated by multiplying 55% by 20.91 (Verizon's current basic rate) and rounding down to the nearest five cent increment because the 55% calculation is within a penny of a five cent increment.
16. An $11.50 California LifeLine support amount is consistent with the amount of funding currently provided to carriers and will result in a total fund size within historical levels.
17. The actual reimbursable amount for each carrier may be less than the calculated California LifeLine support amount depending on the rate charged to the California LifeLine customer after deducting the matching Federal support, currently $3.50.
18. California LifeLine support may be provided to a carrier up to an amount such that a California LifeLine subscriber has a resulting minimum $5.00 rate, taking the Federal subsidy amount into account first.
19. Carriers will establish prices based solely on market forces after 2010 and the Specific Support Amount will be established by the Commission on an annual basis in order to maintain compliance with the California LifeLine statutory scheme.
20. There is no reason to maintain the current price floor on 1MR and 1FR service for carriers that are not rate-of-return regulated.
21. A Specific Support Amount, which is initially $11.50, California LifeLine subsidy, whether or not coupled with the matching federal support, will ensure continued high subscribership levels of low-income customers in California.
22. Carriers should charge LifeLine customers at least $5.00, and they will not be reimbursed beyond the payment floor.
23. The LifeLine payment floor may go down over time if carriers lower their rates, but it should not increase above the initial $5.00 amount.
24. The Commission will adjust the resulting LifeLine rate amount to the lesser of $5.00 or the half the lowest reported basic rate on an annual basis.
25. Low-income consumers who wish to subscribe to Lifeline measured service should be allowed to apply an amount up to the Specific Support Amount, which is initially of $11.50, to reduce the charge for carrier's regular measured service to an initial payment floor of $2.50.
26. Allowing carriers participating in the LifeLine Program to change their LifeLine rate once a year provides a reasonable amount of stability and certainty to LifeLine customers.
27. This proceeding's record contains overwhelming evidence supporting the expansion of LifeLine in a technology neutral manner because low-income consumers deserve the same choice of technology and services they prefer as all other customers.
28. The Commission has controls in place today and Commission staff can adopt additional controls if they are necessary to ensure only one LifeLine service is provided to a subscriber's principal place of residence.
29. All carriers participating in the LifeLine program, including all non-traditional carriers such as wireless and VoIP carriers, must pay public purpose program surcharges.
30. Commission staff has the authority to revise administrative procedures pursuant to the direction provided in this decision to help ensure the efficient operation of the California LifeLine Program and address any California LifeLine program irregularities or other issues.
31. Commission staff authority includes determining the type and frequency of information provided by carriers to consumers to enroll and participate in the program.
32. Commission staff has the authority to initiate carrier program compliance audits, and adjust the percentage of program participants audited for all carriers participating in the LifeLine program.
33. The circumstances of residential use are substantially different than they were in 1996 and now encompass wireless services.
34. Wireless services are commonly found in residential use, and a substantial number of residential users use only wireless service.
35. There is already significant wireless carrier overlap with many of the rate-of-return carriers and the Commission can foresee no circumstance under which our universal service goals or objectives would be furthered by eliminating the ability of some consumers to choose alternative LifeLine providers.
36. If wireless,VoIP and other non-traditional carriers wish to voluntarily participate in the California LifeLine program, they will report their rates and charges for services offered to LifeLine eligible customers with the filing of each LifeLine claim form.
37. Imposing a requirement in this order that carriers must comply with our rules in order to provide LifeLine service does not constitute traditional "regulation" of those carriers. Rather, our authority to regulate providers derives from statutory and common law sources. Here, we seek only to ensure both consistency and competitive fairness in the delivery of universal service.
38. In the public participation hearings, the Commission was repeatedly informed that disabled persons have acute needs for various types of wireless services, and that some of the required services are expensive, and particularly difficult for disabled, low-income persons to afford.
39. Customers who meet the eligibility requirements for both the DDTP and the California LifeLine Programs have particular needs that justify a targeted subsidy.
40. The record supports allowing customers who meet the eligibility requirements for both the DDTP and California LifeLine Programs to be allowed to apply their California LifeLine discount, initially up to $11.50, to non-voice communication services.
41. Data-only services that include text messaging are readily available from most wireless providers and even some wireline providers.
42. Given the impact of the pilot program and the addition of the LifeLine discount, it is reasonable to remove the pilot status from the wireless equipment program and make the wireless equipment program a permanent part of the Deaf and Disabled Telecommunications Program/California Telephone Access Program.
43. The dual eligibility requirement for purposes of the equipment program was a requirement of the pilot. The DDTP equipment program should use the results of the pilot in acquiring and distributing wireless equipment as part of the normal operation of the program.
44. At the end of 2007, 2.7 million households subscribed to California LifeLine and almost 3.7 million households were enrolled in CARE.
45. Seventy-five percent of eligible households are enrolled in California LifeLine.
46. In 2005 the low-income energy programs expanded eligibility to 200% of the federal poverty guideline as a temporary measure.
47. The LifeLine income-based criteria are no longer directly tied to the 150% of the poverty guidelines as the Communications Division is required to adjust the Household Income Limitation requirement for California LifeLine every April 15 based on the change in the Federal Consumer Price Index - Urban Area (CPI-U).
48. The LifeLine income-based criteria should not be further changed until the outcome of the review the Commission is conducting of the interim CARE income-based criteria.
49. Carrier administrative costs had gotten so far out of control that in 2003 the Commission capped the administrative fee for Competitive Local Exchange Carriers (CLECs).
50. There is no longer any need or requirement to have a separate California LifeLine recovery for carrier administrative expenses, however, continuing to reimburse providers at some basic level will provide benefits to low income consumers and all consumers in general.
