Public Utilities Commission Public-Policy Programs Workshop
      Tuesday, April 25, 2006
      
      >>ALJ Bushey:   Good morning.
      I'd like to officially open our workshop this morning.
      Yes, sir?
      >> You need to pull the mike closer.
      >>ALJ Bushey:   Is this better?
      >> Yes.
      >>ALJ Bushey:   Good.
      Good morning.
      I'm Administrative Law Judge Maribeth Bushey.
      I will be assigned to the upcoming OIR on Universal Service policy programs.
      We're very excited this morning to have this opportunity over the next day and a half to bring together people interested in these taxi to lay the foundation for our work in this proceeding.
      To get it started this morning, our assigned commissioner, Commissioner Chong, will begin with comments to get us started and lay the role and the foundation for her leadership role in this proceeding.
      Commissioner Chong.
      >>Com. Chong:   Thank you and good morning.
      I wanted to welcome everybody and thank you for attending our first workshop on Universal Service funding and public policy matters.
      I am the assigned commissioner on the proceeding, and I am looking forward to working closely with all of you in the next months.
      The main concept behind Universal Service is simple:  Our phone system has more value if everybody is connected to it.
      Hence, there's social value in subsidizing connections to the phone system by citizens who otherwise would not be able to afford it.
      The U.S. has always prided ourselves on having good Universal Service numbers.
      The latest FCC report shows that 94% of American citizens are connected to the phone system.
      The same report shows that 96.4% are connected in California.
      Indeed, California has a long history of being a leader in ensuring that it has a wireless -- a wire-line phone system that is ubiquitous and affordable for all of its citizens.
      This state's policies have been innovative, they have been forward-looking, and they have been generally effective in delivering on these goals.
      Our Universal Service public policy programs come at a relatively high cost, however, for ratepayers.
      In recent years, we have spent $241 million per year on Lifeline, $69 million per year on our deaf and disabled telecom program, and $22 million per year on teleconnect.
      Further, the commission has not had regular processes to assess and update our Universal Service policies since they were created, which in some cases was decades ago.
      This lack of regular review is of concern to me, and apparently to the legislature in Sacramento.
      And this is the key reason why I wanted to kick off a comprehensive proceeding.
      Before we begin the formal rulemaking proceeding, however, I wanted to get everybody on the same page in terms of the information about the programs, about the history of the programs, and to put on our thinking caps together.
      To get the mental juices flowing, the PUC staff very kindly prepared a very useful report that has given us some excellent information about the Programs' histories, their funding levels, and how the programs work at present.
      I challenged the staff to be bold in their thinking.
      I wanted to stimulate our ideas about where we should go from here and how our programs have delivered.
      I have to admit, I GASPed a few times when I was reading the staff report.
      To quote Captain James T. Kirk of the "enterprise," "we may be going where no Universal Service program has gone before."
      [ Laughter ]
      >>Com. Chong:   Well, I would really like to hear from everybody who took the time out of their busy schedule to come today.
      I particularly would like to hear your reaction to the staff report, your feelings about the effectiveness of the current programs, and your ideas about where we should go from here.
      Don't be shy.
      What issues do you think need to be raised in the OIR which we expect to put forth in about late May?
      Late May?
      >>ALJ Bushey:   That's our hope.
      >>Com. Chong:   Okay.
      We're hopeful.
      I know some of you expressed a little dismay over the short time period for the written comments before this workshop.
      And I wanted to reassure you not to worry.
      We are going to give you, of course, another chance to file written comments once we issue the OIR in the normal course.
      Well, a couple months ago, I took this job.
      And I didn't really envision having on my plate an immediate review of all of California's Universal Service programs this year.
      As you recall, I was thrown right into the consumer Bill of Rights proceeding, and then I plunged right into hearings on the uniform regular frameworks, URF, proceeding, and I was also assigned broadband over power lines.
      But as I was listening to the oral arguments in the URF proceeding, it became very clear to me that we had to address the Universal Service California High-Cost "B" fund issues which in turn suggested a later review of the California High-Cost Fund "A."
      Then I realized, well, we should really look at the Universal Service public policy programs.
      And it turned out the legislature thought the same thing.
      So the staff is probably horrified by my insistence that we do this.
      But nobody in the building could deny that all the programs were overdue for review.
      It's been about ten years since these programs were created.
      I've been digging into these programs to get ready for today's proceeding.
      And I had a lot of questions for the staff.
      For example, I asked about, number one, the collection of support from companies and the variances in collection rates over time.
      Two, how was the money spent and why has it varied so dramatically over time?
      Three, the availability of new technologies within the programs and the costs and the practical problems related thereto.
      And, four, how changes to the federal Universal Service programs might affect our funding and support processes.
      Well, the answers I got were not totally reassuring.
      The information the commission had about the programs was not readily available.
      It wasn't really easy to put together a picture of how these programs worked, how the money was being spent, and to what extent technological advancements had been allowed under the programs.
      Some of the programs had more detailed information; others had to have their histories reconstructed from various reports.
      So, honestly, I think we can do better for the people of California.
      So, hence, the proceeding was born.
      The time is right for a re-look and an update to these important programs.
      The elephant in the room today is how these programs had their rules set in a wire-line phone wormed.
      The world has changed dramatically since the Moore telephone act was implemented in California, championed by assemblywoman GWEN Moore.
      In 1984, the same time, the Sony Walkman was all the rage, cell phones had just emerged from a stationary position on your phone, your car dashboard, and the commission had issued its first decision in response to the Moore act.
      AT&T had just been broken up by judge Harold Greene.
      The Internet was only used by a couple of academics in the Defense Department.
      I had just graduated from law school here in town and I was heading off to D.C. to practice law before the FCC.
      Well, it's 22 years later, 2006, we've got iPOD, Bluetooth, earpieces all over the place, digital music has revolutionized the recording industry, wireless communications now encompass devices that are a personal PDA communicator for phone calls, wireless Internet, digital voice, music, and video, video on demand is now the hot territory.
      E-mail, voice over Internet protocol, and Wi-Fi and WiMax are revolutionizing the way we communicate.
      So, this elephant in the room, it stands for new communications technologies, some of which are regulated, some of which are not.
      How does the elephant fit into the future of our Universal Service public policy programs?
      I would like to better understand how the significant changes in the legal, regulatory, and technological environments have or will impact California's Universal Service policies.
      As you may know, at the federal level, Congress members are discussing who should pay into the Universal Service fund, who should be eligible to pull out money from the federal universal fund.
      They've recognized there are some players like Voice over IP, VOIP, they sit outside the regulated environment.
      And there is debate on the hill about whether they should be required to participate in some manner.
      They're also debating the definition of advanced services, what should be included, what should not.
      Some of these issues require legislative action.
      To what extent does current law restrict the commission from some actions that could improve our Universal Service public policy programs?
      I also want to ensure that on an ongoing basis, we can monitor and evaluate the effectiveness of our Universal Service programs, all of them.
      We should be properly accountable to the legislature and to our ratepayers.
      So what measures should we use to determine success?
      What reporting and review requirements should the commission have?
      I wanted to share with you my personal goals, at least preliminarily, until I hear from you today.
      One, I want to ensure the funding and the programs meet statutory requirements.
      I'm a lawyer.
      I can't overcome my training sometimes.
      I want to make sure that if we have statutory requirements, we're aware of them and we comply with them.
      So please relate your issues to the statutory goals and how the commission is authorized to act under the statute.
      Two, I want to ensure the funding and programs are accountable to the people of California.
      Everyone should be able to find and understand information about the collection and expenditures of these programs.
      The FCC is concerned about the funding.
      Are we concerned?
      Why are we concerned?
      Three, we should ensure that the programs are designed to work in a 21st-century communications environment, in a technology-neutral way.
      Wireless phones are in more than 70% of our nation's homes, they're used by 23 million Californians.
      Bypass of the traditional wire-line phone network is predicted to be 30 to 40% by the end of the decade, given wireless and newcomers like Voice over Internet protocol.
      This is based on the use of technologies we now know about.
      We can only imagine what's coming next.
      We need to adopt our laws and our resolutions to ensure the goals of people like GWEN Moore and other Universal Service visionaries.
      We have to make sure that the goals are met as technology advances.
      How can funding and programs work in a technology-neutral fashion?
      And how do we manage the overall cost of the program if we expand services available under the program to these new technologies?
      I look forward to our dialogue today.
      I encourage you to speak up and to not be shy.
      And my office is always available to you to hear questions, ideas, et cetera.
