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On Thursday, May 3, 2007, the CPUC held its regularly-scheduled agenda meeting. The most significant telecommunications item on today’s agenda was the decision modifying the certification and verification procedures under the LifeLine program. The Commission also closed the local competition docket, and adopted a pilot program to expand DDTP subsidies to wireless devices. These and other items of interest from today’s meeting are discussed in detail below.


REGULAR AND CONSENT AGENDA ITEMS

  • Further Modifications to California LifeLine Program Adopted (Item 49, adopted 5-0) – After several months of formal and informal efforts to address problems with the California LifeLine program, this decision adopted some formal solutions that the Commission hopes will solve some of the problems. In November 2006, the Commission stayed the process for verifying the income eligibility of existing LifeLine customers (the “verification” process). The stay was prompted by a wave of customer complaints, and by data showing that customers were not returning LifeLine verification documents at a sufficient rate. The process for certifying the income eligibility of new customers (the “certification” process”) remained in place, but has been the subject of extensive discussions amongst stakeholders regarding how the process can be improved.

    This decision adopts a variety of changes to the manner in which the certification and verification have been handled. The decision is intended to dovetail with modifications to the Commission’s contract with the third-party certifying agent in charge of confirming customer eligibility for the program. The changes to the program contained in the decision range from altering the color of the LifeLine envelopes to expanding the timeframe for customers to return certification and verification documents. The Commission also recognized the significance of mailing delays in causing the problems with the program. The certifying agent has been sending LifeLine documents via standard mail, and as a result, customers have not been receiving these documents in a timely manner. The decision also provides that carriers must send “reminder notices” to new LifeLine customers reminding them to look for documents from the certifying agent. The decision contains many other “short-term” and “long-term” proposals that the Commission hopes will improve the situation for LifeLine customers, for the Commission, and for carriers.

    Commissioner Grueneich introduced this item, characterizing it as “the next step in getting LifeLine back on track.” She observed that the Commission has learned a lot since the income certification / verification program was implemented in July 2006, and that if “we had known then what we know now, we would have done something different.” She announced that the verification process will be reinstated starting on June 1, 2007. At first, only 20% of existing LifeLine customers will be subject to verification, and the staff will gradually migrate the remainder of the customers into the verification cycle. Grueneich specifically recognized that the “use of standard mail is not satisfactory,” and that a second phase of this proceeding will be necessary to examine long-term solutions. The Commission staff will continue working with interested parties, and will report monthly on how this effort is progressing.

    Commissioners Chong and Bohn also offered comments on the decision. Bohn suggested that “first-class mail could resolve many of the problems that we are encountering.” With an air of realism, he also stated that “we do need to recognize that some people are not eligible for the program.” He also lamented that California’s program had become too expensive and too complicated. Bohn mentioned that this decision approves a $10 million increase in the certifying agent’s contract, and that many other states have been able to structure their programs in simpler ways. He encouraged the staff to consider ways to streamline the program going forward. Commissioner Chong emphasized the complaint backlog that this issue has created at the Commission. According to Chong, the Commission still has about 3,800 pending complaints. She is checking in on a regular basis with the Consumer Affairs Branch to make sure that they have adequate resources to handle the issues. Chong also echoed Bohn’s sentiments that the “mail issue” had been identified as an important cause of the problems with the program. Following these comments from the Commissioners, the item was adopted unanimously.

  • Local Competition Proceeding Closed (Item 15, adopted on consent agenda) – After remaining open for more than twelve years, the Commission issued an order closing the local competition proceeding, R.95-04-043. The proceeding was opened to establish a basic regulatory structure to usher in local exchange competition. In this proceeding, the Commission evaluated a wide variety of important telecommunications issues, including the “CLEC rules,” VNXX issues, numbering / area code issues, and issues related to the FCC’s Triennial Review Order and Triennial Review Remand Order. The proceeding also became a generalized forum for the resolution of disputes between carriers, and for carriers to seek generalized relief from the Commission.

    In closing this proceeding, the Commission also resolved some residual issues that were still under consideration in the docket. The order dismisses pending petitions by Verizon and AT&T for modification to a prior “batch hot cut” decision, in light of ongoing negotiations with Covad to resolve the parties’ differences. The order directs parties to file applications or petitions for rulemaking to address other issues that have been traditionally been raised in the local competition context, including numbering disputes and carrier-to-carrier disputes. However, the Commission recognizes that the dispute resolution standards established in the proceeding (D.95-12-056) remain valid.

    Commissioner Peevey briefly introduced this item, noting that the local competition proceeding had resulted in more than 200 Commission decisions. As Peevey observed, most of these decisions were written by ALJ Pulsifer. Peevey thanked Pulsifer for his work in this proceeding, and expressed relief that the decision had finally come to a close.