51. The Commission has been concerned by the considerable amount of Commission resources necessary to review and audit administrative cost reimbursement claims.
52. Commission staff has had concerns about the apparent misuse of the administrative expense component of the LifeLine claim program and denied numerous claims for reimbursement submitted by carriers.
53. The Commission has shifted administrative costs from carriers to California LifeLine as the Commission has taken on more administrative burden.
54. Simplifying the separate tracking of administrative costs by carriers and the associated cost to the program of Commission review and audit of those costs will result in tangible benefits to consumers.
55. Costs associated with administration of LifeLine service are a carrier obligation of providing service in California.
56. The California LifeLine Administrator (CertA) collects and vets customer counts by carrier and can provide that information for claims purposes.
57. The expenses associated with explaining available rate schedules to prospective customers, especially subsidized rate schedules, benefit customers.
58. Carrier claims will apportion the customer counts by type of service in order to determine the total amount claimed for any month.
59. A small group of carriers have very high bad debt claims, while large carriers do not claim bad debt against the fund.
60. Full reimbursement of bad debt losses is not consistent with our goal to ensure funds obtained from the surcharges are being wisely spent with efficient administration.
61. Adopting a Specific Support Amount that encompasses all carriers will simplify Commission oversight and carrier implementation of California LifeLine, as well as provide incentives for efficient administration for all participants.
62. Reimbursement for administrative costs from the California LifeLine Program should be modified once the Specific Support Amount methodology is in place on July 1, 2011.
63. Fees, taxes and surcharges significantly impact the affordability of phone service. Fees taxes and surcharges related to the customers' LifeLine billings should continue to be reimbursed by California LifeLine.
64. Separate reimbursements for federal excise and state/local taxes related to customers' LifeLine billings should not end once the Specific Support Amount methodology is in place on July 1, 2011.
65. Carriers should have a reasonable period after July 1, 2011 to submit claims for reimbursement of administrative costs incurred before July 1, 2011.
66. Separate reimbursement for billing surcharges should not end once the Specific Support Amount methodology is in place on July 1, 2011.
67. The CPUC user fee and public purpose program fees are directly tied to the universal service goals of the state and LifeLine customers will continue to be exempt from paying into the public purpose program funds and from paying CPUC user fees.
68. To aid administration of California LifeLine, the Commission should limit the period carriers may submit claims for LifeLine reimbursement to a reasonable period after the conclusion of the month during which service was provided.
69. To aid administration of California LifeLine, the Commission should limit the period carriers may file adjusted claims for LifeLine reimbursement.
70. The Federal Lifeline program currently provides low-income consumers with discounts of up to $10.00 ($6.50 EUCL and $3.50 basic service) off of the monthly cost of telephone service for a single telephone line in their principal residence.
71. Federal Link-Up currently provides low-income consumers with discounts of up to $30.00 off of the initial costs of installing telephone service once per customer per address.
72. Enhanced Federal Lifeline and Link-Up provides qualifying low-income individuals living on tribal lands with additional support.
73. California LifeLine make-up of "lost" federal support due to lack of ETC status for some carriers has been as much as $35 million in one year.
74. This additional support currently provided by California LifeLine could be obtained from the Federal Lifeline program provided that those carriers obtain ETC status.
75. The Federal Lifeline program reimburses only one telephone line per household. If Federal support is not available to California LifeLine customers' second line, and such customers are eligible for two LifeLine discounts, carriers may recover the equivalent of the Federal support amount from California LifeLine for that second line.
76. There are substantial benefits to California consumers in encouraging ETC designation.
77. The Commission encourages, but does not require, non-ETC carriers to obtain ETC certification.
78. Costs that could have been reimbursed pursuant to the Federal Lifeline program should no longer be recovered from California LifeLine, and carriers who do not claim from the Federal program will be reimbursed as if they have received the federal subsidy as an offset.
79. There will be a Phase II in this proceeding, discussed in this decision, to address outstanding implementation issues, particularly with regard to the participation of non-traditional carriers in the LifeLine program.
80. As the Moore Act requires that the non-recurring connection charges shall not be more than 50 percent of the charge for basic residential service, the methodology for ensuring compliance should also be addressed with the participation of non-traditional carriers in the LifeLine program in Phase II of this proceeding.
81. Commission staff should hold a Phase I workshop within 45 days of the effective date of this decision. Within 120 days of the effective date of this decision, Commission Staff must prepare a resolution for the Commission's consideration addressing implementation issues and changes to GO 153, consistent with this decision.
82. Commission Staff should conduct all necessary Phase II workshops and complete all General Order modifications through a resolution within 120 days of the issuance of a decision in R.09-06-019 adopting a definition of "basic service."
1. State policies governing California LifeLine are clearly stated in the Moore Universal Telephone Service Act, Pub. Util. Code §§ 871-884.
2. With respect to our universal service commitment, Pub. Util. Code § 709 instructs us to seek to ensure continued affordable and widespread availability of high quality telecommunications services for all Californians.
3. Universal service is defined as an evolving level of telecommunications services taking into account advances in telecommunications and information technologies and services.
4. It is reasonable to continue considering the 95% subscribership goal as the best measure of affordability when evaluating the universal service programs including California LifeLine.
5. California's LifeLine Program should reflect the changes in conditions that result from the dramatic growth in Internet and wireless communications technologies and the fact that these technologies compete with wireline services.
6. The circumstances of residential use are substantially different than they were in 1996 and now encompass wireless services.
7. California LifeLine policy should reflect the fact that VoIP technology competes with circuit-switched technology in the provision of voice communications services.