      I wanted to also introduce my advisor, Robert Haga, who is sitting here to my -- your right.
      He is working on this proceeding with me.
      And we will be working closely with our crack ALJ.
      Thank you very much.
      >>ALJ Bushey:   Thank you, Commissioner.
      We'll now move on to the presentation of parties, the prospective parties, anyway.
      Our general format will be for the parties to come forward, make their presentation at the podium, and then join us at the table. 
      After all the presentations are complete, we will then have a rectangular table discussion as opposed to a roundtable discussion are we all set to begin?
      Is there anything we need before that?
      All right.
      Then we will begin with Mr. Nusbaum from turn.
      >>Bill Nusbaum:   Good morning.
      Is it on?
      >>ALJ Bushey:   Is there a green light on the base?
      >>Bill Nusbaum:   The green light is on, but I'm not hearing it.
      Here we go.
      I'm sorry.
      Good morning.
      Thank you for the opportunity to speak today.
      My comments are going to be very brief, and, unfortunately, they're not going to be very innovative, at least at this stage.
      In our comments on the staff report, turn expressed some concern that the commission may be prejudging some of the issues pertaining to Universal Service public policy programs.
      For example, the staff report appears to have already concluded that PPPs must be technology-neutral.
      A few parties also appear to have staked out positions, whether it be that basic service must be defined to include broadband, or that the best way to fund Universal Service programs is through a monthly charge per telephone number.
      Some -- or -- some or all of these proposals may be shown to have merit.
      However, at this early stage of what is not even yet a formal proceeding, TURN urges the commission to keep an open mind, ask the hard questions, and work diligently to, at a minimum, retain the Universal Service programs that all parties appear to agree are critical.
      When considering significant changes for these programs, such as expanding basic service to include broadband, or the concept of technological neutrality, turn also urges the commission to employ a rigorous cost-benefit analysis so that the PPPs are not so overextended that Universal Services are at risk.  We look forward to working with the commission on these important issues, and that's all I have to say at this moment.
      >>ALJ Bushey:   Thank you, Mr. Nusbaum.
      Our next speaker will be Peter HAYES from AT&T.
      Yes, please join us.
      >> Peter HAYES:  Good morning.
      Can I ask a process question?
      >>ALJ Bushey:   Please.
      >> Peter Hayes:  I have some comments that are both general in nature and more specific about the funding of these programs.
      >>ALJ Bushey:   Best guess duration-wise for the entire presentation of both?
      >> Peter Hayes.
      Five minutes.
      >>ALJ Bushey:   Go ahead.
      >> Peter Hayes:  Good morning.
      On behalf of AT&T, I wish to thank Commissioner Chong for her leadership as we begin this very important dialogue leading to a comprehensive review of the operational and funding of the commission's LifeLine, teleconnect, and deaf and disabled telecommunications program.
      Such a Louvre ensure the programs' continued viability and meeting -- and the responsiveness in meeting the needs of California's consumers.
      I also want to thank -- excuse me -- and compliment the Telecommunications Division for its thorough review of the programs. 
      The staff report aptly identifies concerns regarding the continued efficacy of the PPPs in light of the changing market environment for telecommunications services.
      The comments that we will make today during the course of this workshop are designed to provide the commission with AT&T's preliminary thinking on these issues.
      Our written comments were made available on the commission's Web site.
      It's my intent during the next two minutes to summarize our comments as they relate to the forthcoming OIR in general and specifically to the funding mechanism.
      A comprehensive review of the public policy programs should lead to program modifications that will redesign the funding mechanism for all the PPPs in order to ensure continued and adequate funding that will maintain the viability and effectiveness of its programs.
      These modifications should recognize the critical importance of designing incentives not only for consumers, but also for service providers' participation in the programs.
      The modifications should ensure ease and efficiency in program administration and participation so as to promote maximum participation by service providers. 
      Complexity and delay result in costs that are not absorbable in a competitive market.
      Improving existing structures of ULTS, DDTP, and CTF to recognize rapidly expanding consumer choice should also be reflected in these modifications.
      And now some specific comments about funding.
      First, any funding mechanism implemented by the commission must continue to be in compliance with the FCC, which is, as has been noted, is in the process of implementing funding reform for its USF program.
      Additionally, funding mechanisms must take into account carrier-of-last-resource obligations.
      Second, AT&T recommends that the commission encourage voluntary participation by all service providers, whether or not the commission has jurisdiction over the provider and/or the particular services that it provides.
      This would provide incentive for providers to participate in the public-policy programs.
      Third, in order to encourage the widest number of possible providers to participate in the public-policy programs, the commission must ensure that the providers' cost of administering their programs are reimbursed.
      Fourth, regarding administrative efficiency, the use of third-party administrators is an option which should be considered.
      Fifth, consistent with the principles of competitive and technological neutrality, AT&T recommends that the commission eliminate AT&T's tariffed rate as the basis for ULTS rate.
      AT&T proposes a funding mechanism for ULTS, CTF, and DDTP similar to what is -- it has proposed to the FCC as a USF funding mechanism.
      The proposal is based on telephone numbers and connection capacity.
      A per-connection assessment mechanism based on working telephone numbers would broaden the contribution base, providing desperately needed stability, and predictability for consumers and carriers.
      Moreover, because all working telephone numbers would be identified and assessable, such a system would be transparent, technologically and service-neutral.
      It would also be simpler to administer and to enforce than a revenue-based system.
      Further, in order to ensure administrative and cost efficiency, AT&T encourages the commission to mirror the funding mechanism ultimately adopted by the FCC.
      And, again, some more general comment.
      AT&T encourages the commission to consider this review in concert with the proposed procedural plan to address California high-cost funds "A" and "B."
      These two public-policy programs are similarly designed to support the availability of telecommunications services in high-cost areas at affordable pricing.
      Changes to the high-cost fund program could affect the consumer benefits received through the other public-policy programs.
      All those these -- excuse me.
      Although these five programs are being handled in separate proceedings, in evaluating the overall consumers impact, the proceedings must be coordinated.
      Further, AT&T recommends that the funding mechanism remain consistent for all five of the public-policy programs.
      A comprehensive evaluation of the PPPs should be conducted in conformance with the objectives underlying the commission's uniform regulatory framework, assuring to the extent practical that every person in business in California has access to modern, affordable, and high-quality telecommunications services, that the public-policy programs are competitively and technologically neutral, and that the public-policy programs, to the extent possible, encourage technological innovation, economic development, and employment in California.
      In light of the tectonic shifts in the telecommunications marketplace in California and the relentless pace of change driven by technology and consumer preferences, the initiation of this proceeding is both timely and critical to safeguarding and promoting California's Universal Service goals.
      >>ALJ Bushey:   Thank you, Mr. Hayes.
      I'm afraid I have a question for you.
      >> Peter Hayes:  I didn't even get away from the podium.
      >>ALJ Bushey:   I think it might help us all out if you were able to give us a status report on the FCC's work on your various proposals, where they are and when -- if there's any time line that you're aware of when we can expect an answer from them.
      >> Peter Hayes:  I can tell you what I know.
      The two proceedings that are in play there are dealing with intercarrier compensation and with the reform of the funding mechanism.
      The sort of rough intelligence that I have gotten from my counterparts in our federal regulatory organization anticipate there may be a resolution of these issues this year, but not early this year.
      Late this year possibly.
      I think there is greater incentive to deal with the intercarrier compensation issues, and I expect those would be addressed first and may see something on those sooner rather than later.
      Does that answer your question?
      It doesn't look like it.
      >>ALJ Bushey:   Sounds like third, fourth quarter this year, best way.
      >> Peter Hayes:  That's what I think, yes.
      >>ALJ Bushey:   The commissioner envisions us being on a bit more of an aggressive schedule.
      So how can we -- do you have a crystal ball that can --
      >> Peter Hayes:  I think we will be getting indications through the second and third quarters as to where some of these things are going, particularly the intercarrier compensation.
      To the extent -- you know, that proceeding has -- intercarrier compensation is the most complicated thing I have ever seen in my life.
      And the USF aspects of it are obviously critical, particularly in other states, not so much here.
      But to the extent that intercarrier compensation is a critical support element for Universal Service in other regions, those two issues are tied together.
      I think the complexity of those issues has kind of slowed down progress on that proceeding.
      But I believe there is significant progress being made right now, and I'm hoping we'll see some new proposals out there soon.
      >>ALJ Bushey:   Very good.
      Thanks so much.
      Please come and join us.
