3. Positions of the Parties
3.1. CTF
AT&T supported expanding the CTF to include California community colleges so long as the additional funding needed to serve these new recipients not decrease the amount available for K through 12 schools.9 AT&T opposed expanding the list of CTF-eligible services to mirror the federal E-rate program because the E-rate program funds many costly services not currently included in the CTF.10 AT&T estimated that the CTF budget would need to increase by about 100% to adequately fund all E-rate services, and stated that the Commission lacks jurisdiction over many of the services, such as broadband.11 AT&T opposed using CTF funds to provide E-rate outreach, training, and support for non-participating schools and libraries, or for nonrecurring construction costs in telemedicine projects funded by the FCC.12 AT&T stated that the Commission does not have jurisdiction to require telephone service providers to offer CTF discounts on E-rate eligible services.13 AT&T also recommended that the Commission consider moving CTF to a need-adjusted flat benefit, rather than discount percentage, and streamlining the E-rate stacking methodology.14 AT&T also proposed that the Commission eliminate the requirement of intrastate tariffed telecommunications services, and encourage such offerings on a voluntary basis by turning over program administration to a third-party administrator.15
The Division of Ratepayer Advocates (DRA) stated that more research is needed before expanding the CTF to include community colleges.16 DRA cited the possible financial strain on the CTF and called for prioritizing the funding requirements of community-based nonprofit organizations over community colleges.17 DRA sought clarification regarding the specific services covered by the E-rate program that the CTF is proposed to mirror.18 DRA opposed making the E-rate application process a prerequisite for schools to receive CTF funding.19 DRA agreed that CTF funds could be used for the federal Telemedicine program recipients but only for telecommunications service costs, not infrastructure costs.20 DRA supported requiring all certificated carriers to provide CTF discounts on E-rate eligible telecommunications services and Internet access services.21
DRA offered qualified support for modifying the CTF program to more closely track the federal E-rate program. DRA agreed that certificated carriers should be required to offer CTF discounts on E-rate eligible telecommunications and Internet access services, but expressed concern that the E-rate program's complex and expensive administrative processes would also be necessary for a modified and expanded CTF. DRA pointed out that the simple, one-page CTF application results in perpetual eligibility, in contrast to the complex, multi-part, annual application required by the federal E-rate program. DRA concluded that the simplicity of the CTF ensures lower administrative costs for the schools (as well as the Commission and carriers) and that this feature could be lost by conforming the CTF to the E-rate process. 22
Verizon California Inc. recommended that the Commission carefully evaluate the surcharge impacts of including community colleges in the CTF program, and also make participation in the federal E-rate program a prerequisite to participation in the CTF program.23 Verizon argued that the Commission could not require telephone service providers to offer CTF discounts on Internet service because this Commission lacks jurisdiction over facilities-based landline broadband Internet access service.24
The California Community Technology Group and Latino Issues Forum urged caution in expanding CTF eligibility without a procedure to evaluate the costs and benefits of eligibility expansion.25 They also opposed focusing outreach and application assistance solely on the E-rate program, without instituting similar assistance for the CTF program.26 They supported requiring all telephone service providers to give discounts on qualifying services.27
The small local exchange carriers and SureWest28 recommended that the Commission carefully consider funding and jurisdictional limitations before expanding the CTF to include services such as Internet access or making community colleges eligible for the program.29
Cox suggested that prior to including community colleges in the CTF program, the Commission must find that community colleges require access to and would benefit from CTF funds. 30 Then, the Commission must balance the economic burden to customers paying the CTF surcharge with the benefit to community colleges from participating in the CTF program.31 Cox supported including Internet access as a service eligible for CTF discount, and allowing non-certificated providers to draw from the CTF.32
The California Community Colleges Chancellor's Office stated that California's community colleges serve about 2.5 million adults each year, and that about 30% of the students qualify for fee waivers due to income levels below the poverty line.33 The Chancellor's Office explained that all community colleges offer technology centers with computers for Internet access and technology assistance.34 The community college system has 109 colleges and 64 approved educational centers located in all areas of the state serving 250,000 full-time equivalent students.35 The Chancellor's Office conducted a study to estimate the likely CTF draw for the community colleges, which resulted in a figure of $7.2 million a year.36 The Chancellor observed that the CTF budget is $33.2 million, with a cap of $55 million.37 The Chancellor concluded that the community colleges provide California residents with access to technology and Internet services in much the same way as the 587 community-based organizations (CBOs) and 2,123 schools and libraries do and should be included as eligible participants in the CTF program.38
The College of the Sequoias filed comments echoing the Chancellor's comments.39
