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On September 27, 2012, the Commission held its regularly-scheduled agenda meeting.  No telecommunications items were discussed on the regular agenda, but the Commission approved the California LifeLine fiscal year 2013-14 budget recommendation on the consent agenda.  In addition, the Commission once again held the proposed decision in the basic service redefinition proceeding.  These and other items of interest on the Commission’s agenda are discussed below.

CONSENT AGENDA ITEMS

California LifeLine Program Expense Budget Adopted for Fiscal Year 2013-14 – (Item 4, adopted on consent agenda) – This Resolution adopts an expense budget recommendation of $282.753 million for the Universal Lifeline Telephone Service (“ULTS” or “California LifeLine”) for FY 2013-14.  The California LifeLine program provides discounted basic telephone services to qualifying households with incomes below 150% of the federal poverty guidelines. The California LifeLine program is funded by a surcharged assessed against intrastate charges of end-users of all telecommunications service providers.  The current surcharge rate is 1.150%.  The proposed budget is based on a $12 million projected decrease in carrier claims from $330 million to $318 million, an increase in CPUC staff costs from $1.280 million to $1.393 million, an increase in the California LifeLine administrator contract of $355,000, and other costs including auditing, pro-rata interagency, marketing and outreach, banking fees, data processing automation, and administrative committee costs.

In a previously circulated Draft Resolution, the Communications Division initially recommended an expense budget of $347.553 million.  This figure included a $64.8 million appropriation to accommodate projected increases in carrier claims in anticipation of federal-only wireless providers obtaining permission to claim from the California LifeLine fund.  However, the Staff reduced the budget recommendation the basis that it would be financially imprudent to increase budget appropriations in light of the uncertainties in the California LifeLine proceeding and the ongoing discussions on revising the basic service definition.

A copy of the Draft Resolution underlying this item is available at the following link.

SmartRiverside Approved as the Fiscal Agent for the Inland Empire Regional Broadband Consortium (Item 12, adopted on consent agenda) – This Resolution approves SmartRiverside as the fiscal agent for the Inland Empire Regional Broadband Consortium (“IERBC” ).  In March 2012, IERBC was awarded $450,000 through the California Advanced Services Fund  (“CASF”)’s Broadband Consortia Grant Account.  At that time, the Commission also appointed the San Bernardino Economic Development Corporation (“SBEDC”) as the fiscal agent.  However, due to the State of California’s Department of Finance’s shutdown of economic development agencies throughout the state, the SBEDC could no longer continue its role as the IERBC’s fiscal agent.  This Resolution approves the IERBC’s change of fiscal agent from SBEDC to SmartRiverside.  As the IERBC’s fiscal agent, SmartRiverside will administer the fiscal responsibilities of the IERBC in accordance with the California Advanced Services Fund Regional Consortia Administrative Manual.

A copy of the Draft Resolution underlying this item is available at the following link.

SIGNIFICANT HELD ITEMS

 
Proposed Decision and Alternative Proposed Decision to Revise the Definition of Basic Telephone Service (Items 27 and 27a, held by Ferron until 10/25/12) – This Proposed Decision would adopt revisions to the definition of basic telephone service that would be applied to carriers seeking to receive support from the California High Cost Fund-B and/or the California LifeLine programs.  The current basic telephone service definition was adopted in 1996.  The Commission’s stated goals in reviewing the basic service definition are to (a) consolidate and streamline existing listings of service elements, (b) apply technology-neutral terminology and definitions, and (c) avoid degrading standards necessary to meet essential universal service needs.

An Alternate Proposed Decision of Commissioner Florio was made available on July 18, 2012 and revised on September 26, 2012.  The Alternate differs from the Proposed Decision in a number of substantive ways.  A few notable differences include requirements for: (1) providers to maintain tariffs for their basic service offerings; (2) basic service to be offered at monthly rates with no contracts; (3) basic service to be offered as a stand-alone option; (4) basic service providers to provide unlimited incoming calls with no per-minute or per-call charges; (5) all basic service providers to offer a flat rate for unlimited outgoing calls within a specified calling area; and (6) all COLRs, unless exempted, to offer measured rate basic service options.  The recent revision to the Alternate establishes that the updated basic service definition will only serve as a baseline starting point in the LifeLine proceeding by allowing the Commission to “add, subtract, or otherwise refine elements applicable to Lifeline service.”  Furthermore, the revised Alternate provides that the “Commission also may address service quality issues relevant to Lifeline providers and may modify the flexibility granted in this Order for residential basic telephone service offered by carriers that are not Carriers of Last Resort and wish to provide Lifeline service[.]”  In addition, the revised Alternate removes the requirement for free non-published listings to be part of the basic service definition.

A copy of the Proposed Decision underlying this item is available at the following link.

A copy of the revised Alternate Proposed Decision is available at the following link.

Proposed Deaf and Disabled Telecommunications Program Expense Budget for Fiscal Year 2013-14
(Item 2, held by staff until 10/11/12) – This Draft Resolution would adopt an expense budget recommendation of $63.1 million for FY 2013-14 for the Deaf and Disabled Telecommunications Equipment and Relay Service Program (“DDTP”).  The DDTP provides specialized equipment to the deaf and hard of hearing throughout the State of California.  The proposed budget would be allocated to CPUC staff costs ($1.38 million), delivery of DDTP services ($30.1 million), DDTP administration expenses ($721,000), California relay services ($13 million), equipment purchases ($17.4 million), committee expenses ($310,000), EPAC ($11,000) and TPIC ($120,000).

In a previously circulated Draft Resolution, the Communications Division initially recommended a budget of $76.11 million.  After considering actual program expenses during FY 2011-12, anticipated program expenses for FY 2012-13, and predicted expenses for the FY 2013-14, CD revised the proposed budget to reduce appropriations for California relay services ($5 million) and for equipment purchases ($8.4 million). 