8. The Commission does not need additional data and evidence to allow wireless services to participate in California LifeLine throughout the State.
9. This proceeding's record contains substantial evidence supporting the expansion of LifeLine in a technology neutral manner.
10. Wireless providers are eligible to participate in the LifeLine program just as any other provider of service. Similarly, other services that include the basic service elements are eligible for LifeLine benefits and providers of those services may seek reimbursement from California LifeLine.
11. Participation in California LifeLine should not make any participant subject to additional Commission jurisdiction beyond what exists today.
12. The requirement that the LifeLine discount be reflected in tariffed rates should be discontinued for LifeLine services offered on a detariffed or non-regulated basis. Until such revisions are adopted Rule 3.3 of GO 153 shall be waived for wireless providers seeking to offer LifeLine service on a voluntary basis.
13. A wireless provider or other voluntary provider may withdraw from the program at any time and remove the LifeLine benefits after 30-days' notice has been given to its customers and fulfillment of any contractual obligation or other term instituted by the provider at the beginning of the LifeLine customer's service.
14. The current price floor on Measured Rate Residential Service and Flat Rate Residential Service for carriers that are not rate-of-return regulated should be removed so that carriers can charge customers less than AT&T's 2006 basic service rates.
15. Statutory changes are not needed to design and implement a change to a Specific Support Amount process.
16. The Commission may seek statutory changes to the Moore Act to simplify the administrative process after 2010 when it will have to continuously update the support amount.
17. A Specific Support Amount set at 55% of the highest basic rate of the URF COLRs as reported to the Commission on August 1 of each year is reasonable to comply with the Moore Act and other universal service statutes.
18. An annual review of the basic rates of all participating carriers to ensure eligible California LifeLine customers are paying no more than 50% of the applicable basic service rate satisfies the requirements of the Moore Act.
19. In order to ensure that the Specific Support Amount methodology is consistent with the Moore Act, a carrier's LifeLine rate will be capped at no more than 50% of its basic service rate.
20. Allowing carriers that are participating in the California LifeLine Program to change their LifeLine rate once a year is consistent with the Moore Act.
21. LifeLine benefits related to connection and conversion should remain consistent with current GO 153 rules and should not be affected by the implementation of the Specific Support Amount methodology.
22. Commission staff should redesign the claim form to gather only information needed to process, verify, and audit carrier LifeLine claims and have a draft redesigned form completed within 30 days of issuance of this decision.
23. Since carriers who serve the majority of LifeLine customers in California are no longer cost regulated, there is no legal obligation to continue the payment of administrative costs and other fees by California LifeLine for those carriers.
24. Carriers have the responsibility for reporting with each claim their rate both before and after application of California LifeLine and Federal Lifeline support payments and the number of eligible customers.
25. The Commission staff can adopt additional controls if they are necessary to ensure only one LifeLine service is provided to a subscriber's principal place of residence.
26. The reasons proffered as a basis for the Conclusion of Law 157 in D.96-10-066 are no longer valid and there is no requirement to amend the Moore Act so that wireless services can participate in the California LifeLine Program.
27. If non-traditional carriers opt to offer LifeLine to their customers, they must file the required schedule of rates and charges for services offered to LifeLine eligible customers.
28. A wireless carrier's act of voluntarily participating in LifeLine and filing its rates and charges with the Commission pursuant to the LifeLine program would not and could not constitute Commission jurisdiction over rates and entry to market.
29. While wireless, VoIP and other non-traditional carriers are not required to participate in our LifeLine program, should they choose to participate, they must abide by the rules of the program; in doing so, the Commission is not exercising jurisdiction over these non-traditional carriers.
30. The Legislature adopted AB 2213 (Fuentes) to replace the term residential with the term households in order to remove any alleged ambiguity in our ability to allow wireless participation in California LifeLine going forward.
31. A significant share of the parties did not express support for initiating an alternative dispute resolution process at a late stage of the proceeding in May, 2009.
32. By expanding the California LifeLine Program to include data services for consumers that receive wireless equipment through the DDTP program, we are fulfilling the statutory goals of the Moore Act and addressing a significant barrier identified in the DDTP wireless pilot program.
33. A barrier to fulfilling the universal service goals of California is eliminated through the targeted initiative to provide California LifeLine support for data services purchased by consumers that receive wireless equipment through the DDTP program.
34. The Commission has yet to finish its review of the costs and the benefits of the CARE program expansion, to help us determine whether the expansion of CARE should remain in effect.
35. There is no need to adjust the LifeLine income-based criteria before the outcome of the review the Commission is conducting of the interim CARE income-based criteria is finished.
36. Carriers may continue to receive California LifeLine recovery for carrier administrative functions.
37. Limiting recovery of carrier costs associated with California LifeLine is consistent with the Moore Act.
38. The cost of serving California LifeLine customers can be recovered through the prices of the services purchased by the customer plus the California LifeLine subsidy.
39. Continuing to reimburse providers at some basic level will provide benefits to low income consumers and consumers in general.
40. Carriers must reduce customer bills by the total amount received from the Federal LifeLine fund and by the Specific Support Amount reimbursement they receive from the California LifeLine fund.
41. Expenses associated with explaining available rate schedules to prospective customers, especially subsidized rate schedules, benefit customers.
42. GO 153 sections 9.3.9, 9.3.10, and 9.3.13 should be modified to reflect the new reimbursement process for administrative costs and elimination of recovery of separate bad debt losses.
43. LifeLine customers should continue to be exempt from paying into the public purpose program funds for customers' LifeLine billing.
44. Commission staff has the authority to initiate carrier program compliance audits.
45. A customer pre-qualification requirement was adopted in D.08-08-029 making further consideration of the bad debt issue in this docket moot.