The State Librarian of California stated that community colleges are tax-exempt organizations that provide education, including computing centers, throughout the state.40 The State Librarian supported extending the CTF discount to community colleges to increase the efficient use of state money and resources by stimulating cooperation among public libraries and community colleges.41 The State Librarian explained that the E-rate process is complex and offered a national study showing that the most common reason for libraries not receiving E-rate discounts was the complexity of the process. 42 Moreover, the districts most in need of the support-low-income, disadvantaged, and rural-do not normally have the "telecommunications expertise and experience" needed to successfully navigate the E-rate process.43 The State Librarian also supported expanding the CTF list to mirror all services included in the federal E-rate program and providing a Commission-supported technical expert to assist with applications.44
The Butte County Office of Education (BCOE)45 found that the CTF is a critical element in support of the significant technology needs of California's K-12 districts and schools.46 The BCOE expressed concern that current CTF participants continue to have access to sufficient funds to meet growing needs.47 The BCOE noted that the 2008-2009 budget is nearly $10 million more than historic levels, due to increased needs of current recipients.48 The BCOE supported expanding eligibility and services offered through the CTF if the level of funding remains sufficient to meet current and future needs.49 The BCOE agreed that additional staff resources be designated for E-rate support, but asked this Commission to provide those resources to the California Department of Education.50 Their comments explained that the Department of Education works directly with the Universal Service Administrative Company to provide validation and confirmation for the Head Start eligibility, technology plan certifications, free and reduced lunch validations, eligible entity validations, and numerous other items for the Universal Service Administrative Company. This relationship and other work done by the California Department of Education would enable the Department to quickly and effectively deploy additional resources.51
3.2. Payphone Programs
On July 28, 2006, the California Payphone Association (CPA) filed its initial comments in this proceeding. The comments set forth the history and current status of the Commission's Payphone Programs.
CPA explains that the two payphone programs arose out of a 1988 docket at the Commission.52 The purpose of the Public Policy Payphone Program was to provide payphones to the general public in the interest of public health, safety and welfare at no charge in locations where there would otherwise not be a payphone.53 Public Policy Payphones are placed at locations designated as emergency gathering places or locations where residents cannot individually subscribe to phone service because of the unavailability of facilities.54 Over the past three years, there have been only 12 applications for the placement of Public Policy Payphones and only two of the applications have met the program requirements.55 No funding has ever been provided for any payphones designated as Public Policy Payphones.
The purpose of the Payphone Enforcement Program is to enforce the rules and regulations of the Commission including signage requirements and rate caps.56 The program implements this responsibility by, among other things, inspections of payphones for compliance with applicable law and regulations.57 Initially, this program was handled by the Payphone Enforcement Committee on a quasi-independent, non-civil-service basis, but 1999 legislation moved the program to Commission staff. Increasing costs caused the per line surcharge to go from $0.10/month to $0.25/month.58 At the same time, the number of payphones and the return per payphone has diminished substantially.59 From March 1999 through March 2004, the number of payphones in California has declined from 294,734 to 187,047 stations (representing a 36.5% decrease in stations).60 A typical payphone once generated $200 or more in revenue a month, whereas a "good" payphone now is one that generates $120 or more.61 CPA implores us to discontinue the Public Policy Payphone Program and to roll the Enforcement program into our extant enforcement efforts.62
AT&T stated that the Public Policy Payphone Program "adds no value to the payphone industry or universal service," is a "waste of scarce Commission resources," and should be "eliminate[d]."63 In reply comments, AT&T opposed the parties' calls for additional expenditure of funds to study the diminishing payphone market as "unnecessary and wasteful."64 AT&T also opposed the proposal to move the Public Policy Payphone Program to the CTF, but suggested as an alternative a limited pilot program to assess need.65
On the Payphone Enforcement Program, AT&T supported CPA's recommendation to move payphone enforcement to the Commission's enforcement staff in the Consumer Protection and Safety Division (CPSD).66 AT&T stated that due to the declining payphone industry, payphone enforcement efforts are less necessary to ensure compliance and have dwindled to isolated complaints.67 AT&T concluded that "continuing the administration of a program that demands a sizable budget and yields such little results is unjustified."68 AT&T made the following specific recommendations:69
1. Eliminate the Enforcement Program and incorporate the enforcement of payphone regulations in the Commission's general consumer protection program administered by CPSD;
2. Mandate the posting of the Commission's 800 number for service complaints on all payphones, with an implementation deadline of 12 months from the date of the Commission's order;
3. Incorporate payphone oversight into CPSD's operations, including training enforcement personnel on handling payphone complaints;
4. Eliminate the monthly Coin Operated Payphone Enforcement Report, which lists payphones and locations to facilitate random inspections; and
