IV. 2006 Review of the Telecommunications Public Policy Programs
Under the leadership of Commissioner Rachelle Chong, the Commission Staff began to prepare for the first formal and comprehensive review of the Telecommunications Public Policy Programs.5 The preparations included a staff report, written comments, and a well-attended, two-day workshop.
A. Staff Report
On April 14, 2006, the Commission's Telecommunications, Strategic Planning, and Legal Divisions issued their Staff Report on Public Policy Programs (Staff Report). The Staff Report described each Telecommunications Public Policy Program, including its participants and funding.
The Staff Report also presented several reasons for comprehensive review of the programs. First, the programs have not been reviewed to assess whether they are successful in meeting their goals or complying with any statutory requirements. Second, telecommunications technology has advanced substantially since the inception of the programs, and the current programs may not provide the technology necessary to meet modern telecommunications needs. For example, the LifeLine Program provides subsidized residential local telephone service and does not include any form of wireless telephone service. Today, many low-income persons find that the mobility of wireless service and the national calling range provides them better value than stationary landline service. Third, program funding may also be affected by changing technology since due to Commission jurisdictional limitations, as the new telecommunications services may not be subject to Public Policy Program funding requirements. Services provided over the Internet, such as VoIP, are a primary example.
Several other new concepts were discussed in the report and presented for consideration. "Technological neutrality" was used to refer to the possibility of expanding the Programs to include telecommunications services provided by other than landline telephone providers, such as wireless services. Such expanded programs would allow customers to choose the means through which they receive telecommunications service, and the program benefit would apply regardless of the technology employed.
"Bundled services" refers to the practice of many service providers who offer discounts to customers purchasing multiple services in a bundle or package. A typical example would be to offer three or more calling features, such as call waiting, call forwarding, or caller identification at a price lower if the three features are purchased separately. The LifeLine Program applies only to basic residential service and thus customers who desire to take advantage of any potentially discounted group of services cannot apply the discounts to the bundles that include basic service. Thus, Lifeline customers are prevented from subscribing to the more economical bundled package. The Staff Report suggested restructuring the program to foster customer choice, while at the same time retaining local telephone service protections.
The Staff Report concluded with an extensive list of questions on each program, and invited written comment.
B. Written Comments on the Staff Report
The following parties provided written comments on the Staff Report: National Consumer Law Center and AARP, jointly; Division of Ratepayer Advocates (DRA); The Utility Reform Network (TURN); Disability Rights Advocates; California Coalition of Agencies Serving the Deaf and Hard of Hearing; Latino Issues Forum; The Greenlining Institute; AT&T - California (AT&T); and, Fones4All Corporation (Fones4All).
The National Consumer Law Center and AARP stated that current telecommunication services have advanced beyond local landline service to include wireless- and Internet-based services, which are particularly valuable to customers with limited mobility, vision and hearing. These developments suggest that the Commission should take a fresh look at these advanced services that have become commonplace since the Programs were created. The need for balance between desirable features and funding needs was also recognized. The comments sought further clarification on the concepts of technological neutrality, bundled services, and understanding why all wireless and some competitive local carriers choose not to offer LifeLine services. Consumer protections, such as disconnection rules, and Program enrollment were also discussed. These comments raised new issues including municipal wireless Internet service; services for the homeless, including Community Voice Mail;6 and using fines, penalties, and unclaimed utility deposits to supplement program funding.
DRA's comments supported the goals of the Public Policy Programs - ensuring that telecommunications services are economical and accessible for low-income customers, deaf and disabled customers, and schools and libraries. DRA pointed out that these Programs are funded by surcharges on all other customers, with all customers and the California economic climate benefiting from efficient and effective Programs. DRA recommended that the Commission employ a rigorous cost-benefit analysis to evaluate any proposed program or equipment expansion. DRA also suggested that Commission consider giving customers more control and choice over services and providers.
TURN's comments also urged the Commission to consider the cost impacts of any potential Program expansion. TURN pointed out that the benefits of expansion must be weighed against the costs, if we are to avoid undermining the financial sustainability of the Programs. TURN opposed the conclusion offered in the Staff Report that all Program offerings should be "technologically neutral" and suggested that the Commission should take comment on the definition of the term and whether it is an appropriate goal. TURN also disputed what it characterized as the apparent conclusion in the Staff Report that bundled service offerings necessarily offer customers a better deal than stand-alone services. TURN recommended that this Commission be cognizant of federal policy on these Programs, but not surrender autonomy. TURN also mentioned customer privacy and the reliability and accessibility of emergency services with advanced services.
Disability Rights Advocates explained that persons with disabilities have unique telecommunications needs, which the Commission must consider. Specifically, Disability Rights Advocates recommended that the Commission enhance communication and outreach to consumers with disabilities. On the subject of technology neutrality, the group supported the concept but requested flexibility as the needs of disabled persons differ. Similarly, the definition of basic service or service bundles must reflect the unique needs of people with disabilities. Finally, Disability Rights Advocates supported enhanced Program reporting mechanisms for service to disabled persons.