46. Pursuant to section 254(e) of the Communications Act, only eligible telecommunication carriers (ETCs) designated pursuant to section 214(e) are eligible to receive Federal Lifeline and Link-Up support.
47. There are substantial benefits to California consumers in encouraging ETC designation.
48. GO 153 should be modified to exclude all costs that could have been reimbursed pursuant to the Federal Lifeline program, regardless of whether the costs are actually reimbursed to the carrier.
49. During the transition period in 2011 and 2012, non-ETCs my recover up to the Specific Support Amount, initially $11.50, as well as the amount designated ETCs may obtain from the Federal Lifeline program, subject to the payment floor.
50. Carriers should be reimbursed for administrative costs related to implementation of program changes and other one-time activities.
51. Changes to the California LifeLine rules and GO 153 in accordance with this revised Specific Support process are appropriate.
52. Phase II in this proceeding will address outstanding implementation issues discussed in this decision, particularly with regard to the participation of non-traditional carriers, including wireless carriers and VoIP carriers, in the LifeLine program.
IT IS ORDERED that:
1. The current price floor on Measured Rate Residential Service and Flat Rate Residential Service for carriers that are not rate-of-return regulated is removed.
2. Wireless, VoIP and other non-traditional carriers may participate in the LifeLine program on a voluntary basis.
3. All providers that participate in the LifeLine program are required to report to Communications Division (CD) staff, under penalty of perjury, their rate and charges for the LifeLine service on an annual basis and upon request from CD staff.
4. All providers participating in the LifeLine Program must pay public purpose program surcharges.
5. Effective July 1, 2013, the California LifeLine Program shall provide eligible subscribers a subsidy using a Specific Support Amount. To reflect California LifeLine Program support, carriers shall reduce California LifeLine Program subscribers' monthly bills by the Specific Support Amount plus any applicable Federal Lifeline and Linkup subsidy. During the transition period, until January 1, 2010, non-ETCs may recover up to the Specific Support Amount (after deducting the set rate of up to $6.84 or the applicable EAS LifeLine rate) in addition to the amount that designated ETCs may obtain from the Federal LifeLine fund.
6. The California LifeLine Specific Support Amount shall be set at 55% of the highest basic rate (as of July 31) of the Carriers of Last Resort as reported to the Commission on August 1 of the previous year. The Specific Support Amount shall be effective as of January 1 of each year.
7. Commission staff shall annually review the basic rate amounts submitted by URF Carriers of Last Resort in California on August 1 of each year, and establish the Specific Support Amount based on the methodology set forth in this decision.
8. If a carrier's basic rate less the matching Federal subsidy less the Specific Support Amount results in a LifeLine rate that is more than 50% of the basic service rate, the carrier shall cap its LifeLine rate at no more than 50% of its basic service rate.
9. Beginning January 1, 2013, customer LifeLine rates are adjusted based on the Specific Support Amount on January 1 of each year, and can only be further adjusted if a carrier's basic rate decreases such that a LifeLine customer would end up paying more than 50% of the carrier's basic rate if the LifeLine rate were not adjusted. In such cases, a carrier must reduce the LifeLine rate so that is not more than 50% of its basic rate, in compliance with the Moore Act.
10. After the transition period, beginning January 1, 2013, carriers may only change their LifeLine rate once annually, to be effective on January 1 of each year.
11. Commission staff shall prepare a resolution that proposes a methodology and process for determining the Specific Support Amount consistent with this decision and the resolution shall also propose the Specific Support Amount for each year beginning with 2012. The Specific Support Amount will be determined annually based on the highest URF Carrier of Last Resort basic rate.
12. Commission staff will review rate increases by Carriers of Last Resort and all other participating carriers on an ongoing basis to ensure compliance with the Moore Act. Carriers may not charge LifeLine subscribers more than 50% of their basic service rate at any time.
13. Beginning July 1, 2011, the Specific Support Amount will be $11.50.
14. Beginning January 1, 2013, the Commission will limit California LifeLine Program support paid to carriers to the lesser of the Specific Support Amount or the amount that results in the California LifeLine subscriber having a $5.00 monthly rate. A similar limitation applies to subscribers of regular measured service (1MR) such that the support paid to carriers is the lesser of the Specific Support Amount or the amount that results in the California LifeLine subscriber having a $2.50 monthly rate. Enhanced Federal Lifeline may further reduce rates for qualifying low-income individuals living on tribal lands. Carriers shall not claim more than the amount of support provided to a subscriber.
15. From the effective date of this decision until January 1, 2013, no carrier participating in the LifeLine Program may have a customer LifeLine rate greater than $6.84 or the current LifeLine rate in EAS exchanges. During this transition period, carrier compensation will be capped at the Specific Support Amount for this transition period, initially $11.50.
16. Separate reimbursement for administrative costs and other fees from the California LifeLine shall be modified on July 1, 2011.
17. Carriers will continue to be reimbursed for administrative costs related to implementation of program changes and other one-time activities.
18. Carriers will be reimbursed for ongoing costs based on the weighted average per customer per month of the reported costs or their actual expenses, whichever is lower. Carriers will report their administrative costs with each claim filing. If a carrier is not able to adequately justify claimed administrative expenses but still seeks reimbursement for some of those expenses it will be compensated at a rate no greater than $0.03 per customer per month.
19. Staff will update the allowable administrative claim amount on an annual basis based on the previous calendar year's weighted average. Such updates shall not increase the previous calendar year's weighted average by more than the CPI-U, rate of inflation, and will be effective on July 1 of each year.