5. As necessary, have CPSD staff inspect and evaluate persistent payphone service complaints.
The Small Local Exchange Carriers also supported CPA's proposals.70 Verizon offered three reasons for eliminating the Public Policy Payphone Program: (1) lack of interest, (2) dramatic decline in the number of payphones (36.5% decrease from March 1999 through March 2004), and (3) an equally dramatic increase in wireless phones (from December 1999 through December 2004, the number of mobile wireless telephone subscribers in California increased from 8,544,941 to 23,457,761 (a 175% increase in five years).71
DRA opposed CPA's proposals and recommended that the Commission reform rather than eliminate the payphone programs.72 DRA explained that any Commission action on these programs must continue to carry out the Commission's policy objectives of supporting public health, safety, and welfare.73 DRA contended that the "old technology of payphones is still important in an earthquake prone state like California."74 DRA also posited that payphone dependence may increase in poorer neighborhoods as a result of the future deregulation of the price for basic services.75 DRA makes similar recommendations with regard to the enforcement program, i.e., conduct a workshop to allow the parties to address consumer protection safeguards, as well as administrative costs and funding mechanism.76
DRA made recommendations for additional study to develop a "fair and efficient application process" and a set of "objective criteria" for identifying locations for public policy payphones.77 DRA recognized that the current funding mechanism for these payphones, a surcharge on each payphone line, is not sustainable on a shrinking number of payphones.78 DRA, therefore, proposed creating a new surcharge applicable to all telephone end users to fund the improved payphone programs.79
The Latino Issues Forum also contended that public purpose payphones continue to serve a vital public need, particularly among households without access to basic residential service.80 Latino Issues Forum and the California Community Technology Policy Group opposed funding public policy payphones through the CTF as CTF is used to provide discounted rates to qualifying schools, libraries, hospitals, health clinics and community organizations.81
The Utility Reform Network and the National Consumer Law Center supported further analysis of the public interest in continuing the public purpose payphone program, and opposed moving the program to the CTF.82
Cox recommended that the Commission determine whether payphones remain a necessary component of the Commission's universal service goals, and obtain data that supports a sound public policy program with respect to such goals.83 Cox expressed concern that expanding the CTF to include public policy payphones could jeopardize funding for existing recipients.84
In reply, CPA decried the parties' call for "belabored inquiry" and sought "decisive action."85 CPA argues that the declining payphone industry can not afford to participate in such inquiries, and that the current funding mechanism is rendering more payphones uneconomic, exacerbating any negative impacts on communities.86 CPA conceptually supported the proposal to shift the Public Policy Payphone Program to the CTF, but identified several issues which required resolution.87 These issues included:
· Expanding the list of services eligible for funding by the CTF program to include Customer Owned Pay Telephone ("COPT") service;
· Redefining the potential recipients of CTF support to include Payphone Service Providers (PSPs) by amending Pub. Util. Code § 280; and
· Revising the CTF application form to accommodate the broader scope of qualifying entities proposed for inclusion.
