6. Assignment of Proceeding

Rachelle B. Chong is the assigned Commissioner and Maribeth Bushey is the assigned ALJ in this proceeding.

Findings of Fact

1. The CTF was established in D.96-10-066 to provide discounted basic and advanced services to schools, libraries, qualifying hospitals and health facilities, and CBOs.

2. The review of the CTF, as initiated by this proceeding, is required by Commission directives in D.96-10-066.

3. The Commission adopted a uniform regulatory framework in D.06-08-030, generally eliminating restrictions on pricing of telecommunications services.

4. The CTF is capped at $55 million per year, but, if necessary, can be raised by staff recommendation via a Commission resolution at any time.

5. The Commission's goals to help bridge the digital divide are enhanced by reaching communities served by community colleges.

6. Service providers have refused to honor the CTF discount for DSL and other advanced communication services.

7. The federal E-Rate and Rural Health Care programs allow non-telecommunications service providers to participate in the programs to provide Internet access services.

8. Providing California Teleconnect Fund support for DSL services (provided by incumbent LECs), cable broadband and wireless Internet services and their equivalents will avoid skewing the competitive marketplace for broadband access services.

9. Voluntary participation by providers of cable broadband and wireless Internet access services is an acceptable means to getting CTF discounts to all qualifying entities who desire such services.

10. The requirement that the CTF discount be reflected in tariffed rates is an impediment to CBOs receiving advanced discounted service, such as DSL.

11. Schools and libraries that do not participate in the federal E-rate program nevertheless have their CTF funding calculated as if they were participating in the E-rate program, effectively penalizing these schools and libraries for not participating in the federal program.

12. In order to ensure that CTF accomplishes its goals, the Commission should do more to make sure there are no "information poor" in California.

13. In November 2007, the FCC approved $22.1 million over three years to help develop the CTN, which will connect more than 300 rural health care locations with each other, and with a network of specialty providers at academic medical centers and other nonprofit and for-profit health providers statewide.

14. In D.90-06-018, the Commission established a Public Policy Payphone Program with the purpose of providing payphones to the general public in the interest of public health, safety, and welfare at locations where there would otherwise not be a payphone.

15. The Public Policy Payphone Program has been funded by a monthly surcharge assessed on each payphone access line. However, by Resolution T-16590, the Commission reduced the Payphone Program surcharge from a rate of $0.08 per line per month to zero, effective December 1, 2001, and where it remains today.

16. The Public Policy Payphone Program is nonfunctional.

17. It is significant that nearly a million 9-1-1 calls came from payphones in 2007.

18. A payphone in an isolated, rural or remote location or areas where basic residential landline phone service is not present-yet where the public travels-has significant value in achieving our universal service and access to emergency service goals.

19. Our goals for the Public Policy Payphone Program are protection of public safety, health and welfare.

20. In 1990, the Commission established the Payphone Enforcement Program to enforce tariffs, rules and regulations such as signage requirements, access to 9-1-1, call re-routing and rate caps for local, long distance, and directory assistance calls by inspecting pay telephones.

21. The Payphone Enforcement Program is funded by a monthly surcharge assessed on each payphone access line, which is currently set at $0.25.

22. The declining number of payphones cannot continue to support a dedicated enforcement staff.

23. The payphone industry is under increasing economic pressure, which is exacerbated by the payphone enforcement surcharge,

24. On May 3, 2007, the Commission issued Resolution T-17089 which established a pilot program to offset the cost of wireless equipment for California Telephone Access Program-certified participants.

25. Limiting participation in the wireless pilot program to low-income individuals directs the available funds to those least likely to be able to otherwise afford to purchase the more costly wireless devices vis-à-vis landline phones for people with disabilities.

Conclusions of Law

1. The CTF is successfully enhancing our universal service goals by bringing discounted telecommunications services to California's educational institutions, libraries, government-owned hospitals and health clinics, and CBOs.

2. The Commission continues to have an obligation to ensure that universal service goals are met through the CTF and the Deaf and Disabled Telecommunications Program.

3. The Commission will seek additional comment on what procedures should be adopted to ensure that entities deemed eligible for the CTF continue to function as eligible entities, and should review the Program at least every five years to ensure that eligibility information is current.

4. Neither Pub. Util. Code § 884, nor any other section of the Public Utilities Code limits CTF to only K-12 schools; the Legislature has left it to the Commission's discretion to delineate the range of educational institutions eligible for the programs

5. The Commission may define schools eligible for CTF to include community colleges.

6. The CTF should be expanded to include the California community colleges.

7. The Commission should limit the participation of community colleges in the CTF program to $7.2 million per year, adjusted annually based on Western-CPI.

8. Participation in the CTF should not make an Internet access service provider subject to the Commission's jurisdiction; the Commission's authority over such providers should be limited to the administration of the CTF program.

9. The Commission should not adjudicate or be a forum for billing, quality of service, service, or other disputes relative to broadband Internet access services or interstate broadband services except to the extent necessary to administer the CTF program.

