2. Background
The ULTS program provides affordable basic exchange telephone service to low-income residential subscribers. The statewide ULTS program provides basic telephone service at the rate of $5.34 per month for flat rate service, and $2.85 for measured rate service,3 and excludes the surcharges or taxes that are generally applicable to basic telephone service.
The ULTS program, which was first established by statute in 1987, was revised in 1996, by Decision (D.) 96-10-066 to ensure that all local telephone companies, including competitive entrants, would provide ULTS as part of their offering of basic telephone service. Further, in that decision the Commission adopted a "competitively neutral" ULTS cost recovery subsidy program available to both Incumbent Local Exchange Carriers (ILECs) and CLECs. The 1996 revision to the ULTS program permits both CLECs and ILECs to recover the costs related to provisioning ULTS service.
The 1996 decision also made a significant change regarding the costs of marketing ULTS service. Prior to 1996, the ILECs, as the monopoly providers of basic telephone service, were responsible for educating the public regarding the availability of ULTS. Based on concerns that ILEC marketing would not be competitively neutral, the Commission prohibited carriers from recovering marketing costs from the program, and established a ULTS Marketing Board (ULTS-MB) to be responsible for all marketing efforts.
In D.00-10-028, the Commission again adopted numerous significant modifications and clarifications to the ULTS program. One modification was to limit the amount of "lost revenues" that utilities may recover from the ULTS Fund. Lost revenues consist of the excess of the utility's regular tariffed rates and charges for basic residential service over the lower ULTS rates.
Lost revenues also include those administrative costs that are 1) incremental to the ULTS program, and 2) not recovered elsewhere by the utility. TD was ordered to conduct a workshop to develop a comprehensive list of those cost elements that carriers can recover from the ULTS Fund. TD conducted a workshop on January 31, 2001 and developed a list of specific costs and lost revenues that utilities may recover from the ULTS Fund. The Commission approved the comprehensive list in Resolution T-16591, dated February 21, 2002.
FONES4ALL filed its Petition to Modify D.00-10-028 on March 14, 2001 claiming that under the reimbursement mechanism adopted in D.00-10-028, carriers are limited to recovering the difference between the serving ILEC's standard residential rate and the ULTS rate, plus the incremental costs of serving ULTS subscribers and certain other costs. According to FONES4ALL, this reimbursement plan does not adequately compensate carriers for serving ULTS customers.
Pursuant to an Administrative Law Judge's (ALJ) ruling issued on October 30, 2001, FONES4ALL was required to submit information in support of its Petition to Modify. On November 19, 2001, FONES4ALL filed an appeal of the ALJ's Ruling. FONES4ALL made its Supplemental filing on December 19, 2001, accompanied by a motion asking that its confidential cost and line count information be covered by a protective order.
FONES4ALL filed an Amended Petition on April 16, 2002. On April 19, 2002, an Assigned Commissioner's and Administrative Law Judge's Ruling (ACR) was issued requesting comments on FONES4ALL's proposal and raising some additional issues. Opening comments were filed on May 20, 2002,4 and Reply Comments, on June 4, 2002.5 In its Comments, FONES4ALL made some further modifications to the proposal in its Amended Petition. For purposes of this decision, we will analyze FONES4ALL's latest proposal.
In order to implement Senate Bill 669 (Stats. 1999, Ch. 677), the Commission issued a series of decisions associated with the ULTS program. Decision 01-09-044 amended the charters of the ULTS Trust Administrative Committee (ULTS-AC) and the ULTS Marketing Board (ULTS-MB) revising their purposes from administrative and advisory, to purely advisory. This decision also directed the Commission's Telecommunications Division to assume the administrative functions of the two boards. Therefore, those two boards have no management or control over the ULTS program monies and no longer pay claims effective October 1, 2001. Decision 02-04-059 merged the ULTS-AC and the ULTS-MB into one board and revised the charter of the ULTS-AC to include the ULTS-MB as a component program of the ULTS-AC. In their comments, some parties make reference to the ULTS-MB, but that organization no longer exists as a separate entity. Oversight for the ULTS marketing effort now rests with the Commission, rather than an outside board.
3 Those rates are actually ULTS price ceilings, i.e., for ULTS, a CLEC is required to charge $5.34 per month (one half of Pacific's tariffed rate for flat rate service) or 50% of its own regular tariffed flat rate for basic local service, whichever is less. 4 Opening Comments were filed by FONES4ALL; Joint Comments of AT&T Communications of California, Inc., Cox California Telcom, L.L.C. dba Cox Communications, WorldCom, Inc., and The Utility Reform Network (The Coalition); Verizon California Inc. (Verizon); The Office of Ratepayer Advocates (ORA); Roseville Telephone Company (Roseville); Calaveras Telephone Company, Cal-Ore Telephone Co., Ducor Telephone Company; Evans Telephone Company, Foresthill Telephone Co., Happy Valley Telephone Company, Hornitos Telephone Company, Kerman Telephone, Pinnacles Telephone Co., The Ponderosa Telephone Co., Sierra Telephone Company, Inc., The Siskiyou Telephone Company, The Volcano Telephone Company, Winterhaven Telephone Company (Small LECs); Latino Issues Forum and the Greenlining Institute (LIF/Greenlining); and the Universal Lifeline Telephone Service Administrative Committee of the California Public Utilities Commission (ULTS-AC). The ULTS-AC filed its comments with a motion to accept late-filed comments. 5 Reply Comments were filed by FONES4ALL; The Coalition; Verizon; ORA; Roseville; Small LECs; LIF; Z-Tel Communications, Inc. (Z-Tel); Mpower Communications Corp. (Mpower); Latino Initiatives for the Next Century, Salud Financiera, William C. Velasquez Institute, CADEF-Central American Development and Educational Foundation, Workforce Development Center, Education for the Entertainment Arts: At-Risk Youth Program of the Hollywood Entertainment Museum, Pacifica Hospital of the Valley, and St. Mary's Clinic (Latino Initiatives for the Next Century, et al.); and I-Trax, Inc. (I-Trax). I-Trax filed its comments with a motion to accept late-filed comments.