Also in reply, the Butte County Office of Education opposed folding the Public Policy Payphone Program into the CTF and stated that the Commission should focus on improving the existing CTF program for its intended beneficiaries, not adding new recipients.88
3.3. Deaf and Disabled Telecommunications Program (DDTP)
The Telecommunications Access for the Deaf and Disabled Administrative Committee (TADDAC) filed comments opposing the income limitation in the pilot wireless program.89 TADDAC supported the implementation of a voucher system within an expanded wireless program and the retention of the current administrative contractor, California Communications Access Foundation.90 TADDAC and DRA agreed that a voucher system should be implemented and that the DDTP should be made more efficient by consolidating the California Relay Service Advisory Committee and the Equipment Program Advisory Committee into the TADDAC.91
The California Council for the Blind supported expanding the California Telephone Access Program to include wireless devices but desired a regional roll out of the program, rather than the current limited pilot program.92 The Council also found the LifeLine program's payment of half the monthly wireless service cost to be an "elegant solution."93
9 AT&T California Opening Comments in Response to Scoping Memo at page 7 (Aug. 24, 2007) (hereinafter "AT&T Opening Comments").
10 Id. at 8.
11 Id.
12 Id. at 9.
13 Id. at 10.
14 Id. at 11.
15 AT&T OIR Comments at 23 (July 28, 2006) (hereinafter "AT&T OIR Comments").
16 Division of Ratepayer Advocates Reply Comment on CTF at 10 (Sept. 14, 2007) (hereinafter "DRA CTF Reply Comments").
17 Id. at 10-11.
18 Id. at 12.
19 Id. at 13.
20 Id. at 14.
21 DRA Comments on Scoping Memo at page 15 (Aug. 24, 2007) (hereinafter "DRA Scoping Comments").
22 DRA CTF Reply Comments at 13.
23 Verizon California Inc., Verizon Wireless Comments at 16 (Aug. 24, 2007) (hereinafter "Verizon Comments").
24 Verizon Comments at 17 citing Appropriate Framework for Broadband, Access to the Internet over Wireline Facilities, Universal Service Obligations of Broadband Providers, Review of Regulatory Requirements for Incumbent LEC Broadband Telecommunications Services, Computer III Further Remand Proceedings: Bell Operating Company Provision of Enhanced Services; 1998 Biennial Regulatory Review - Review of Computer III and ONA Safeguards and Requirements, Conditional Petition of the Verizon Telephone Companies for Forbearance Under 47 U.S.C. § 160(c) with Regard to Broadband Services Provided Via Fiber to the Premises; Petition of the Verizon Telephone Companies for Declaratory Ruling or, Alternatively, for Interim Waiver with Regard to Broadband Services Provided Via Fiber to the Premises, Consumer Protection in the Broadband Era, Report and Order and NPRM in CC Dkt. Nos. 02-33, 01-337, 95-20, 98-10 and WC Dkt. Nos. 04-242, and 05-271, FCC 05-150 (rel. Sept. 23, 2005) (Wireline Broadband Ruling).
25 California Community Technology Group and Latino Issues Forum Scoping Comments at 7 (Aug. 24, 2007) (hereinafter "CCTG & LIF Scoping Comments").
26 Id. at 9.
27 Id. at 10.
28 SureWest Telephone and SureWest Televideo.
29 SureWest Comments at page 6 (Aug. 24, 2007), and "Small LEC" Comments at 6 (Aug. 24, 2007).
30 Cox Communications & Time Warner Cable Information Services (California) Comments (Aug. 24, 2007) at 5.
31 Id.
32 Id. at 5-6.
33 California Community College Chancellor's Office Comments at 2 (Aug. 21, 2007) (hereinafter "Chancellor Comments").
34 Id.
35 Id. at 3.
36 Id. at 4. Though the Chancellor Comments used a figure of $7.4 million per year, we believe the actual number should have been $7.2 million per year based on the components of the calculation contained in the comments. The Commission will use the $7.2 million figure as the expected amount of CTF support to be provided the community colleges.
37 Id.
38 Id. at 5.
39 College of Sequoias Comments at 1-2 (Aug. 17, 2007).
40 State Librarian Comments at 3 (Aug. 24, 2007).
41 Id. at 3-4.
42 Id. at 5.
43 Id.
44 Id. at 4-6.
45 The comments were submitted by the Butte County Office of Education in "conjunction with the California Department of Education" and signed by the Chair of the CTF Administrative Committee/Primary K-12 Representative.