      Commissioner.
      >>Com. Chong:   Mr. Hayes, before you leave --
      [ Laughter ]
      >>Com. Chong:   Sorry.
      You nearly escaped.
      >> Peter Hayes:  Do I have a microphone down there, too?
      >>Com. Chong:   Yes.
      Would you be willing to put into the record the AT&T filing you made at the FCC on these Universal Service issues?
      >> Peter Hayes:  Certainly.
      The most recent one that we have in writing, we have a March ex parte, March 2006 ex parte summarizing our Universal Service proposal.
      And then we've got an October 2004 very detailed ex parte which addresses the entire intercarrier compensation proposal.
      That proposal is coming from our intercarrier compensation forum, consortium, it's a consortium that joined together of rural interexchange carriers and ILECs to try and present a proposal that we feel addresses the needs of all those disparate groups.
      That October 2004 is about 200 pages.
      However you want me to put that forth, I'd be happy to do it.
      >>Com. Chong:   I'm sure we can work out a way.
      And if any other party has filed at the FCC on these issues and would like to submit your filing, that would be helpful to us.
      We are monitoring what's going on at the FCC.
      I do understand that on intercarrier comp, there is a NARUC-driven proposal that is circulating but they don't expect to submit it to the FCC until probably early June-ish is what I'm hearing.
      >> Peter Hayes:  That's consistent with what I'm hearing.
      >>Com. Chong:   End of the year is probably right and programs optimistic depending on whether they get the fifth FCC commissioner.
      Thank you, Mr. Hayes.
      Come and join us.
      >>ALJ Bushey:   Mr. Mattes, tell us who you're representing.
      >> Martin Mattes:  Yes, Your Honor.
      Good morning, Your Honor, commissioner, and panelists.
      I'm Martin Mattes, representing California Pay Phone Association today.
      And don't mean to take the proceeding off track, but there is a kind of a sidetrack that ought to be visited on the way to Universal Service.
      And that is the -- a couple of public-policy programs the commission has that unfortunately weren't on Mr. Hayes' list of five.
      And they do tend to be neglected, even though they were, for better or worse, inaugurated into statute along with all the other ones.
      And those are the pay phone service provider enforcement program and the public-policy pay phone program.
      So there we have four "Ps," not just three.
      Those are a couple of miniature programs in comparison to Universal Service or high-cost fund B.
      They involve, at their best, two or three million dollars of funds collected from pay phone providers to fund these important public aspects of pay phone service, that is, the enforcement of the commission's rules that are set forth in the tariffs of local exchange carriers that govern pay phone services, and the subsidization intended for pay phones that are in place not for economic, but for public-policy purposes.
      The first of those programs, the pay phone service provider enforcement program, has been rather successful over the years in trying to maintain a minimum standard of service from pay phones, particularly maintaining proper signage on pay phones and ensuring that essential network access function offered by pay phones are not blocked, those being 911 and 711 access, which must be free from pay phones, which runs a little bit against the grain of some pay phone providers, who are extreme private enterprisers.
      But the enforcement program has had problems over the years, but overall, it has performed its basic function to maintain that kind of basic level of adequacy of pain phone services.
      The problem is that the pay phone industry is aptly described in the second paragraph of the -- of the staff's report on Universal Service programs, the description about programs created decades ago that may no longer meet the telecommunication needs of California customers in the face of changing technology.
      The pay phone industry is kind of the dark side of improving technology, because the pay phone services have suffered from the wonderful new technology that's available, and, frankly, superior in its accessibility, ease of use, and diversity of application that we see today in wireless services.
      Pay phone services are in decline.
      The numbers of pay phones in place have gone from approximately 400,000 to approximately 150,000 in California in the last eight or ten years.
      There are still, though -- they're still, though, an important means of access to the network.
      And, in fact, the Universal Service aspect of pay phone services has become more marked in the continuing activity at pay phones.
      Where are the pay phones that survive?
      They tend to be in central cities or rural areas with less than ideal wireless connections.
      And they tend not to be in the upper income, more affluent areas or the high-rise downtown buildings where everybody has got a cell phone.
      But the -- those pay phones that remain out there and are still economically viable are ones that are increasingly serving the lower-income portions of the population, the more transient people in the population, those who tend not to be fully included in the standard telecom services.
      So what that means is that we have this aspect of the telecom network, the pay phone, that is in economic decline, is subject to removal rather than installation, with changes in the economy -- economics of the business, and yet it is not receiving subsidy; it is -- it is, in fact, having to pay for its own enforcement program and its own public-policy pay phone installation program, which, by the way, has very serious problems that has never been successful in meeting the goals that were originally set for it.
      That could be a whole day's conversation.
      But the -- the overall problem is that the pay phone business is in a downward spiral partly because of the burden of these public-policy programs that are -- were designed for an era of growth in the business and are ILL-designed for the -- a period of decline.
      So although it's a little bit off track, in fact, quite a bit off track from the major themes of today, we do hope that this proceeding will retain a niche for these two pay phone programs and will give some attention to them and to the means by which the Universal Service aspect of pay phone services can be supported rather than degraded by the regulatory process.
      >>ALJ Bushey:   Thank you, Mr. MATTES.
      I have some questions for you as well.
      This is an incredibly interesting topic and completely unanticipated.
      So I know absolutely nothing about it.
      Could you help me.
      How --   Is there an oversight board?
      How is this managed?
      >> Martin Mattes:  The model for administering the two pay phone programs is the same model that applies to the Universal Service program and the high-cost funds.
      There is an advisory committee that is intended to be comprised of stakeholders in the business.
      I have the honor of being an alternate member when my client, the executive director of the pay phone association, can't attend.
      There are two representatives on the committee representing independent pay phone company interests.
      And there are -- there is one slot on the committee for a representative of an incumbent local exchange carrier, one slot intended for an interexchange carrier, and a couple of public-interest slots.
      It's been actually difficult to fully populate the committee in recent years.
      It's just not an area of great interest.
      And it's a problem area that just -- it's difficult to give enough attention to it.
      But, basically, that's the oversight system, is an advisory committee with the real management being done by commission staff, through the consumer protection and safety division.
      >>ALJ Bushey:   Thank you.
      Commissioner.
      >>Com. Chong:   Thank you, Mr. Mattes.
      This is exactly why we had this workshop, was to find little niches that we forgot about.
      So I would like to recommend ALJ that we include of the pay phone program in the OIR.
      >>ALJ Bushey:   I will be looking to Mr. Mattes to provide us with a comprehensive proposal for that.
      [ Laughter ]
      >>Com. Chong:   As soon as possible.
      >>ALJ Bushey:   That brings us to our next speaker, Ms. Kasnitz.
      >> Melissa Kasnitz:  Good morning.
      I'd like to join the other presenters in thanking the commission for the opportunity to address these issues and to express my appreciation for the staff report, which I think did a very useful job of focusing attention on a great many issues.
      A couple of aspects of --
      >>ALJ Bushey:   Excuse me, Ms. Kasnitz, if you could identify the group you're representing.
      >> Melissa Kasnitz:  I'm sorry.
      Disability Rights Advocates.
      I'd like to follow up on a couple of issues touched on in the staff report and bring some attention to a couple of issues that perhaps should be brought to the attention of the commission and staff and were not included in the staff report.
      First, I'd like to mention that in any proceeding that takes place regarding these public-policy programs, I think that there's going to be a vital need for public participation hearings.
      I expect that's going to be part of the program, but I just wanted to raise that issue.
      Second, I'd like to support the comments made by T.U.R.N. and by National Consumer Law Center in their written comments, together with AARP, about the need to address certain threshold issues before we simply make presumptions, things like technology-neutrality.
      It appears to Disability Rights Advocates that this is a very important issue.
      But it's going to be crucial that everyone define their terms and know that we're on the same page for when we say "technology-neutrality is a goal," what exactly that means.
      Similarly, there's a lot of talk about the need for access to the Internet.
      There's a real question in my mind that hasn't been addressed to date in the written materials about whether that exclusively means broadband access, with the attendant costs, or whether the need for people to be connected to the Internet can be satisfied by some form of dialup access, so when people talk about access to the Internet or advanced services, I think it's also important that we understand what that means and all share the same definition of these terms.
      Another issue that has been the focus of Disability Rights Advocates' attention in a number of proceedings and may sound familiar to some folks is the need to focus on accessible communications in all of the outreach and all of the communications that take place with the broader community.
