ALJ/TRP/sid Date of Issuance 6/23/2009

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking Regarding Revisions to the California High Cost Fund B Program.

FILED PUBLIC UTILITIES COMMISSION JUNE 18, 2009 SAN FRANCISCO, CALIFORNIA RULEMAKING 09-06-019

ORDER INSTITUTING RULEMAKING ON REFORMS TO THE

CALIFORNIA HIGH COST FUND B PROGRAM

1. Summary

We hereby institute a new rulemaking to address important reforms to the state's California High Cost Fund B (B-Fund) program, as discussed below. The B-Fund program was designed to ensure that basic telephone service remains affordable in high cost areas served by the major incumbent local exchange carriers (ILECs). This will be a successor proceeding to Rulemaking (R.) 06-06-028, as previously instituted to review and reform the B-Fund program. Given the passage of time since the B-Fund program began back in the mid 1990s, R.06-06-028 was instituted as a forum for much-needed reform and updating of the program in view of changes in markets and technologies.

Although R.06-06-028 has made important progress in reforming the B-Fund program, important issues still remain unresolved. For purposes of resolving these remaining issues, we consider it appropriate to open a new successor proceeding, as outlined below. In a separate order, we will close R.06-06-028 so that any subsequent B-Fund reform measures will be considered exclusively in this new rulemaking.