46 Butte County Office of Education Comments at 1, filed by the CTF Administrative Committee Chair (Aug. 24, 2007).
47 Id. at 2.
48 Id. at 2.
49 Id. at 2.
50 Id. at 3.
51 Id.
52 Operations, Practices and Regulation of Coin and Coinless Customer-owned Pay Telephone Service; and Related Matters, D.90-06-018, 36 CPUC2d 446, 1990 Cal. PUC LEXIS 326 (closing the "COPT Investigation," I.88-04-029).
53 Statewide Expansion of Public Policy Pay Telephones, D.98-11-029, 83 CPUC2d 41, 1998 Cal. PUC LEXIS 753; see also, CPUC Resolution PSPC-1 at 3, adopted May 7, 2005.
54 Id.
55 California Payphone Association Initial Comments at 6 (Jul. 28, 2006) (hereinafter "CPA Initial Comments").
56 PSPC Committee Letter at Aug.10, 2005 (summarizing CPUC Decision 98-11-029).
57 See Id.
58 CPA Initial Comments at 4.
59 Id. at 11.
60 Id. at 11, citing FCC Trends in Telephone Service, Table 8.5 (Aug. 2001) and Table 7.5 (Apr. 2005). CPUC data indicates that the steady decline in the number of payphones cited by CPA has accelerated. In July 2007, there were 101,694 payphones in the state, a 21.4% reduction from July 2006 total of 129,369 payphones. A year prior to this period, in July of 2005, there were a total of 156,769 payphones in the state.
61 CPA Initial Comments at 11. CPSD data shows that by the end of 2007 the number of payphones had fallen further still to less than 91,000 stations (representing a 51.3% decrease in stations since 2004 and a 69.1% decrease since 1999).
62 Id. at 18-20.
63 AT&T Comments on PPEP and PPP programs at 1 (Sept. 7, 2007) (hereinafter "AT&T Comments on PPEP and PPP programs").
64 AT&T Reply Comments at 2 (Sept. 28, 2007) (hereinafter "AT&T Reply Comments").
65 AT&T suggested a one-year program for up to 50 payphones, each sponsored by an approved CTF recipient with a limit of one phone per location. AT&T Reply Comments at 2.
66 AT&T Comments on PPEP and PPP programs at 2.
67 See Id. See also, AT&T to hang up on pay phones, Los Angeles Times, December 4, 2007, available at http://www.latimes.com/business/la-fi-payphones4dec04,0,4312775.story?coll=la-home-center.
68 See AT&T Comments on PPEP and PPP programs at 2.
69 See Id.
70 Small LECs Comments at 1 (Sept. 7, 2007).
71 Verizon Reply Comments at page 2 (Sept. 28, 2007); FCC Trends in Telephone Service Table 8.5 Aug. 2001 and Table 7.5 Apr. 2005.
72 DRA Comments on PPEP and PPP programs at 1, 3 (Sept. 7, 2007) (hereinafter "DRA Comments on PPEP and PPP programs").
73 Id. at 2.
74 DRA Comments on PPEP and PPP programs at 3.
75 See Id.
76 Id. at 5.
77 DRA Reply Comments on the Order Instituting Rulemaking at 62, 63 (hereinafter "DRA OIR Reply Comments").
78 Id.
79 Id. at 62.
80 Latino Issues Forum Comments at 1- 2 (Sept. 7, 2007).
81 The California Community Technology Policy Group and Latino Issues Forum Comments at 1-2 (Sept. 25, 2007).
82 The Utility Reform Network and the National Consumer Law Center Comments at 6-7 (Sept. 7, 2007) (hereinafter "TURN/NCLC Comments").
83 Cox Payphone Program Comments at 5 (Sept. 28, 2007).
84 See Id.
85 CPA Reply Comments at 6 (Sept. 28, 2007).
86 Id. at 2-3.
87 Id. at 7-11.
88 Butte County Office of Education Comments at 1-3 (Sept. 28, 2007).
89 Telecommunications Access for the Deaf and Disabled Administrative Committee Comments at 1-2 (Aug. 20, 2007).
90 Id. at 3-4.
91 DRA OIR Reply Comments at 37, 30, 31.
92 California Council for the Blind Comments at 3 (Aug. 28, 2007).
93 See Id.