      This means ensuring that community outreach is accessible and that it includes targeted outreach to the disability community, which, historically has been a difficult community to reach.
      It means that any information on enrollment in the PPPs should be provided in accessible format.
      That means any customer service lines or any informational hotlines should have TTY services and that the quality of response to TTY callers meets the same level of service as voice callers.
      If a voice call is answered immediately, TTY callers shouldn't be expected to leave a message and get a call back.
      If the call -- if a voice caller is put on hold for no more than two minutes, a TTY caller shouldn't be put on hold for 20 minutes.
      These are things that some people might expect just happen automatically, but, unfortunately, history shows that TTY service is often not given the same quality of care.
      It also means that written materials should be available in alternative formats for people with disabilities.
      This might mean large print, which is vitally important for many people with low vision, including many seniors.
      It means Braille versions of forms and paperwork.
      It means electronic versions of paperwork and forms in a format that can be used by text readers and speech translators on computers.
      It means that any information that's provided over the Internet should be put up in a format that's accessible.
      Under federal law, section 508 of the rehabilitation act talks about accessible technology and accessible Internet Web sites.
      California state law has adopted the 508 standards through California government code section 11135.
      And this commission should be taking steps to ensure that any information put out over the Internet meets those accessibility standards.
      With regard to the specific programs that have been identified in the staff report, I think this proceeding also provides an opportunity to address certain open issues.
      For example, in the ULTS program, there was a commitment in the recent proceeding to create a Web-based enrollment and verification system that would be accessible for people with disabilities.
      But because of the tight timelines of that program, the commitment was made, but details weren't yet provided.
      This proceeding may present an opportunity to address in more detail that type of question in -- that was originally raised in the ULTS proceeding.
      Similarly, there are open questions about the usefulness of automatic enrollment in certain programs, which this OIR may present the opportunity to address.
      The use of community-based organizations, CBOs, to assist people in enrolling in public-participation programs.
      Finally, echoing the position put out by AT&T, I think that there are issues that have been raised in the uniform -- the URF proceeding -- excuse me, I'm blanking on what the acronym stands for -- about what constitutes basic services.
      For people with disabilities in particular, some services that are add-ons or luxury services may be vital or basic telecommunications needs.
      An example would be three-way calling, that people whose disability impacts their ability to communicate may use to get a person who is familiar with their speech patterns on the line with a stranger so that that person can assist in their ability to communicate.
      So the concept of what constitutes basic services may be different and broader for people with disabilities as opposed to the general population.
      Finally, two additional issues that are touched on in the staff report that I think need greater attention.
      As has been raised already, there's a question of whether expanded services, advanced services, should be incorporated into the public-policy programs.
      I'm not here to take a position on those issues yet today.
      I just want to highlight that with choice comes a very strong need for additional education.
      People with disabilities in particular may have reasons to decide that wire-line technology is superior for their personal needs than wireless or other advanced services.
      For example, the lack of availability of Voice over Internet protocol technology if there's a power outage may make it completely unsuitable for a person with a disability who relies on life support services, such as a dialysis machine or a respirator that's served by electricity.
      If the power goes down, that person vitally needs to be able to access their telecommunications service.
      People have to be aware that VOIP may not be available in a power outage before they are given the opportunity to make that choice.
      Lastly, I'd like to raise the issue that meaningful reports and meaningful monitoring of these PPPs should be a vital part of any ongoing changes that are instituted through an OIR, and that reports and monitoring should include some form of breakout to evaluate how well these services meet the needs of people with disabilities.
      We have found historically that there's not a lot of breakout for that customer group, and our ability to make recommendations to this commission has been limited by the fact that the information is not easily broken out of historical documents and other reports.
      And so, ongoing, we think it would be a great service to ensure that the needs of this community are identified and audits and reports break out how well their needs are being met.
      Happy to answer any questions.
      Thank you.
      >>ALJ Bushey:   I just have a simple question for you.
      You are recommending public participation hearings.
      Do you have any idea of how many you think are necessary or where they will be?
      >> Melissa Kasnitz:  Without having an OIR, it's very difficult to say that, although I would hope that they would be broadly spaced throughout the state, because for people with disabilities in particular, travel can be very burdensome.
      I just think that these are the programs that really touch people, people's day-to-day lives, and so the opportunity to allow them to present their input is going to be very important.
      But without more detail, I'm afraid I can't make a proposal.
      >>ALJ Bushey:   Okay.
      Thank you.
      Please join us.
      >>Com. Chong:   I had one question for you before you leave.
      >>Com. Chong:  I had one question for you, before you leave.  You were talking about a ULTS proceeding.
      >>Melissa Kasnitz:  Yes.
      >>Com. Chong:  Where the web-based enrollment was discussed.  How long ago was that proceeding?
      >>Melissa Kasnitz:  It just wrapped up.  It was the proceeding to restructure the program to maintain the federal funding.  IMSD afraid I don't have the number at my fingertips.
      >>Com. Chong:  All right.  So it's that one.
      >>Melissa Kasnitz:  Yes.
      >>Com. Chong:  Thank you.
      >>ALJ Bushey:  Our next speaker will be Mr. Selken.
      >>Russ Selkin:  I am going to wait until the afternoon.  I don't have any general comments.
      >>ALJ Bushey:  All right.  Very good.  Then our final speaker will be Natalie Billingsley.
      Natalie Billingsley Natalie Billingsley good morning, commissioner and Your Honor.  I am Natalie Billingsley and I am representing the division of ratepayer advocates, the other DRA.  And I am not going to repeat all of the remarks that we made in our comments that we filed, which were very general and we're suggesting certain concerns that the commission should be guided by, as it does programmatic review.
      We are delighted to see this process occurring.  We felt like we were voices crying in the wilderness about particularly the CHCF B fund.  I'm not sure if you have had An opportunity to see our report on that that we submitted to the legislature.  Good.
      We think the staff report is very comprehensive, and the questions are well phrased.
      We don't have any issue with some of the concerns that the other parties have raised.
      I am concerned on a general way that subsidy funding sources should be on as broad a base as possible.
      We think that they need to be carefully targeted to those in need.  And we believe that that targeting is particularly problematic for the CHCF B so that you know.
      It's crucially important that they be cost effective, and I would echo the concerns that disability rights advocates raised about the importance of regular programmatic review, and if necessary, auditing to make certain that disbursements are being properly made and equally important that the recipients of those disbursements are using them only for the services and purposes that meet legislative goals and commission precedent.
      When you start talking about expanding the types of services that are available for subsidy support, you start expanding the universe of opportunities to inappropriately use that funding.
      We are not opposed to exploring opportunities to expand the services that are available, especially in light of what disability rights advocates pointed out where this might be instances of what is basic service for a standard consumer may not be sufficient to be defined as basic service for a consumer with special needs.
      So we're very eager to be able to explore that opportunity.
      Furthermore, service quality standards matter.  We were happy to see that included in the staff report.  Not just to ensure that special needs customers get the same quality and kind of services that standard customers can receive, but also that standard customers get pretty good quality of service, too.
      This has been a longstanding issue and concern for D.R.A, and I just wanted to reiterate it for your benefit.
      There were some other suggestions about -- I believe it was from AT&T about incenting the carriers to provide services.  And there were some further comments in their prefiled statement that I am a bit concerned about because if you are going -- it is our view that if you are going to get public subsidy money, you need to make yourself available to undergo an appropriate level of scrutiny to make sure the money you are getting is being spent the way it is supposed to be spent.  That is not saying you need to come under the commission's jurisdiction.  I'm not even going to get into what we do and don't have jurisdiction over since it's a changing target at the FCC.
      But I do think a core principle should be if you are going to get public money, you have to be accountable to the public for how it's spent and you have to be accountable to the commission and the legislature to allow them to assure themselves that it is being appropriately expended and that it is serving the population it is supposed to serve.
      Subsidies have real costs to the economy, and they have real rate impacts to the ratepayers.  And I was very encouraged to hear that one of your goals, commissioner, was public accountability and transparency.  We think that is a very important goal, and it may not necessarily have been most effectively achieved in the way that we have been managing the programs.
      I would also say that if you are going to change the funding source, and I look forward to the opportunity to re-read AT&T's ex parte, all 200 pages of them, hopefully on paper before it clogs up my e-mail box, you need to be careful about going to a numbers-based allocation, a Capacity-based allocation, a connections-based allocation or some combination of the above, which is pretty much which is on the table at the FCC proceeding.