20. Rate-of-return LECs must continue to report their LifeLine administrative costs and may obtain reimbursement from California LifeLine based on the weighted average cost methodology.
21. For any costs reported above the allowable LifeLine administrative claim amount, rate-of-return carriers are permitted to seek recovery from the CHCF-A through the general rate case process.
22. Carriers shall continue to receive separate reimbursements for pass-through taxes (Federal excise and State/local taxes).
23. California LifeLine Program customers will continue to be exempt from paying into the public purpose program funds, including the CPUC User Fee, for customers' LifeLine billings, for LifeLine services.
24. Carriers shall reduce customer bills by the total reimbursement amount they receive from California LifeLine Program. By January 1, 2012, carriers shall specifically show such all reductions as a separate line item, or its equivalent, on the bill. If the reductions are not shown as separate line items, carriers shall provide a revised sample bill format to the Public Advisor that includes a section showing the discounts being provided to the customer by July 2011. Carriers must, at a minimum, delineate the LifeLine reductions on customers' bills in a manner discernible by the public.
25. No later than September 30, 2011, carriers shall submit to Commission staff all claims for reimbursement of administrative costs and pass-through taxes as defined above incurred before July 1, 2011. No claims for bad debts shall be accepted after June 2011, and any claim for reimbursement not timely submitted is deemed void and denied.
26. Carriers with 100 or more LifeLine customers shall submit claims for California LifeLine Program reimbursement no later than 60 days after the conclusion of the month during which service was provided. No claims for carriers with more than 100 LifeLine customers shall be accepted after the end of that period, and any claim for California LifeLine Program reimbursement not timely submitted is deemed void and denied.
27. Carriers with fewer than 100 LifeLine customers may submit claims on a monthly basis and shall submit claims for California LifeLine Program reimbursement and administrative costs at least every six months. No claims for carriers with fewer than 100 LifeLine customers shall be accepted if it is for more than six months after service was provided, and any claim for California LifeLine Program reimbursement not timely submitted is deemed void and denied.
28. Carriers will have up to one year to submit adjustments to timely filed claims consistent with General Order 153 Rule 9.10.2. Phase II of this proceeding will consider whether the time allowed for adjustments will be shortened.
29. Carriers will continue to report their administrative costs with their monthly LifeLine claims.
30. Changes to California LifeLine Program adopted in Decision 08-09-042 at Ordering Paragraphs 5, 6, and 11 cease to be effective on December 31, 2010.
31. The California LifeLine income-based criteria shall remain unchanged at this time.
32. Communications Division staff will establish a schedule and convene at least the first workshop within 45 days of the effective date of this decision to address all the new requirements, including proposed changes to General Order 153.
33. Communications Division staff will establish a schedule and convene at least the first workshop within 75 days of the effective date of this decision to develop a consumer education plan and shall prepare and serve on all the parties to this proceeding within 60 days of the last workshop a report to conform our existing outreach and education plans to today's decision.
34. Commission staff shall prepare and serve on all parties to this proceeding within 120 days of the effective date of this decision a resolution for Commission consideration on Phase I issues conforming California LifeLine Program rules and General Order 153 to today's decision. Such resolution shall include but not be limited to the following:
a. Commission staff shall modify the claim form to require the information needed to process, verify, and audit carrier California LifeLine Program claims consistent with the program modifications adopted herein.
b. To further simplify the claims process, California LifeLine Program participant counts by carrier shall be collected from the Certifying Agent and shall be used to calculate and pay claims.
c. Carriers shall report with each claim their rate applicable to the California LifeLine Program subscriber both before and after application of California LifeLine Program and federal Lifeline support payments. Such reports shall include the weighted average customer count by type of service at the end of the month. Carriers shall also provide their end of month count of new LifeLine customer for flat and measured service for the month. Carriers may calculate on-half of the flat and measured figures to be claimed to reflect those customers eligible for credits for having certified in the current month and were eligible in the prior month.
d. Each California LifeLine Program subscriber shall be limited to one Specific Support Amount per month. Subscribers that have a medical certificate may receive an additional Specific Support Amount each month.
e. Carrier claims shall not include reimbursement for bad debt losses.
f. Carriers will include a report of their monthly administrative costs in their claim filing. Carrier reimbursements for administrative costs will be based on the weighted average per customer per month of the reported costs or their actual expenses, whichever is lower. Carriers with 100 or more administrative customers will include their administrative costs in their claim filing at least every three months, or will receive reimbursement.
g. After 2012, carrier claims shall not include any amounts for replacement of federal funds available to Eligible Telecommunications Carriers, but not obtained by the carrier.
35. The requirement that the LifeLine discount be reflected in tariffed rates should be discontinued for LifeLine services offered on a detariffed or non-regulated basis. Until such revisions are adopted, Rule 3.3 of General Order 153 shall be waived for wireless providers seeking to offer LifeLine service on a voluntary basis.
36. Commission staff has the authority to revise administrative procedures as necessary consistent with this decision to ensure the efficient operation of the California LifeLine Program and address any California LifeLine Program irregularities or other issues, including the type and frequency of information provided by carriers and subscribers to enroll and participate in the program. California LifeLine is expanded to include wireless text messaging/data services for consumers that receive wireless equipment through the Deaf and Disabled Telecommunications Program.
37. Subscribers eligible for both the Deaf and Disabled Telecommunications Program and California LifeLine Program may apply their California LifeLine Specific Support Amount to wireless text messaging/data services provided by carriers.
38. The California LifeLine Program provides one discount per household; however, if there is a member of the household who is hearing impaired and has a medical certificate, that household may qualify for a second California LifeLine Program discount.
