3. D.10-11-033 Adopting Forward Looking Modifications to California Lifeline in Compliance with the Moore Universal Service Act
In 2006, the Commission opened R.06-05-028 to evaluate whether California's universal service public policy programs should be updated to reflect changes in the telecommunications industry. Through that Rulemaking, the Commission set out to reform California LifeLine in order to guarantee high-quality communication services were affordable and widely available to all. In D.10-11-033, the Commission adopted a new methodology for providing LifeLine support to consumers and in doing so ensured that the Commission will continue to monitor impacts on ratepayers so that the basic rate remains just and reasonable and that the LifeLine rate remains affordable.
That decision recognized significant technological and regulatory changes in the telecommunications industry and the flexibility of the statutory structure underlying the Moore Universal Telephone Service Act,1 which we now refer to as the California LifeLine Program (California LifeLine or LifeLine).2 Consumers have accelerated their use of communications options that have never been subject to traditional utility regulation and have not previously participated in the California LifeLine Program. We recognized the challenge of making those communication services that consumers are choosing available to LifeLine customers. In D.10-11-033, the Commission clarified that non-traditional carriers may participate and offer their services to consumers eligible for California LifeLine.
The decision targeted reforms to the most pressing problems confronting the California LifeLine Program and adopted the following specific changes to the program:
· "De-links" California LifeLine from the AT&T basic rate structure in order to ensure ongoing compliance with Section 874 of the Public Utilities Code, and determines that a Specific Support Amount methodology is the best option to continue to meet the goals of the Moore Act and our overall universal service goals.
· Sets a Specific Support Amount at 55 percent of the highest basic rate of the State's Uniform Regulatory Framework carriers of last resort. Each carrier will receive the Specific Support Amount (with some exceptions), and the initial Specific Support amount shall be set at $11.50, effective July 1, 2011.
· Caps the current California LifeLine rate at $6.84 for the next two years for most customers, and thereafter limits each carrier's LifeLine rate to no more than 50 percent of its basic service rate.
· Allows each carrier to reset its LifeLine rate on an annual basis. Each carrier's LifeLine rate will be calculated by subtracting the Specific Support amount and any applicable Federal Lifeline and Linkup subsidy from its basic rate.
· Eliminates the current price floor and allows carriers to charge customers less than AT&T's 2006 basic service rates. However, this decision also requires carriers offering LifeLine to charge LifeLine customers at least $5 per month (exclusive of tribal customers receiving federal Tier 4 subsidy).
· Expands the LifeLine program to include data services for consumers that receive wireless equipment through the CPUC's Deaf and Disabled Telecommunications Program (DDTP).
· Allows non-traditional carriers, such as wireless carriers and voice over internet protocol (VoIP) companies, to participate in the California LifeLine program consistent with current requirements. This decision establishes a separate phase to consider implementation changes needed to facilitate participation in LifeLine for non-traditional carriers, including data services for DDTP - eligible consumers, wireless carriers, and other non-traditional carriers.
· Eliminates excess payments to carriers for administration, bad debt, and to make up for forgone Federal support.
Although making great strides towards completing needed revisions to the Lifeline program, D.10-11-033 also recognized that many implementation issues remained outstanding and set forth additional effort the Commission would be undertaking to allow consumers to apply the California LifeLine discount to the communications service of their choosing. The decision set a schedule for the Communications Division to convene workshops to address implementation issues, including updates to General Order (GO) 153.
The decision contained many specific directives for non-traditional carriers, including wireless carriers. Although authorizing such carriers that are able to meet the current requirements of GO 153 to participate in the LifeLine program as of the effective date of the decision, the Commission also set a Phase II of the proceeding to clarify any outstanding issues with regard to the participation of non-traditional carriers, including wireless and VoIP carriers, in the LifeLine and DDTP Programs.
The decision noted that the definition of "basic service" is being explored and revised in the High Cost Fund-B docket, R.09-06-019, which will likely impact participation in the Lifeline program by non-traditional carriers and set out a series of questions to be addressed in workshops.
1 The formal name specified in Pub. Util. Code § 871 for the program which has come to be known as the "California LifeLine Program."
2 The entire program is established in Pub. Util. Code §§ 871-884.