A copy of the Draft Resolution underlying this item is available at the following link.

Proposed California Teleconnect Fund Expense Budget for Fiscal Year 2013-14  (Item 3, held by Simon until 10/11/12) –  This Draft Resolution would adopt the following budget item recommendations for the California Teleconnect Fund (“CTF”):  (1) a FY 2013-14 budget of $92,429,000; (2) an increase of the annual appropriations cap by $194,000 to $92,429,000; and (3) set a cap of $11,167,000 on the total discounts available for community colleges for FY 2013-14.  CTF was created to enhance universal service goals by providing discounted rates for telecommunication services for qualifying schools, libraries, government-owned health care providers, and community based organizations.  The CTF program is funded by a surcharge assessed on revenues collected from consumers for intrastate telecommunication services.  The current surcharge rate is 0.079% but the Commission is currently considering an increase as discussed below.  The CTF recommended budget would be allocated to carriers providing CTF discounted services ($86.646 million); interest payments ($50,000); financial and compliance audits ($750,000); Advisory Committee expenses ($34,000); CPUC Staff costs ($1.112 million); inter-agency costs ($289,000); programming and automation expenses ($2.148 million); and outreach services ($1.4 million).  DRA has raised concerns on whether the CTF program is funding the appropriate entities and has urged the Commission to re-examine whether certain categories of entities still require CTF subsidies.

In a previously-circulated Draft Resolution, the Communications Division recommended a budget of $117,233,000 to accommodate the projected cost increases related to a newly implemented outreach program.  However, Staff reduced the appropriations after determining that it would be financially imprudent to project expenses two years into the future based on limited data from a new program.

A copy of the Draft Resolution underlying this item is available at the following link.

Proposed California Teleconnect Fund Surcharge Rate Increase (Item 9, held by Simon until 10/11/12) – This Draft Resolution would approve the California Teleconnect Fund (“CTF”) surcharge rate increase from 0.079% to 0.59%. The current CTF surcharge generates less revenue per month than expenses paid by the program and has been supplemented by several loan repayments from the Department of Financing.  However, notwithstanding the Department of Financing’s loan repayments, the current CTF surcharge is not collecting enough to meet future needs.  The increased CTF surcharge would allow the CTF to meet its expense obligations by generating $52.876 million in revenue during FY 2012-13 and $93.263 million during FY 2013-14.  Carriers would assess a CTF surcharge rate of 0.59% on revenues collected from end users for intrastate telecommunications services subject to surcharge beginning on November 1, 2012.

A copy of the Draft Resolution underlying this item is available at the following link.

G3 USA Telecom, Inc.’s  Application for Certificate of Public Convenience and Necessity (Item 21, held by Florio until 10/11/12) – This Proposed Decision would grant G3 Telecom USA, Inc. (“G3 Telecom”) a Certificate of Public Convenience and Necessity to provide resold interexchange service in the State of California.  G3 Telecom’s principal place of business is located in Toronto, Ontario, Canada but it plans to offer prepaid and postpaid long distance service to business and residential customers in the State of California.  This Proposed Decision would also decline to impose a sanction on G3 Telecom for its failure to disclose a citation issued by the Canadian Radio-Television and Telecommunications Commission (“Canadian Commission”) to its affiliate for violation of telemarketing rules.  The Proposed Decision would find that G3 Telecom did not violate Rule 1.1 because the citation resulted from the activities of third-party telemarketers who were marketing G3 Telecom’s services, the problems have been corrected, and no penalty was imposed by the Canadian Commission based on the citation.
 
A copy of the Proposed Decision underlying this item is available at the following link.

NOTES AND COMMISSIONER REPORTS
During the public session, a number of speakers spoke out in support of President Peevey’s proposed definition of basic service.  These speakers emphasized the need to update the basic service definition to include reliable wireless and broadband technology. 
 
Commissioner Sandoval noted her attendance at the LifeLine Direct Application Processing Workshop on Tuesday.  She once again expressed her support for  the proposed process.   She explained that the new application process, which is scheduled to go live for a pilot group of wireless carriers on November 1st, will allow customers to walk into a carrier’s store to apply for LifeLine discounts.  She commended the new process as a technological step forward that will eliminate delays in the LifeLine application process.  She also indicated that the Commission will be exploring a second phase to the process that would also allow Community Based Organizations to assist in the LifeLine application process.  Commissioner Simon did not attend the Direct Application Processing workshop; however, he expressed his approval and support of the proposed process.  Through his broadband advisor, he was told that the workshop was “an amazingly effective and inspiring gathering.”  He noted that California is behind other states in offering lifeline support to wireless carriers and commended Nexus, Cricket, and Virgin for bringing the LifeLine application process directly to the customers.  He appreciates that the new process will eliminate the “middle-man bureaucracy.” 
 
Commissioner Florio announced the recent release of a revised Alternate Proposed Decision on the basic service definition and he invited the other Commissioners to comment on the revisions.  President Peevey noted that he had not had the opportunity to review Commissioner Florio’s revised Alternate.  However, he urged the Commissioners to consider the thoughtful comments received from former Assemblywoman Gwen Moore and the Rainbow PUSH Coalition in support of his Proposed Decision. 
 
Commissioner Ferron noted a recent tour he had at the AT&T central station and he expressed his appreciation for the opportunity. 
 
General Counsel Frank Lindh announced the retirement of two members of Legal Divisions, Arocles Aguilar and Lionel Wilson.  
 


If you have questions regarding any of the above items, or the underlying proceedings in which they arose, please feel free to contact us.

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