39. For customers who meet the eligibility requirements for both the Deaf and Disabled Telecommunications Program and California Lifeline Program, carriers may apply a LifeLine discount to either landline or wireless text messaging services. Customers who meet the eligibility requirements of the Deaf and Disabled Telecommunications Program do not have to also meet the eligibility requirements for the California LifeLine Program to receive wireless equipment as part of the Deaf and Disabled Telecommunications Program/California Telephone Access Program.
40. Wireless equipment is included as eligible equipment within the Deaf and Disabled Telecommunications Program/California Telephone Access Program.
41. The Commission should continue to carefully manage our universal service programs to maximize federal universal service support.
42. TURN's August 16, 2010, Motion for Clarification does not substantially contribute to the resolution of this proceeding and is dismissed as moot.
43. All providers participating in California LifeLine will follow the directions of the Commission and its staff with respect to the administration, adjudication, and oversight of the LifeLine program.
44. We direct Communications Division staff to establish a schedule and convene at least the first workshop within 45 days of the effective date of this decision, to address all the implementation requirements for traditional wireline carriers, including proposed changes to General Order 153, consistent with this decision, and to present a proposed resolution to the Commission within 120 days of the effective date of this decision.
45. We affirm the denial of the Motion to Initiate Alternative Dispute Resolution issued on May 22, 2009.
46. We direct the Communications Division to hold at least one workshop, consistent with this decision, on how non-traditional providers, including wireless and VoIP carriers, will participate in California LifeLine in a manner different than CLECs within 45 days of the issuance of a decision adopting a definition of "basic service" in Rulemaking 09-06-019 as part of Phase II of this proceeding.
47. We direct Communications Division to prepare a resolution for the Commission's consideration on Phase II issues within 120 days of issuance of a decision adopting a definition of "basic service" in Rulemaking 09-06-019.
48. Rulemaking 06-05-028 remains open to address outstanding issues with regard to the implementation of LifeLine for non-traditional carriers, such as wireless and VoIP carriers, in Phase II.
This order is effective today.
Dated November 19, 2010, at San Francisco, California.
MICHAEL R. PEEVEY
President
DIAN M. GRUENEICH
JOHN A. BOHN
TIMOTHY ALAN SIMON
NANCY E. RYAN
Commissioners
I reserve the right to file a concurrence.
/s/ TIMOTHY ALAN SIMON
Commissioner
I reserve the right to file a concurrence.
/s/ DIAN M. GRUENEICH
Commissioner
APPENDIX A
Summary of the record of this proceeding:
· On April 14, 2006, Staff issued its first report on the Commission's Public Policy Programs (PPPs), in which staff provided history and status on the PPPs. Comments were provided by parties on the PPP Staff Report and a good deal of the two-day workshop held by Commissioner Chong focused on the LifeLine program.
· Comments on the OIR were received on July 25, 2006, with reply comments filed on September 15, 2006. Twenty-five parties submitted comments, with many focusing exclusively on California LifeLine.
· On July 20, 2006, an ALJ Ruling was issued setting three Public Participation Hearings (PPHs), setting date for filing notices for intent to claim intervenor compensation and directing AT&T and Verizon to distribute copies of the 2004 affordability study to all parties.
· During the summer of 2006, companies responded to DRA's discovery requests.
· PPHs were held in San Diego, Oxnard, and Sacramento in September, October, and November of 2006 after mandatory notice of the hearings was included in all consumer telephone bills that summer. Public comments focused on changes needed to the LifeLine program including the affordability of telephone service as many California LifeLine consumers wanted to purchase additional communication services without losing the discount and the need to include to wireless services in the LifeLine program.
· On July 13, 2007, the assigned Commissioner and ALJ issued a scoping memo that defined the specific issues to be addressed, set the timeline, and set the California LifeLine workshop for August 15, 2007.
· On August 15, 2007, a half day workshop session was held, in which parties discussed modernizing the California LifeLine rate and implementation issues. In preparation for that workshop, the Communications Division issued on August 2, 2007 a workshop notice in which it requested comments on eight implementation issues.
· On September 18, 2007 Staff issued its report summarizing a California LifeLine workshop that included their implementation recommendations for the adoption of a monthly set amount of subsidy per LifeLine household.
· August 2007 and September 2007 - several rounds of Opening and Reply Comments were filed by the parties in this proceeding in response to the July scoping memo.
· October 2008 - The record was reopened to allow additional comment in light of changes made to extend the basic rate cap and limit adjustments to that cap and to the California LifeLine rate in 2009 and 2010 in D.08-09-042.
· March 2009 - A workshop was held to provide an opportunity for clarification regarding numerical representations in the Proposed Decision prior to submitting comments and reply comments.
· April 2009 - Comments were filed on the Proposed Decision released in February 2009. The comments addressed various options on how to reform the methodology used to provide support to carriers that participate in the California LifeLine program along with other proposed changes to the program.
(END OF APPENDIX A)
APPENDIX B
BRIEF HISTORY OF LIFELINE IN CALIFORNIA
· The California Commission created the California LifeLine service to primarily "take care of the needs of the poor, the infirm, and the shut-ins."1 The Commission modified the California LifeLine service from 1969 to 1984 through general rate cases of the telephone companies.
· Pub. Util. Code § 871 was codified in by the enactment of AB 1348 (1983), known as the Moore Universal Service Telephone Act, requiring the Commission to provide low-income households with access to affordable basic residential telephone service.
· D.84-04-053 as modified by D.84-11-028 established General Order (GO) 153 for the implementation, funding, and administration of the Moore Universal Telephone Service Act. The Universal Service Telephone Program (ULTS) was created to provide a 50% discount on residential telephone service to low-income families. This program was funded by a tax administered by the State Board of Equalization.