      I agree it's valuable to the extent that we can to conform our funding sources in the same way that the FCC does, but the commission should also be aware that there may be very good reasons for us to do it slightly differently.  Not the ULTS funding, because we want to conform that, but I don't think a slavish approach to uniformity is necessarily a positive guiding principle for this.
      The PUC is going to need a whole lot more information than it has in front of it now, and maybe will have in front of it once the OIR is issued, in order to make a sound determination of whether a different funding source from the one we have, rather than merely considering ways to expand the base but still using a revenue-based funding source, is going to work.
      Finally, I'd like to repeat a point that we made, which was there may be a way where we could expand, in some sense, the portability of the subsidies.  And I would like to urge you to add consideration of that in your OIR.  And by "portability," I mean perhaps if the programs are going to be expanded to encompass new services or new technologies, it may be a cost effective way to allow people to make the choices that they are presumably going to be able to make in the future, although we don't share quite the rosy view of the level of competition that AT&T does.
      Perhaps a fixed amount per customer that they could apply to any of a basket of eligible services from any of a basket of eligible providers might be a way to hit your technology neutral goal and still not radically expand the cost of the programs.
      Do you have any questions?
      >>ALJ Bushey:  I'd like to follow-up on your portability of the subsidy idea.
      First of all, the way the program is set up, it's not really a subsidy.  It's a discount.
      >>Natalie Billingsley:  It depends on the program.
      >>ALJ Bushey:  Okay.  I am thinking ULTS.  It's the biggest one.  So how would you change that?
      >>Natalie Billingsley:  That's going to take a whole lot more than five minutes.
      Specifically with respect to ULTS, it is both a subsidy and a discount.  It's a discount to the end-user customer; right?  They pay half.
      It's a subsidy to the carrier providing service, because they get made hole for the half that the customer isn't paying.
      There is some minimalist form of service provider portability now for those who have agreed to sign on for carrier of last resort obligations.  It may be that there are ways to expand that to, as AT&T referred, provide incentives to carriers to serve.  There may be some other options that should be explored for more than just the ULTS program.
      This was sort of a broader idea.
      We look forward to providing comments once we see the OIR.
      >>ALJ Bushey:  Okay.  Thank you, Ms. Billingsley.  If you would like to come and join us.
      This might be a good time for us to take our morning break.  And when we return, we will be in discussion format.
      And just to get you focusing your ideas, as the person assigned to the proceeding, my interests tend to be a little more pragmatic and practical.  So I am going to be interested in concrete ideas for issues.  Specifically articulated issues that need to be in the OIR.  Procedural proposals, that sort of thing, as well as other -- is there any homework you want to give them for their break?
      >>Com. Chong:  (Shakes head.)
      >>ALJ Bushey:  Thank you.  We will see you at quarter till.
      
      (BREAK)
      
      >>ALJ Bushey:  Let's all be seated so we can begin.  All be seated.
      Now, this next phase of our morning is less structured, and an opportunity for the commissioner to ask questions, get more answers.  For you to make other observations.
      We have invited the speakers to join us.  To the extent any of you in the audience have comments that you would like to make, we're very receptive to hearing them.
      For convenience of everyone, it would be best if you came to the podium to make your comment if you have any.
      So commissioner, how would you like to begin?
      >>Com. Chong:  I thought we just had a list of issues and we would go right at it.
      >>ALJ Bushey:  Okay.  A list of issues.
      All right.  Then my question.  Our topic this morning is fundamentally funding mechanism.  I have heard so far really just one proposal, and that's the AT&T, which is currently pending before the FCC.
      Now I'm thinking that if I were to right an OIR that said, "Please bring me funding proposals," I would get AT&T's proposal.
      Am I likely to get any other proposals?
      >>Natalie Billingsley:  Depending on how you right it, you may well.
      >>ALJ Bushey:  Okay.  Do you have any fundamental principles that might be a part of that?  I think it is important for us to use the microphone so everyone can hear.
      >>Natalie Billingsley:  Sorry about that.
      It was lined up facing away from me.
      I think we would have a set of specific principles that should be used in considering funding reform.  We have articulated some of them in our comments and elaborated a little bit on that this morning.
      But I think we could certainly provide some perspective on the desirability or lack thereof of any of the pending FCC things.  Although DRA itself has not filed anything at the FCC, NASUCA has, and we would be happy to provide NASUCA's comments if you would find that helpful.  
      >>ALJ Bushey:  NASUCA?
      >>Natalie Billingsley:  National Association of State Utility Consumer Advocates.  It's the advocacy equivalent of NARUC.
      >>ALJ Bushey:  And what is DRA's top three principles or top three requirements for funding mechanism?
      >>Natalie Billingsley:  As broad a base a possible.  Maximizing the efficiency of the way that the PUC collects the money, so it lowers administrative costs.
      Fundingwise, we have tended to be more focused on the value of making sure that program outreach happens and that the programs are cost effective and cost efficient, rather than necessarily focusing upon the finer points of their funding sources.  But since it's clearly going to be a fairly important issue in the forthcoming OIR, we will certainly devote a bit more thought to what we could add for you.
      >>ALJ Bushey:  Well, let's back up a step then.  We have the current funding mechanism.  Are we all agreed that it's no longer serving its purpose and is not adequate and needs to be changed?
      >>Natalie Billingsley:  I wouldn't necessarily draw that conclusion.  Could it capture more services so that you broaden the funding base without changing the mechanism itself?  Sure.
      It becomes for us, in essence, sort of a cost/benefit analysis.  If we are going to add X number of services that are supported by external funding, how do we make sure that adding those services won't drive the surcharge up to an unsustainable level or kill the fund.
      It's not unlike the comments that you are hearing on the federal level about the federal universal service support system.
      >>ALJ Bushey:  But you see the two related.
      >>Natalie Billingsley:  I see common issues.
      >>ALJ Bushey:  I meant the funding sources and the services support it.
      >>Natalie Billingsley:  Yes.  There's an intrinsic connection.  Because you have got to figure out how much the services that you are going to support cost in order to figure out how much -- what the percentage of the surcharge is going to be that all the end users pay to fund them.
      So if the cost is going to be up here (indicating) and your funding base is going to be down here (indicating), then you have got a problem.
      But with the exception of the "B" fund, the funds that we are talking about today, I haven't seen any data.  I haven't necessarily looked hard for it, but I haven't seen any data that suggests that the current funding mechanism is broken.  It's more a prospective question about how do you deal with it going forward.  Is there a better way to do it?
      So I don't -- I don't have any reason to believe that the current one is broken with the current services and the current funding base.
      I'd like to see an expansion of the funding base because it lessens the burden on each individual customer in terms of the amount they have to pay for the surcharge.
      >>ALJ Bushey:  Thank you.
      >>Com. Chong:  I thought we should go after AT&T's proposal.
      >>ALJ Bushey:  Okay.
      >>Com. Chong:  I would like to go over the AT&T proposal.
      There was a plan at the federal level that you would fund USF with a simple monthly fee in the range of a dollar per connection from every company using telephone numbers and connections regardless of technology?
      >>Peter Hayes:  Correct.
      >>Com. Chong:  So one question we had was if you can talk about connections versus phone numbers versus other methodologies that are being discussed at the federal level.
      >>Peter Hayes:  The proposal that we made at the FCC really addressed two aspects of the connection.  One is the number with the emphasis being assessing a flat fee on working numbers.
      A second aspect of the proposal looks at the connection really in terms of capacity.  And it's described as a units-based approach where higher unit value is assigned to higher capacity connection.
      For example, less than 1.5 megabit per second would be a single unit.  Between 1.5 and 45 megabits would be five units.  45 to 200, 40 units.  Greater than 200, 100 units.
      So this has the effect of applying or spreading the burden of support not strictly on numbers but also it spreads it across the bandwidth that the folks have who are using the service.
      >>Bill Nusbaum:  A question on that.
      So a regular phone call, someone who just has a basic line, how many units or how much bandwidth is that?
      >>Peter Hayes:  Just a traditional wire line would be a single unit.  So if you have a wire line and a DSL line, you would probably have two units.  If you are a business and you have got X number of phone numbers in use, whether it's over a VOIP system or over a traditional Centrex or something, you would have a charge per line -- per number.  In addition, you would be assessed for the bandwidth for the other services that you have.
      >>ALJ Bushey:  Walk me through the practicalities of this.  There is a central authority that issues the phone number.  So we can find out who has that in terms of distances.
      >>Peter Hayes:  Right.
      >>ALJ Bushey:  The service providers.
      >>Peter Hayes:  Right.