The California Coalition of Agencies Serving the Deaf and Hard of Hearing advocated for increased outreach and marketing efforts for all Programs. The Coalition argued that the LifeLine and Deaf and Disabled Programs should be expanded to include wireless and broadband services and equipment for the Deaf and Disabled. The Coalition also recommended numerous administrative changes, including increasing Commission staff assigned to the Deaf and Disabled Program.
The Latino Issues Forum supported expanding the LifeLine Program to include advanced technologies, such as wireless, and reevaluating the limitation of one account per household. It further recommended using community-based organizations for outreach and enrollment was also supported, as well as automatic enrollment across other utility low-income programs. The Latino Issues Forum was cautious on the proposal to allow the LifeLine discount to be used for bundled services. It maintained that protections are necessary to ensure that customers are not unduly directed towards expensive bundles, and that basic LifeLine service should be maintained even if the customer is unable to pay the bill for the entire package.
The Greenlining Institute announced that it is conducting a study to assess whether the LifeLine Program serves the technological and social needs of low-income consumers. When available, the study results would be provided to the Commission and interested parties. Greenlining also supported expanding the LifeLine Program to include cellular telephone, broadband Internet, and Voice over Internet Protocol services. Greenlining recommended an information hearing to resolve jurisdictional issues.
AT&T agreed that the programs should be reviewed and, if warranted, modified to optimize telecommunications access for eligible low-income households, ensure modern telecommunications technology is available to the deaf and disabled community, and provide needed telecommunications services to educational and health care institutions, and community-based organizations. AT&T supported redesigning the funding mechanism, enticing broader service provider participation, and enhancing the role of customer choice in the Programs. AT&T proposed that the Commission institute a policy of limiting its authority over any Program service provider to that necessary to administer the program, in an effort to encourage voluntary participation by entities not subject to the Commission's jurisdiction. AT&T supported expanding the definition of basic service in the LifeLine Program but any such expansion must conform to the Federal Communications Commission's guidelines, or would otherwise risk the $300 million of federal funds received by California for the Program. AT&T stated that a means test for Deaf and Disabled equipment would allow the Program to focus its resources on those most in need, and provide up-to-date equipment and thorough outreach. AT&T recommended that the Commission consider replacing the discounts in the Programs with rebates. AT&T contended that a rebate approach would allow participants greater choice by including services over which the Commission has no jurisdiction. AT&T also supported continued cost recovery for program administration, and limiting any reporting requirements.
AT&T's most urgent recommendation was that the Commission adopt a different means to determine the LifeLine discount, which is currently set at the lesser of one-half the utility's tariffed rate or AT&T's tariffed rate. AT&T explained that in Rulemaking 05-04-005, the Commission is considering changes to the regulatory framework under which AT&T provides telecommunications service in California. These changes may include modifications to the type of tariffs AT&T is required to file such that AT&T may not have a comparable tariff in the future.
AT&T also provided a proposal for expanding the funding base. AT&T suggested replacing the current surcharge on jurisdictional revenue with an assessment on working telephone numbers. AT&T stated that such a system would provide stability and predictability for both customers and carriers. AT&T provided further detail on its funding proposal during its presentation at the workshop, discussed below.
Fones4All explained that it is a facilities-based, competitive local carrier that specializes in bringing high-quality service to low-income customers, and that it has participated in the LifeLine program for six years. Fones4All recommended that the Commission reimburse carriers for outreach expenses for the LifeLine Program, and include cellular and Voice over Internet Protocol (VoIP) in the definition of basic service. Fones4All stated that the best way to increase the number of LifeLine service providers would be to allow the carriers to be reimbursed for their actual costs, rather than being capped at the incumbent local exchange carrier's tariffed rate.
C. Pre-Rulemaking Workshop
In anticipation of this proceeding, Commissioner Chong convened a workshop to take comment on the Staff Report and discuss potential issues which could be addressed in this proceeding. The two-day workshop covered issues related to funding the Telecommunications Public Policy Programs, as well as potential improvements to the specific programs. Many parties submitted written comments that are summarized above, and other parties made presentations at the workshop that are summarized below. The workshop was well-attended and lively discussions ensued.
On the funding topic, AT&T explained that it had presented its proposal to fund Public Policy Programs with an assessment on working telephone numbers to the Federal Communications Commission, and that AT&T was cautiously optimistic that the proposal might be acted on by late 2006. This proposal, and the importance of California adopting a funding mechanism that was consistent with the Federal system, were the main topics of discussion on funding. AT&T agreed to provide additional documents that it had prepared for the Federal Communications Commission, which set out further details of AT&T's proposal.
Discussion participants agreed that any funding mechanism must be broad-based and include all technological means of delivering telecommunications service to ensure program sustainability as well as competitive neutrality. Specifically, participants noted that substantial numbers of customers have migrated from landline telephones to wireless in recent years, and that a similar migration may be underway to VoIP services. AT&T's funding proposal is based on working telephone numbers, regardless of the technology used, and thus would be able to accommodate this type of migration, while being fair to all competitors. AT&T's proposal, however, would set the surcharge at a particular amount, which would remain the same and not fluctuate based on revenue. Pursuant to the current funding system, a customer with a high volume of jurisdictional charges would pay more than a customer with a low volume. Some discussion centered on whether AT&T's proposal would be regressive as lower income customers could be disproportionately impacted by the set fee.