· D.87-07-090, in response to AB 386 (1987), repealed the ULTS tax and implemented a 4% all end user surcharge accessed on intrastate interLATA services.
· D.87-10-088 established a ULTS trust for the deposits of the surcharge monies, and an administrative committee for the administration of the ULTS program. The administrative committee, ULTS-AC, was comprised of five members including 1 large LEC, 1 small LEC, 1 IEC, and 2 public interest groups.
· Annual Budgets for the ULTS program are adopted by the Commission through the resolution process. Information about CPUC mandated telecommunications all-end-user surcharges can be found at: http://www.cpuc.ca.gov/PUC/Telco/Consumer+Information/surcharges.htm.
· D.94-09-065 standardized the ULTS rates to the lower of 50% of the LEC's tariffed rate or 50% of Pacific Bell's basic service rate and revised the assessment of the surcharge from intrastate interLATA services to all intrastate telecommunications services. This decision also required the large LECs to perform ULTS outreach to undersubscribed communities, and established a 95% subscribership goal for low-income and non-English speaking households.
· D.96-10-066 required all competitive local exchange carriers (CLEC) to provide ULTS, extended the 95% subscribership goal for all customer groups, removed the large LECs' outreach requirement, established a marketing working group to perform ULTS outreach in a competitively neutral manner, and set the budget for the marketing working group to the annual total average ULTS marketing expenses reimbursed to the large LECs over the last 3 years (1993 to 1995).
· D.97-12-105 established a nine-member ULTS Marketing Board (ULTS-MB), and ordered the board to use 80% of its marketing budget to bring basic telephone service to qualifying households currently without telephone service and the remaining 20% to close the gap between the total number of residential customers eligible for the ULTS program and total number of customers who actually use the ULTS program.
· Annual Outreach Budgets are included in the ULTS annual budgets. Resolution T-16176, the first annual budget for the outreach, set the marketing budget at $5 million a year.
· D.98-10-050 increased the ULTS-MB 1999 budget from $5 million to $7 million.
· Resolution T-16353 (1999) approved a 12-month marketing program and the operation of a call center for the ULTS program. These marketing and outreach efforts were conducted from November 1999 through October 2000.
· D.00-10-028 revised GO 153 to reflect changes to the ULTS program that occurred subsequent to 1984, set standards for carriers' service representatives in informing subscribers on the availability of ULTS program, etc.
· Pub. Util. Code § 270-281 et seq. were codified by the enactment of SB 669 (1999) requiring a ULTS Trust Administrative Committee Fund be created in the State Treasury, limiting moneys in this fund to only be expended for the purpose of the program and upon appropriation in the annual Budget Act, changing the role of the ULTS-AC from administrative to advisory, and requiring the Commission to submit a transition plan on or before July 1, 2000.
· SB 742 (2001) mandated that the remaining funds of the ULTS Trust be transferred to the State Treasury on October 1, 2001.
· Resolution T-16561 (2001) approved a proposed contract with Richard Heath & Associates (RHA) in the amount of $4,983,241 for a 12-month marketing program submitted by the ULTS-MB.
· Resolution T-16606 (2001) approved a proposed contract with RHA in the amount of $1,481,990 for a 36-month operation of a call center submitted by the ULTS-MB.
· D.01-09-064 revised the charters of ULTS-AC and the ULTS-MB to conform to SB 669, and directed the Information and Management Services Division (IMSD) and the Telecommunications Division (TD) to take over the administration of the ULTS program starting October 1, 2001.
· D.02-04-059 merged the ULTS-MB (disappearing committee) and the ULTS-AC (surviving committee) into one committee, and established a nine-member board for the merged committee. The Commission solicited participation from over 4,000 groups and organizations to participate on the advisory committee process.
· D.02-07-033 directed the Low Income Oversight Board (LIOB) to solicit public input and develop recommendations for coordinated customer outreach between the ULTS and CARE programs.
· D.03-01-035 provided CLECs the option of using the cost factor developed by the Commission, rather than calculating their incremental costs as delineated in T-16591. Issued opinion denying Fones4All's amended petition to modify D.00-10-028 and modifying ULTS administrative expense process.
· D.05-04-026 adopted new LifeLine certification and verification processes, as required by the Federal Communications Commission's (FCC's) Lifeline Order. Ensured California continues to receive $330 million in federal Lifeline/Link-Up funds to protect the financial viability of the ULTS program. Adopted program-based eligibility, to facilitate participation in the program by all eligible customers.
· D.05-12-013 adopted the revisions to GO 153 as they appear in the Telecommunications Division's August 2005 Workshop Report on Revision and Update of GO 153, as further amended by this order; and addresses various implementation issues related to the changes in GO 153.
· D.06-11-017 confirmed, with some modifications, the November 1, 2006 Assigned Commissioner's Ruling, suspending portions of GO Order 153 that relate to the annual LifeLine verification process. Begins process to review initial certification and verification processes to address problems experienced during the first few months of the new process.
· D.07-05-030 adopted strategies to improve the California LifeLine certification and verification processes, and reinstated portions of GO 153.
· D.08-08-029 adopted a pre-qualification requirement for the California LifeLine Program and resolved remaining Phase 2 issues. Pre-qualification requirement was implemented on July 1, 2009.
Concurrence of Commissioner Timothy Alan Simon
November 19, 2010 Commission Meeting - Item 55 R.06-05-028
Decision Adopting Forward Looking Modifications to California LifeLine in Compliance with the Moore Universal Telephone Service Act
Introduction
At its business meeting of November 19, 2010, the California Public Utilities Commission voted in favor of a Proposed Decision [Agenda Item 55] regarding California Lifeline. I voted in favor of the proposed decision and file this Concurrence.