10. The Commission should allow telephone corporations, including registered providers, to provide CTF advanced services through affiliated entities or through partnerships.

11. CBOs that are 2-1-1 Information and Referral Service providers should be included in the list of types of entities eligible for CTF discounts.

12. To only provide California Teleconnect funds for DSL services and not for cable broadband and wireless Internet services unfairly skews the competitive marketplace for broadband access services.

13. Telephone corporations, including registered providers may provide CTF advanced services through affiliated entities or through partnerships as the certificated or registered entity shall remain legally responsible for any failure of its affiliates to fully meet those commitments.

14. The requirement that the CTF discount be reflected in tariffed rates should be discontinued for CTF-eligible services offered on a detariffed or non-regulated basis. Universal Service Rules 8.B.(3), 8.C.(1), and 8.D.(3) of D.96-10-066, Appendix B, 68 CPUC2d at 678-679, should be conformed to this modification.

15. The public interest requires creating a CTF Outreach and Assistance Unit to actively encourage and assist non-participating schools and libraries to participate in the federal E-rate and CTF programs, and to assist other CTF-eligible entities.

16. The duties of the CTF Outreach and Assistance Unit should include, but not be limited to, one-on-one coaching on filling out the appropriate forms; setting up an easy to use website to assist applicants with the procedures and forms; regular outreach efforts to non-participating schools and libraries; presentations at school and library organization functions to encourage participation; establishing instruction manuals and best practices for obtaining funding; and other creative solutions.

17. The CTF Outreach and Assistance Unit should have no fewer than two full time equivalent professional-level positions.

18. Should the CTF Outreach and Assistance Unit attain a participation rate of 100%, or as close as practicable, by eligible schools and libraries for two consecutive years, the Executive Director may discontinue or redeploy the Unit.

19. On September 26, 2006, the FCC established a rural health care pilot program, pursuant to Section 254(h)(2)(A) of the Telecommunications Act of 1996 (Act), and in November 2007, approved $22.1 million over three years to help develop the CTN.

20. Connecting rural medical facilities to urban health care providers furthers the health care goals of the CTF and funding the CTN projects is consistent with CTF purposes.

21. The CTF can already provide discounts on monthly recurring telecommunications service charges for most, but not all, CTN participants.

22. All participants in the CTN should be eligible to receive the 50 percent discount from California Teleconnect Fund for the monthly recurring CTF-eligible telecommunications services related to the CTN not paid for by the FCC's Rural Health Care Pilot Program.

23. The current Public Policy Payphone Program does not work and is not helpful in reaching our universal service goals.

24. Payphones have an important role in meeting our universal service goals, and Californians continue to use public payphones, especially in emergency situations.

25. The public interest requires a modified Public Payphone Policy Program initially for no more than 50 public payphones, supported by a surcharge levied on all California telephone users, in order to further our universal service goals.

26. The Payphone Enforcement Program is not sustainable as a stand-alone program with a separate surcharge.

27. Payphone enforcement duties should continue to be carried out by CPSD and funded through the general PUC fee.

28. The Payphone Enforcement Program surcharge should be discontinued immediately; however, local exchange carriers should continue to report on a monthly basis all payphone location and owner information to aid in the Commission's enforcement efforts.

29. The DDTP programs are working well to advance our universal service goals.

INTERIM ORDER

IT IS ORDERED that

1. Issues relating to the Universal Lifeline Telephone Service (LifeLine) program shall be addressed separately in a future decision.

2. The category of schools eligible to participate in the California Teleconnect Fund (CTF) is expanded to include California community colleges. Appendix B, Rule 8, Section B(1) of D.96-10-066, is amended to read:

"Public or nonprofit schools providing elementary or secondary education which do not have endowments of more than $50 million and California community colleges shall qualify for the discounted rates for schools."

3. The total CTF discount received by California community colleges is subject to an annual limit of $7.2 million, based on 2007 dollars, adjusted annually based on the Western-CPI rate. Carriers shall promptly submit claims. Payment of claims shall be made on a priority basis determined by the date a properly filed and valid claim is submitted, subject to the annual funding cap.

4. Certificated or registered carriers, separately or jointly with their affiliates or partners, may voluntarily offer Internet access services pursuant to the CTF program, and such offerings shall not be subject to state tariff requirements or Commission regulation. All such offerings shall comply with the CTF rules and requirements and the certificated or registered carrier shall remain responsible for ensuring compliance with CTF rules and requirements.

5. The list of services eligible for the CTF program adopted in Resolution T-16742 (May 8, 2003) shall be expanded to include Internet access services.

6. The Commission will not adjudicate or be a forum for billing, quality of service, or other disputes relative to broadband Internet access services or interstate broadband services except to the extent necessary to administer the CTF program.

7. Non-profit Community-Based Organizations providing 2-1-1 Information and Referral Service shall be eligible to participate in the CTF Program, and the program rules shall be modified to conform to this requirement.