      >>ALJ Bushey:  So once we have that, then we send a bill to the VOIP service providers and the DSL service providers that tell us you have X number of working units and therefore you owe us X dollars.
      >>Peter Hayes:  Right.
      >>ALJ Bushey:  So that comes back, then, to --
      >>Peter Hayes:  The VOIP service is an interesting one in that the VOIP provider has -- essentially has the working number.  But the underlying service, the broadband connection that VOIP is riding over, that may be with the VOIP provider, it may be with another provider.
      And so in this system, in order to broaden that base, as Natalie described, maybe for a single customer, actually, based on how they have structured their VOIP service, you may see a -- kind of a mix of carriers working with that customer to collect from the customer the appropriate unit-based payment that then gets remitted back to the fund.
      >>ALJ Bushey:  So there may be an amount for the phone number from the VOIP provider and then an amount from the broadband provider as well.
      >>Peter Hayes:  Yes.
      >>ALJ Bushey:  Okay.
      What fraction of current phone numbers are currently being assessed (inaudible) total phone numbers?
      >>Peter Hayes:  It is currently based not on phone numbers at all but in California, on intrastate revenue.  So it's not -- it has no connection to how many numbers you have.  Rather, it's based on under what tariffs are you purchasing your services under.
      >>ALJ Bushey:  Right.  I understand.  I'm just trying to get some kind of a rough handle on how much bigger the pie is going to get.
      So the current providers have some fraction of available phone numbers; right?
      >>Peter Hayes:  Yes.
      >>ALJ Bushey:  Which is maybe --
      >>Peter Hayes:  You know, I have not seen what percentage of numbers are currently being used by VOIP services.  I'm sure somebody here may know but I don't know that.
      Obviously the majority of phone numbers are being used by customers on wire line or wireless services.
      >>ALJ Bushey:  And they are already paying.
      >>Peter Hayes:  And they are already paying.
      >>ALJ Bushey:  So the only incremental gain will be VOIP phone numbers; right?
      >>Peter Hayes:  I think there is a threshold issue, and I would go back to the first question that says is the current system working.  And I think we would say the current system is not working.
      That maybe it's working at 11:00 today because there is not a serious problem, but the market is changing so fast.  And the regulatory regime is changing so fast that you can no longer have a system that is fundamentally based on carrier revenue, because it's getting harder and harder to distinguish intrastate from interstate revenue.  And more fundamentally, it's getting harder and harder to distinguish telecommunication services from non-telecommunication services.
      And to the extent our current structure is fundamentally tied to revenues and being able to jurisdictionally separate and identify the sources of those revenues in order to apply proper surcharges, that able to distinguish those revenues is going away very rapidly.  And it may be working today, but in the very near future, it is no longer going to work for us.  And we need now to move away from a revenue-based surcharge mechanism to a mechanism that continues to spread the burden of supporting these important programs across as broad a base as possible.
      But we no longer have what's essentially the very easy mechanism of regulated carrier revenue from which to make our calculations and to apply our surcharge.
      >>Melissa Kasnitz:  I'm going to display my ignorance on this issue, unfortunately.  But I just want to raise the question, based primarily on my reading of the staff report.
      It seems to me that so far, the funding mechanism that's in place is sound.  And what AT&T is describing and the concerns in the staff report are based on future projections primarily concerning VOIP, about calls that can no longer be tracked with intrastate versus interstate, and things of that sort.
      I have seen statements that talk about projections of the amount of call traffic that's going to be over VOIP, but to my knowledge, and it may basically be my ignorance, these projections have seemed to be largely pulled out of thin air.
      I am wondering if there is a more detailed base, and it may very well exist and I'm just not aware of it.
      >>Natalie Billingsley:  It does.  That makes these projections.  And if that information can be included in a more broad way in any OIR that comes out or the basis of that for people who are not immersed on this on a day to day basis to see where the problem is.  I am not trying to deny its existence.  I am saying that so far in the materials that have been put out, it's not clearly explicated for people who aren't already immersed in that type of field.
      >>Natalie Billingsley:  Your Honor, if I may offer a suggestion?
      >>ALJ Bushey:  Just a minute.  We have someone here who can make some comments.  
      Please identify yourself.
      >>Ross Buntrock:  My name is Ross Buntrock and I represent Fones4All.  
      To that point, if you look at page 25 of the staff report and if you look at the level of surcharge for each particular program, it's remained relatively study and in some cases has gone down in certain air why is over the last six years as represented in that table.
      So I think that you raise a valid point in terms of AT&T sending a funding crisis alarm at this point.  But obviously the purpose of this examination is to look on a GOING-FORWARD BASIS and to the extent we are going to be expanding the covered services, obviously we need to be mindful of how we need to expand the funding pie.
      But based on covered services, if you look at the surcharge rates they have been very steady in the last -- over the life of the program and especially what's represented in this table.
      So that's the only point I wanted to raise.
      >>Natalie Billingsley:  Your Honor, I was just going to point out the data exists that you are seeking.  It exists at this commission today.
      Carriers report twice a year to the FCC all the numbering resources that they hold.  That report is available to the commission staff, and they review it with some regularity.
      So telecommunications division can tell you how many numbers are currently available in California.  Last time I looked it's roughly 210 million.
      They can tell you how many of them are working numbers, which again was in the 50 to 60 million number range.
      And to the extent that you want to get that data, you have got it downstairs.  And one thing that you should consider if you are going to look at numbers is you only get the updated information twice a year.  So if you are going to use that kind of a system, you need to bear in mind that particular fact.  Because the amount of numbers that are working changes every day.
      >>ALJ Bushey:  I didn't understand that Mr. Hayes was talking about things going away but just we won't be able to make our calculation in the future.  And that is a fundamental problem, although the flip side of said fee is it's progressive.  It hits the poor harder.  So there's two sides.
      >>Peter Hayes:  I think the staff report has another interesting data point in it on page 24 where it describes who is paying into the funds right now.  And over time what we are seeing is a bigger and bigger percentage of the support is coming from the wireless industry.
      And I would throw out that I think this is really the precursor of the kind of movement we are going to see to VOIP in the next generation.
      The movement away from wire line is already obviously well underway.  It's going to be -- it's going to continue.  It's going to go to VOIP.  And if as we open this proceeding we don't tackle this issue, we will have missed an enormous opportunity.
      If we wait until the problem is upon us and open a proceeding that takes, let's just say, a year to address, it's going to be all the harder to do it then.  I think we can really benefit now from doing some forward-looking planning that would identify how we can transition to a more sustainable support mechanism going forward.
      >>ALJ Bushey:  Well, it's sustainable.  I mean the wireless -- it's not that it is unsustainable.  It's uncalculatable right -- I mean, that's the first problem.  And then potentially it could become less sustainable (inaudible) service could offer.
      >>Peter Hayes:  Yes.
      >>ALJ Bushey:  But I hear you making two steps.  First moving to include VOIP.  That's easy enough -- well, it sounds like it can be done.  The next step, though, is that fee.  That's a bigger divergence, I think, from our current program.  But I can understand if we are going to include VOIP, (inaudible) not going to work.  So VOIP really has to have some kind of a set fee, whether everyone else, all the other providers do, that's another story; right?
      >>Peter Hayes:  And I think the cautionary statement I would make would be, be careful about creating one mechanism for one technology and a different mechanism for another technology.  It will distort the market in a way that's not productive.
      My comment about wireless is not to imply that somehow wireless is going to stop paying or anything like that, but it's just that the pace of change in the marketplace continues to accelerate.  And these programs and the support for them were built in a totally wire line world.  And the wireless providers joined in under their safe harbor agreement with the FCC.  They are paying their share.
      >>Com. Chong:  Perhaps more than their share.  Is there anyone from the wireless industry here today who would like to speak on the issue of how much they pay?
      >>ALJ Bushey:  And how little they take.
      >>Com. Chong:  Correct.
      There is somebody out there.  I see Joyce Masamitsu from Verizon Wireless.  How kind of you to join us, Joyce.
      >>Joyce Masamitsu:  Thanks for calling me out.
      >>Com. Chong:  I will be getting a call from her boss later today, "Thanks a lot."
      >>Joyce Masamitsu:  Well, actually, I think today -- and I am Joyce Masamitsu.  I am the associate director for state public policy for Verizon in the west area, and I thank you for the opportunity to be here today.
      I think the only comment that we really want to make on behalf of our customers is the concern that currently our customers pay about 16 to 20% of their bill in federal, state, and local taxes, surcharges, and additional fees.  And that's not an insignificant amount.  That's a lot.