Background and Discussion
Four years after the Commission opened this Rulemaking to evaluate whether California's universal service public policy programs should be updated, we finally begin the process of reforming the California LifeLine Program by adopting Commissioner John A. Bohn's proposed decision making forward looking modifications in compliance with the Moore Universal Telephone Service Act (Pub. Util. Code § 871). The Commission sets out to reform California LifeLine in order to guarantee that much needed communication services are affordable and widely available to all since the current methodology is not in the best long-term interest of consumers.
This decision adopts a two year phase-in period, temporarily capping Lifeline rates while also making the carriers whole. This methodology is technology neutral, allowing for voluntary participation by wireless and non-traditional carriers. While there are concerns about the growth and size of the fund with the addition of non-traditional carriers, the Commission has adequate safeguards.
As we adopt the new methodology, the Commission will continue to monitor impacts on ratepayers and ensure that the basic rate remains just and reasonable and LifeLine rates remain affordable. The decision appropriately defers various implementation issues to subsequent phases, including updates to General Order 153. Our decision to implement a Phase Two provides guidance on how wireless and non-traditional carriers would participate in LifeLine, and recognizes that our processes should be reviewed and may need clarification in some areas. Other issues will be scrutinized in subsequent phases and workshops, including how the LifeLine program will include data services for consumers that receive wireless equipment through the CPUC's Deaf and Disabled Telecommunications Program.
Now is the time to begin the process of reforming an important public purpose program since affordable and reliable telephone service is essential to many in California. It provides an economical way to stay connected with family, friends, businesses, information, and emergency services. Needless to say, the benefits afforded through the Moore Universal Telephone Service Act and subsequently ratified and adopted by this Commission through various proceedings and rulemakings provide invaluable protections that cannot be given up during these difficult economic times.
Wireless is far from a luxury to some; it is a necessity. The inclusion of non-wireline carriers in California LifeLine will provide a critical choice that many low income consumers already are employing in increasing numbers and also spur the development of products that provide quality service. While California LifeLine has helped move closer to the Universal Service goal of a 95 percent penetration rate, assisting almost 2 million households, its policies should provide an evolving level of telecommunications services and take into account advances in telecommunications and information technologies and services in order to help connect low income communities in the 21st century. This decision is the crucial first step.
Conclusion
It is for these reasons provided above that I respectfully concur on this Order.
/s/ TIMOTHY ALAN SIMON
Timothy Alan Simon
Commissioner
Concurrence of Commissioner Dian M. Grueneich
A top priority of my office has been protecting customers-especially at risk customers. This decision, though not perfect, adopts rules to protect LifeLine customers during the next two years, while the Commission and carriers implement revisions to the LifeLine program. These revisions, in theory, should provide more stability and choice to LifeLine customers while controlling the costs of the program for non-LifeLine customers.
In December 2009, I sat with State Senator Felipe Fuentes as we listened to many parties express concerns about proposed changes to the LifeLine program. During our forum on LifeLine, hosted by the Division of Ratepayer Advocates, I heard two things. First, LifeLine customers are on a limited budget and need to have more stability in their monthly expenditures. Second, the Commission should have more control over the costs for the LifeLine program. I also heard the desire by many communities to have better access to wireless service and therefore more choice in their overall telephone service.
Compounding these issues is the looming January 1, 2011 deregulation of the basic service rate for incumbent local exchange carriers who provide telephone service to the majority of California customers. I was concerned that with this Commission's decision to relinquish control over rates for basic service, California would experience a decrease in the number of financially at-risk households being able to afford basic telephone service. Two years ago, I worked with former Commissioner Rachelle Chong to provide protection to LifeLine customers in the form of limited lifeline rate increases during the final two years of regulated basic service rates. Because of my continuing concern for LifeLine customers, I recommended early in 2010 that until we fully implemented the new LifeLine program, we needed to include safeguards such as a rate freeze. Commissioner Bohn's decision recognizes the needs of the low income community and includes a two-year freeze on LifeLine rates.
During last year's forum on LifeLine, I came to better understand that low income households have a limited income and need to know ahead of time what their monthly finances look like. Thus, I recommended that the LifeLine rate or discount be determined on an annual basis so as to provide stability for the low income household. I am pleased that Commissioner Bohn included this crucial piece of policy in this decision.
Also in the final version of the decision, Commissioner Bohn includes a cap on subsidies that carriers can collect from the LifeLine fund. This will go a long way towards ensuring non-LifeLine customers that the Commission is controlling the size of the fund, and thus, the size of their monthly contribution to the fund.
I remain concerned about what happens to LifeLine customers after we remove the freeze and have relinquished regulatory control over basic service rates. Will customers experience $35 or higher monthly rates for basic service? Will low income customers see their monthly costs rise exponentially from less than $7 to more than $20? Will California, a state that has consistently ranked in the top tier nationally for providing universal service, experience a decrease in the number of California households with telephone service? These are important issues that the Commission must monitor and ensure that the solutions, as they unfold, are in the best interest of the public and do not leave California's low income residents stranded.
This decision, albeit not perfect, adopts policies that attempt to balance the needs of LifeLine households with those of non-LifeLine households. Thus I will support Commissioner Bohn's decision modifying the LifeLine program.
Dated November 22, 2010, at San Francisco, California.
/s/ Dian M. Grueneich
Dian M. Grueneich
1 Re General Telephone Company (1969) 69 CPUC 601, 676, See also Re Pacific Telephone & Telegraph (1969) 69 CPUC 55, 83.