  • DDTP Pilot Program Initiated to Subsidize Use of Wireless Devices by the Deaf and Disabled Community, Resolution T-17089 (Item 19, adopted 5-0) – Based on advocacy from the deaf and disabled community, and the urgings of the Deaf and Disabled Telecommunications Program (“DDTP”) advisory board, the Commission has adopted a pilot program to “offset the costs of wireless equipment” for customers who qualify under the Commission’s California Telephone Access Program (“CTAP”) and who also meet the low-income thresholds of the LifeLine program. Under this program, qualifying disabled and/or deaf individuals will be able to receive discounts toward purchases of text-messaging devices and other similar equipment. The pilot program will last for at least one year, but it may be expanded for an additional year if the Commission deems that appropriate. The Communications Division will closely monitor the effectiveness and the costs of the pilot program to determine its feasibility as a long-term modification or addition to the DDTP.

    Communications Division Director Leutza introduced this item by providing some background about the program. Leutza anticipates that there will be 200 participants in the initial pilot program, and he hopes to expand the program after the two-year pilot phase is complete. The program will give $300 credits to qualifying individuals to purchase wireless equipment. These credits will be offered on a “first-come, first-served” basis.

    The Commissioners expressed significant support for the program. Commissioner Grueneich noted that an increasing number of people are relying on wireless devices, and that the Commission should be sensitive to that development. Commissioner Simon also praised the program, but qualified his remarks by saying that he is “not convinced that it is appropriate to restrict all DDTP funds on the basis of income.” If a more broad-based change of that sort were under consideration, Simon would need “further evidence to be convinced.” Commissioner Chong observed that the DDTP program is about 30 years old, and that the equipment that it subsidizes is “extremely outdated.” With an ironic tone, she commented that “there is no reason not to fund something that comes from this century.” She hopes that this program will put California back into the “vanguard” of promoting forward-looking solution for universal service.

  • Telecom House CPCN Expanded Despite History of Non-Compliance with Commission Requirements (Item 3, adopted 5-0) – This decision granted Telecom House’s application for a CPCN to provide resold local exchange service, thereby expanding the company’s existing CPCN that permits it to offer interexchange service. This CPCN was issued notwithstanding the fact that Telecom House has a history of deficiencies in submitting required reports and fees.

    Commissioner Peevey introduced this item, calling it “rather routine,” but nevertheless acknowledging that “there are concerns here.” Commissioner Bohn also offered support for the outcome of the decision, but stated that Telecom House’s “record as an interexchange carrier does not inspire a lot of confidence.” Bohn requested that any problems with Telecom House’s future performance be reported to him immediately so that appropriate action can be taken. Following these comments, the matter was unanimously adopted.

  • Authority Granted for Transfer of Control of Pac-West (Item 4, adopted on consent agenda) – This decision grants Pac-West Telecomm, Inc.’s (“Pac-West”) request to transfer 95% of ownership in Pac-West to a new entity, Pac-West Acquisition Company, LLC (“PWAC”). However, the decision also penalizes the parties $2500 for failing to seek advance authority for the transfer of control under Public Utilities Code Section 852. The decision provides that Pac-West will retain its CPCN, and that it will continue to provide interexchange and local exchange service to customers in California.

  • AT&T Application for Lease to Affiliate Voluntarily Dismissed (Item 13, adopted on consent agenda) – This decision grants AT&T’s request that a pending Section 851 application be dismissed. The application was originally filed in July 2002 by SBC, who sought a transfer of assets, business functions, and associated personnel to SBC Advanced Solutions. As a result of the SBC / AT&T merger, these entities are now called AT&T and AT&T ASI, respectively. This proposed transfer of assets was hotly contested for a number of years based on consumer groups’ contentions that it would not be in the public interest. The Commission had not taken any action on the application, and no documents had been filed in the docket since May 2003. In February 2007, AT&T filed a letter notifying the Commission that it would prefer to withdraw the application because the passage of time had rendered it moot. This decision grants AT&T’s request for withdrawal, but leaves open the possibility that consumer groups might derive intervenor compensation from the matter.


SIGNIFICANT HELD ITEM

  • Proposed Decision Regarding Alleged Impermissible Ex Parte Contacts (Item 48, held by Chong until 6/7 for possible alternate) – This decision would penalize both Cox and AT&T for allegedly engaging in impermissible ex parte contacts with Commissioner advisors with respect to an ongoing adjudicatory matter. The carriers contend that the ex parte contacts giving rise to these allegations were focused on a motion in a quasi-legislative proceeding rather than on the merits of the complaint cases. Commissioner Chong has held the item to evaluate the possibility of an alternate, presumably one that will be more favorable to the utilities.

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