      And they don't receive any direct benefit from the majority of those taxes and surcharges.  And most certainly not from the USF.
      We don't -- Verizon Wireless does not draw from the USF.  We simply contribute.
      So I think that we do pay, and our customers do pay a disproportionate amount right now into that fund, and we are concerned about what happens to this fund.  And many folks have spoken to the fact that this needs to be a broad-based type approach, and we do agree with that.
      >>Com. Chong:  Are you able to speak on whether Verizon Wireless would support a numbers-based versus a connections-based type of program?
      >>Joyce Masamitsu:  At this point I think that's a bit premature for us to commit to that at this point in this the conversation.  I'm sure that we will have opportunity, as you mentioned, to formally respond in comments to any inquiries that are made by the commission.
      However, we're certainly open to options as to what opportunities there are to broaden that base and to apply contribution methodologies that are going to be equitable to all as far as contributions and technologies.
      >>Com. Chong:   Do we have anyone from CTIA represented here?
      I don't see Mike (inaudible).
      All right.
      >>Bill Nusbaum:   Just a question for AT&T, with reference to VOIP.
      I kind of get the -- obviously, the interstate, intrastate issue.
      But when AT&T provides VOIP to its customers now and in the future, which it will be doing, how is it going to differentiate at all between those services?
      So if I'm a VOIP customer of AT&T, what does my bill look like?
      Am I going to have -- it's going to be parsed out for interstate versus intrastate or it's just going to be one bill or what?
      >>Peter Hayes:   For the --   Let me ask some clarifying questions.
      Meaning where we are both the VOIP provider and the broadband provider?
      >>Bill Nusbaum:   All right.
      Yeah.
      >>Peter Hayes:   I mean --
      >>Bill Nusbaum:   Well, otherwise, how are you going to be (inaudible) right?
      And I'm assuming your new network --
      >>Peter Hayes:   Right.
      >>Bill Nusbaum:   Digital, state-of-the-art.
      >>Peter Hayes:   But we could also, obviously, offer VOIP across anybody's broadband.
      Clearly, consolidated billing is going to be there.
      We're not going to send anybody two bills.
      How will it be broken out?
      I don't know.
      How will it be separated?
      How will we pay the surcharges?
      I think that's what's critical to identify now.
      Because you've put the spotlight on me as the VOIP provider.
      It goes on everybody.
      We need to help everybody determine how they can continue to support these programs, because they're important.
      We can't walk away from them.
      We're not going to walk away from them.
      >>Bill Nusbaum:   I don't disagree.
      And I'm not trying to take a position and I'm not trying to ask a question to put you on the spot.
      It's more of trying to get my own head around.  In fact, are these going to be so much -- there's not going to be a way to distinguish inter- from intrastate, is that what you're saying?
      >>Peter Hayes:   I think that's clear.
      I think VOIP is going to be an information service.
      >>Martin Mattes:   I'd like to just suggest that there may not -- it may not be necessary to look at these options as complete extremes of revenue-based versus number-based.
      There are all kinds of variations that can come up within rate design.
      One, for example, is a minimum charge, have a minimum charge based on numbers and capacity.
      And then have -- continue with your revenue-based charges, but the revenue surcharge could be much smaller than it is today.
      That's just a thought that might be some sort of compromise.
      >>Peter Hayes:   Can I make another comment?
      >>ALJ Bushey:   Sure.
      >>Peter Hayes:   I'm talking way more than I wanted to.
      You had mentioned that a flat fee is -- has the potential to be regressive.
      And I think that's one of the reasons it's important to have an approach that not only does a flat fee on numbers, but also looks at capacity.
      Because that's going to be the mechanism that will broaden that support and minimize the regressive potential of a flat fee.
      >>ALJ Bushey:   Let's shift gears for a minute and imagine that we get out ahead of the FCC.
      What happens?
      We're all looking at you.
      >>Peter Hayes:   I think flexibility's key.
      I think we need to recognize that the federal structure is changing.
      They're going to do something.
      They're in the same bind we're in.
      We need to make sure that whatever we do, we do in a way that allows us to move smoothly to accommodate whatever FCC changes are coming out.
      Obviously, we need to continue to operate from the best information about what's happening in Washington.
      To the extent we can continue to modify our course as we proceed through this proceeding, it's going to be very beneficial to have an outcome that is sufficiently flexible.
      These are thorny issues, and as I said before, if we have to come back and revisit these on the other side of an FCC decision or on the other side of a dramatic migration to VOIP, it's going to be unfortunate if we have not captured the opportunity here to set ourselves up to make those kinds of future course corrections as easily and as quickly and as efficiently as possible.
      >>ALJ Bushey:   What you're suggesting seems to me to suggest that we flip our agenda, if you will, and do this last and give the FCC time to get through its process and then take it up, and then we have a concrete proposal that's been adopted and we have a full record at the FCC and has been chewed on by everybody, we can see all the positions, and then we can -- rather than trying to imagine what --
      >>Peter Hayes:   I think it's not a bad idea.
      I do think, as Natalie pointed out, there may be some very valid reasons why California will want to take a somewhat different path.
      I don't think that's necessarily a great idea.
      We could be spending time now identifying what kinds of characteristics are true about California, what's going to be the basis for a path like that.
      Those kinds of threshold questions could also start to be investigated as we wait to see what the FCC finally does.
      >>ALJ Bushey:   Abstract proceedings are very difficult.
      And maybe -- and maybe we do just queue it up at the end and see where we are in six or nine months.
      And if they've got a concrete proposal that everybody's behind and everyone's adopting, we can sit down and look at it fairly quickly, make whatever tweaks we need to make it a California product.
      Maybe that might make the most sense.
      And then also it'll be -- at that point, we'll have gotten through some of our programmatic review, we'll have a better idea of what kind of charges, what kind of services we're looking at and what kind of numbers we're going to have to look through to make it all work.
      So....
      Go ahead.
      >>Robert Haga:   Just a quick question for the panelists (inaudible) being the best place to address this.
      But the idea of numbers in connection-based methodology on a national scale makes some sense, because you're adopting all of the connections in the country.
      But if we're doing it just in California, what sort of issues arise in the bigger economic picture by assessing just California numbers in some way?
      >>Natalie Billingsley:   That's a thesis dissertation there.
      You want to take a crack at it, Peter, or do you want me?
      >>Peter Hayes:   Go ahead.
      >>Natalie Billingsley:   I think it's -- it's workable to use numbers in California.
      I'm not giving an opinion of whether we should or not.
      But I think it's -- it appears to me that it's probably technically feasible if you want to do that.
      There are some technical issues that you'd have to think about how to deal with.
      For example, since everybody's favorite whipping boy today is VOIP, you can have California numbers that are not in California.
      So how you would ratio that out or how you would gather any kind of data that would tell you, since I rather doubt you're going to get any of it from the VOIP providers, even if you ask them, you're -- you'd have to have some kind of discount adjustment in that rate design.
      But, yeah, you could do it.
      I don't think -- I'm going to have to think about that question some more.
      But just off the top of my head, I -- I don't think that would be something that would necessarily be problematic if you're using a numbers-based allocator to raise revenues here for specifically intrastate-only funds.
      You do have a little bit of an issue with ULTS because of the need to conform it to the federal structure.
      But you could do it.
      I don't know that I would, but you could do it.
      >>Peter Hayes:   And I would agree with that.
      The details on this are not simple.
      And, obviously, the -- well, not obviously.
      Potentially, the key is what piece of information are you going to glom onto to find these people.
      Is it area code?
      Is it billing address?
      You have to have something that's going to help you find where these people are who you believe are California-eligible for support.
      I agree with Natalie.
      I think it's workable.
      But I can't lay out the workings for you right now.
      >>Melissa Kasnitz:   I have a question going back to eligibility issues, the previous back and forth with Mr. Hayes.
      Are you contemplating, potentially, a phased proceeding or a phased review where we would evaluate what programs or what services should be included in the PPP programs and how they should be structured, either jointly or as consecutive phases, and then a final phase that evaluates the funding base?
      I'm just trying to imagine what a proceeding might look like?
      >>ALJ Bushey:   That might be how it would have to turn out if we're going to sort of let the FCC do this first, and then we'll look at it.
      >>Melissa Kasnitz:   So we might examine questions like what should constitute basic service and to get a better sense of what we want to have incorporated in the PPPs and then say, okay, now that we have this vision, what revenue do we need and how do we best look to the future to ensure that the revenue base is there?