8. The tariff requirements in Universal Service Rules 8.B.(3), 8.C.(1), and 8.D.(3)158 shall not apply to providers that offer CTF services on a detariffed or non-regulated basis. Therefore, Universal Service Rules 8.B.(3), 8.C.(1), and 8.D.(3) are revised to read:

8.B.(3): All carriers that provide on a tariffed basis the services listed in subdivision B. above, shall provide in their tariffs that the rates for qualifying schools and libraries for such services shall be 50% below the rates charged to other businesses for those services.

8.C.(1): All carriers that provide on a tariffed basis the services listed in this subdivision, shall provide in their tariffs that the rates for qualifying government owned hospitals and health clinics for such services shall be 50% below the rates charged to other businesses for those same services, or their functional equivalents.

8.D.(3): All carriers that provide on a tariffed basis the services listed in this subdivision, shall provide in their tariffs that the rates for qualifying CBOs for such services shall be 50% below the rates charged to other business for those same services, or their functional equivalents.

9. All carriers that provide CTF services on a detariffed basis and all voluntarily participating providers claiming reimbursement from the CTF program shall include with their CTF claim submittals to the Commission the rates for CTF-eligible services that were in effect at the time of the provisioning of the services for which the claim is submitted or a electronic link to a website with such information.

10. Commission staff shall update the CTF processes to reflect these changes.

11. The Executive Director shall create a California Teleconnect Fund Outreach and Assistance Unit (Unit), either within the CPUC or other state agency, to encourage and assist non-participating schools and libraries to participate in the federal and state programs, and may also provide outreach support for other CTF-eligible entities.

12. The Unit shall have no fewer than two full-time equivalent professional-level positions.

13. The duties of the Unit shall include, but not be limited to, one-on-one coaching on filling out the appropriate forms; setting up an easy to use website to assist applicants with the procedures and forms; regular outreach efforts to non-participating schools and libraries; and presentations at school and library organization functions to encourage participation.

14. The Unit shall be fully functionally no later than July 1, 2009, and should actively coordinate its efforts with the California Department of Education and other agencies as appropriate.

15. The Executive Director may discontinue or redeploy the CTF Outreach and Assistance Unit's functions after two consecutive years of 100%, or as close as practicable, participation by eligible schools and libraries in the federal and state programs has been achieved.

16. All participants in the California Telehealth Network (CTN) granted federal funding by the 2007 RHC PP Selection Order (Rural Heath Care Support Mechanism, WC Docket No. 02-60, Order, 22 FCC Rcd 20,360 (2007)) shall be eligible to receive the 50 percent discount from the CTF for the monthly recurring charges for CTF eligible communications services integral to the CTN not otherwise paid for.

17. The CTN participants may apply as a consortium to receive the CTF discount.

18. The duties of the Payphone Enforcement Program are combined with existing enforcement duties within CPSD funded by the fee established by Pub. Util. Code § 431.

19. The Payphone Enforcement Program surcharge applicable to all local exchange carriers and competitive local exchange carriers providing intrastate payphone line service as ordered by D.98-11-029 and as amended in subsequent resolutions is eliminated. To aid in the Commission's enforcement efforts, we will retain the requirement that local exchange carriers report monthly on payphone location and owner information.

20. The Executive Director shall make all reasonable efforts to augment the Commission budget to provide for payphone enforcement duties as required by Pub. Util. Code § 742.

21. The existing Public Policy Payphone Program established pursuant to D.90-06-018 and modified and expanded statewide by D.98-11-029 is eliminated.

22. No later than July 1, 2009, the Executive Director shall implement a limited Public Policy Payphone Program that provides for payment of up to 50% of the otherwise applicable monthly charges subject to the following limitations:

a. No more than 50 public payphones shall initially be funded by the program.

b. The program shall be funded initially by all remaining funds in the existing Payphone Programs' accounts.

c. To the extent additional funds are needed, the Executive Director shall determine an appropriate means to levy a surcharge on all intrastate telephone service ratepayers, which may include utilizing an existing program.

23. Determinations to fund Public Policy Payphones pursuant to the new Program shall be based on the following criteria:

a. enhance public health and safety;

b. rural or remote area with significant public traffic, even if only seasonally;

c. interstate or state highway rest stop;

d. low income or disadvantaged community setting with limited landline telephone availability;

e. demonstrated need for a public payphone, with the request supported by a governmental entity or local community group willing to pay at least half the costs; or

f. presentation of other facts justifying the need for a publicly supported payphone.

24. The new Public Policy Payphone Program shall be administered in a streamlined manner with an eye toward controlling costs.

25. Should the number of public policy payphones in the new Public Policy Payphone Program fall below ten, the Executive Director may recommend to the Commission that the program be terminated.

26. Commission staff shall continue to monitor the Deaf and Disabled Telecommunications wireless equipment pilot program and report back on its results along with any further recommendations to enhance the program.

27. Commission staff shall hold such workshops as may be necessary and helpful in implementing these changes to the Telecommunications Public Policy Programs.

This order is effective today.

Dated June 12, 2008, at San Francisco, California.

158 D.96-10-066, Appendix B, 68 CPUC2d at 678-679.

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