A surprise topic was the Commission's two Public Payphone Programs, which were not included in the Staff Report. A representative of the California Payphone Association offered comments on the two programs - the Payphone Service Provider Enforcement Program and the Public Policy Payphone Program. The Payphone Enforcement Program ensures that all payphones maintain a minimum standard of service and provide 911 and 711 access without charge. The Public Policy Payphone Program acts on requests for payphones to be placed in locations for public policy reasons, rather than the business determinations of the provider. Both programs are funded by a surcharge on each payphone line, which is in jeopardy as the number of payphones has declined from 400,000 to 150,000 over the last eight years. The payphones that remain economically viable may serve low-income and transient customers who are often not included in the telecommunications system.
On the topic of the LifeLine Program, Fones4All and Telscape Communications, carriers that actively seek out LifeLine customers, explained that effective outreach requires being in the places where potential LifeLine customers live and work, as well as providing services in the appropriate language and locations. Compensation for outreach efforts in the form of cost reimbursement or a commission was discussed.
Many participants recommended expanding the LifeLine Program to include other telecommunications services, such as wireless telephones and high-speed Internet access, while other participants raised implementation issues with the proposed expansion. Some of the alternative service providers, such as VoIP, are not currently within the Commission's jurisdiction, and others choose not to participate. Options for enticing participation in an expanded program were discussed. Creating a menu of services to which an expanded LifeLine subsidy might be applied was one idea considered, with a telecommunications coupon being suggested as a means to distribute the subsidy to customers. Such a proposal could advance the goal of being technology neutral by not favoring a particular telecommunications means. The current program is perceived as favoring residential landline telephones because the subsidy may only be applied to that type of service.
Quality of service standards, however, differ among the alternative services. For example, one discussion participant uses wireless service for long distance and convenience but still maintains a landline telephone for service quality and reliability reasons. Also local landline customers enjoy certain non-disconnection advantages over other services.
Most participants agreed that keeping the service affordable was important. Similarly, the cost of any program expansion and the resulting surcharge were identified as critical issues. The majority of discussion participants agreed that the California LifeLine Program should continue to adhere to federal requirements to ensure on-going funding.
The California Teleconnect Fund, and especially the related work of the Commission's staff, was generally praised, but commenters stated that additional outreach to potential customers was needed. Adding community colleges to the list of eligible entities was suggested, as was adding DSL to the list of eligible services. Community-based organizations particularly sought additional outreach efforts. Budgetary limitations for meetings and statutory conflict of interest prohibitions were issues common to all oversight committees. Billing complexity for both the carriers and the applicants was another cited problem.
The California Telephone Access Project provides equipment to persons of limited hearing, mobility, vision, speech, manipulation, and cognition. This project is a component of the Deaf and Disabled Telecommunications Program. The new equipment program name gathered praise as its assists in marketing the program to persons who could benefit from the equipment but who would not described themselves as "disabled."
To date, the equipment program has been free of charge to qualified customers. The proposal to limit equipment program eligibility based on income was generally opposed, because current program funding is below the entire authorized surcharge level. Concerns were raised about replacing the current equipment-based program where the state lends equipment free of charge with a coupon to purchase equipment. The current system provides customers with unbiased advice in equipment selection and training in proper use. Organizational recommendations included designating one person in the Commission Telecommunications Division to handle all Program issues, adding Commission staff with disability expertise similar to the FCC's Disabilities Rights Office, and issuing a master services contract for staff work.
Incorporating new and emerging technology into the current landline only program was the primary topic of many presentations and of the ensuing discussion. Wireless telephones, Internet-based communication, and video allow disabled customers to achieve the level of communication convenience and reliability available to other customers, a concept referred to as "functional equivalence." The program, however, is currently exclusively tied to landline telephone equipment, and thus has become less relevant to some portions of the disabled community. For example, Internet-based, two-way video conferencing could provide critical communication capability for persons using sign language to communicate, but is not included in the current Program. Similarly, a wireless service with text messaging capability would enable mobile text-based communications for those customers who require it. High-speed Internet service was mentioned most often as a needed service that the current program does not include.
The advisory committees are in the process of preparing a request that the Commission expand the current Program to include wireless equipment. The Commission's legal counsel has informally advised that such an expansion would be consistent with existing law. Also in progress are negotiations with service providers for discounted service charges. Monthly service charges of any type are not included in the Program.
The need for a variety of options to meet individual needs was also emphasized. Commenters maintained that customers need a broader range of choice among technologies and services to meet their particular needs.
5 The Commission has recently reviewed and modified our advisory committees as required by Pub. Util. Code §§ 270-281. The advisory committee structure and program governance will not be included in the scope of this proceeding.
6 Community Voice Mail is service provided at no cost to persons in transition seeking employment, housing, and continued connections with family and friends. The service is headquartered near Seattle, Washington, but partners with local service providers to reach clients. Local telephone service, or soon Internet service, is needed to access the voice mail. See www.cvm.org.
