2. Background

The ULTS program provides affordable basic exchange telephone service to low-income residential subscribers. In D.00-10-028, the Commission adopted numerous and significant modifications 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 ("rates") for basic residential service over the lower ULTS rates. D.00-10-028 limited the recovery of lost revenues for all utilities to the amount of lost revenues that the incumbent local exchange carrier recovers from the ULTS program. The limit on the recovery of lost revenues established by D.00-10-028 became effective on April 2, 2001.

FONES4ALL is authorized by D.00-05-010 to provide resold local exchange services as a competitive local carrier in the service territories of Pacific Bell (Pacific) and Verizon California, Inc. (Verizon). Most, if not all, of FONES4ALL's customers are ULTS subscribers.

Prior to D.00-10-028, FONES4ALL was able to recover from the ULTS Fund an amount of lost revenues equal to the difference between FONES4ALL's regular tariffed rates and the lower ULTS rates. For example, FONES4ALL regular tariffed rate for fixed-rate local service (FRS) is $50 per month, while the ULTS rate is $5.34 per month. Thus, prior to D.00-10-028, FONES4ALL could recover $44.66 per month from the ULTS Fund for each of its customers subscribing to FRS under the ULTS program.

D.00-10-028 limited FONES4ALL's recovery of lost revenues from the ULTS Fund to what Pacific and Verizon recover from the ULTS Fund. Pacific and Verizon have significantly lower tariffed rates than FONES4ALL. For example, Pacific's tariffed rate for FRS is $10.68 per month, and Verizon's is $16.85 per month. Thus, Pacific recovers $5.34 per month¹ in lost revenues for each ULTS customer subscribing to FRS, and Verizon recovers $11.51 per month.² As a result, for every ULTS customer in Pacific's service territory served by FONES4ALL, FONES4ALL's recovery of lost revenues was reduced by D.00-10-028 from $44.66 per month for FRS to $5.34 per month. Similarly, for every ULTS customer in Verizon's service territory served by FONES4ALL, FONES4ALL's recovery of lost revenues was reduced by D.00-10-028 from $44.66 per month for FRS to $11.51 per month.

On March 14, 2001, FONES4ALL filed a petition to modify D.00-10-028. In its petition, FONES4ALL asks the Commission to modify D.00-10-028 to increase the amount of lost revenues that FONES4ALL may recover from the ULTS Fund. Along with its petition, FONES4ALL filed an emergency motion to stay the provisions in D.00-10-028 pertaining to the recovery of lost revenues while the Commission considers FONES4ALL's petition to modify D.00-10-028.

FONES4ALL served its petition and motion on the service list for Rulemaking 98-09-005, the proceeding in which D.00-10-028 was issued. Notice of the petition appeared in the Daily Calendar on March 16, 2001. There were no responses to the petition or motion.