      >>ALJ Bushey:   Well, hopefully, we would be looking at what revenue we need earlier on, and there'd have to be -- I suppose we'd just sort of default to the existing mechanism to get some idea of what the surcharge impact would be, and then we would, second phase or part or at the end, depending on when the FCC acts, then follow it up with the broader question.
      (inaudible).
      >>Melissa Kasnitz:   Thank you.
      >>ALJ Bushey:   Any further questions?
      Brilliant ideas?
      >>Robert Haga:   The -- just one question on the connections-based, and maybe I'll answer it in asking the question.
      But I've heard the idea that numbers as -- numbers won't exist anymore as a way to connect to people.
      I -- you know, as an engineer, I'm not sure about that.
      But if, from a practical standpoint, when we don't use a number, we say someone's name or we -- you have an address book and type in their name, and don't realize there's a number behind it, you know, how sustainable is the numbering methodology?
      How sustainable is the connection methodology versus a revenue-based system?
      >>Peter Hayes:   I think it's a relative situation.
      Numbers are more sustainable than revenue.
      I think at some point in the future, you won't have numbers.
      But I think at least from almost a societal standpoint, numbers are pretty firmly ingrained in how we live.
      I think it's got some kind of a decent remaining life to it.
      I think it's a good transition step.
      I think the notion that we will in this proceeding establish a funding mechanism that will outlive us is not a reasonable expectation.
      This commission is going to be revisiting this periodically just because we can't be smart enough to design a solution to the problems that we don't even know are coming at us yet.
      >>Com. Chong:   One question I had is whether the PUC has jurisdiction to order the VOIP providers to pay into our fund.
      Anyone like to comment on that?
      Peter.
      >>ALJ Bushey:   Well, hearing no objections, we'll --
      [ Laughter ]
      >>ALJ Bushey:   Motion adopted.
      >>Peter Hayes:   I actually would prefer not to.
      [ Laughter ]
      >>Com. Chong:   Do we have any VOIP providers out in the audience?
      I think I saw a Fones4Us type person.
      Do you have an opinion?
      Are they VOIP or not?
      >> Ross Buntrock:  (inaudible) of adding a VOIP product.
      And I actually represent some other VOIP carriers in addition to Fones4all.
      I work for a law firm in D.C.  I guess that's a question they would probably allow me to address in any kind of public space in terms of whether or not the commission has jurisdiction.
      If you look back at the -- you know, the series of decisions that the FCC has made, the Vonage and AT&T cases, and there's -- we're getting some guidance.
      But the commission has not, obviously, formally come to a conclusion on that yet.
      I think it would certainly be a shot across the bow if the commission decided to assert jurisdiction and probably significant litigation associated with that kind of a decision.
      But certainly an interesting proposition.
      >>ALJ Bushey:   Are your clients actively opposing the AT&T proposal at the FCC?
      >> Ross Buntrock:  No.
      (inaudible) clients that have been involved in the Intercarrier Compensation Forum, which is now being called the Missoula plan.
      But nobody has staked out any ground yet in the actual dockets.
      >>Robert Haga:   I may be wrong on this, but I think most numbers that are assigned to VOIP numbers are actually assigned through a carrier.
      >>Natalie Billingsley:   Yes.
      >>Robert Haga:   So that would be one aspect to this that would be available to us I think jurisdictionally.
      >> John Gutierrez:  Good morning, Your Honor, commissioner.
      My name is John Gutierrez. 
      I'm the Director of government affairs for Comcast here in California.
      As you may know, Comcast is both a CLEC, providing wireless -- excuse me, wire-line telephony for a number of years here in California.
      In addition, we regionally started an I.P.-enabler -- we don't like to call it Voice over IP, because our service does not touch the public Internet, it's over Comcast proprietary networks.
      Comcast, as part of the National Telecommunications Association white paper, has decided to step up to its licensing responsibilities.
      In the area of surcharges, we do pay these surcharges on a voluntary basis.
      That is our public policy.
      So the concern about VOIP totally taking away from the funds, at least when it's a cable provider, our policy is we will go in and remit those funds to the appropriate agencies at both the state and federal level.
      >>ALJ Bushey:   How do you calculate?
      >> John Gutierrez:  Tough question.
      You kind of do a -- let me answer that this way.
      We make a best-faith effort based upon existing data to balance it all out.
      But on a voluntary basis, we're hoping that we get it right, because we do have our wire-line CLEC business to kind of (inaudible) data for.
      So we kind of get at it that way.
      >>ALJ Bushey:   You take some sort of a fraction and apply it to your customers' bills?
      Or do you just pay it as a corporate expense?
      >> John Gutierrez:  No.
      It's a pass-through.
      >>ALJ Bushey:   It's a pass-through.
      So it shows up on the customers' bills?
      >> John Gutierrez:  There is a charge on the Comcast digital voice bill that says, "These are the regulatory fees."
      We don't do a (inaudible) breakdown.
      But if you look at all of the underlying mathematics of it all, it's like you said, Your Honor.
      >>ALJ Bushey:   Okay.
      So you make some sort of a rough estimate and assess it directly to your customers and pass it through?
      >> John Gutierrez:  Correct.
      >>ALJ Bushey:  You've done this voluntarily?
      >> John Gutierrez:  Correct.
      >>ALJ Bushey:   Have any of your similar-situated entities made similar offers or would you be optimistic that they'd be forthcoming?
      >> John Gutierrez:  I would say the cable industry, through its white paper, has adopted this policy decision.
      I cannot speak for my cable colleagues, if they have operationalized.
      >>ALJ Bushey:   Okay.
      Thank you.
      Do we have any further comments?
      >>Peter Hayes:   Can I just make one last comment regarding the FCC proceeding?
      I think what might be useful is to build in the kind of flexibility that would accommodate whatever the FCC ends up doing rather than simply waiting and seeing what the FCC does and responding after that. 
      Rather, to keep this on our agenda, if we're moving forward, but recognize the need to build in flexibility so that the necessary adjustments can be made when the FCC does finally determine what it's going to do.
      >>Ross Buntrock:   Just one last comment on that.
      It's not just the FCC that we have to be mindful of.
      The house subcommittee yesterday marked up the Barton bill and there are other competing Congressional proposals that can impact the outcome of what the commission does here on this issue.
      So I think that's another reason, as you said, to postpone this to the last possible minute until we know where the federal outcome is going to be.
      But I'm not optimistic based on what I've heard that the FCC is going to have anything done on this within the next nine months.
      It's probably going to be longer than that.
      Probably next summer, summer 2007.
      >>ALJ Bushey:   Okay.
      Thank you.
      >>Bill Nusbaum:   Just one comment on this set of issues regarding FCC and Congress, et cetera.
      I mean, the commission has independent authority to support a unique program.
      I mean, California's LifeLine program is pretty unique in the nation.
      And while I agree that we need to be sensitive to what's happening at the federal level, I am concerned that we not at the same instance see jurisdiction, say, cede jurisdiction.
      Say, we do whatever they're going to do.
      I'm not suggesting that you're doing that.
      There's this very difficult balance between what do the feds want to do, what are their goals and motivations, versus what we as an individual state can do to protect the citizens here.
      >>ALJ Bushey:   Final comments?
      All right.
      Well, that will bring to a close, then, our discussion on the funding mechanisms.
      I'd like to get some information about this afternoon, additional presentations we are anticipating.
      I have quite a list of speakers signed up for this afternoon.
      And I'm just going to call them up, and tell me if you intend to make a further presentation this afternoon.
      Mr. Nusbaum, you've already told me you do not.
      Patty Ugarte from Latino Issues Forum?
      >>Patty Ugarte:   Actually, it will be (inaudible) speaking for Latino Issues Forum.
      >> Ana Montes will be representing the (inaudible) administrative committee.
      >>ALJ Bushey:   So will --
      >> There will be someone from Latino Issues Forum.
      >>ALJ Bushey:   So there will be someone -- someone else, but Latino Issues Forum has a presentation.
      Ms. Billingsley?
      >>Natalie Billingsley:   Oh, I think I've probably shared enough of my wit and wisdom with you.
      Anna Leach-Proffer?
      >>Anna Leach-Proffer:   My comments were actually concerning Deaf and Disabled Telecommunications Program, so probably it should hold out until tomorrow.
      >>ALJ Bushey:   Okay.
      We must have just gotten (inaudible).
      Okay.
      Very good.
      Patrick Rosvall?
      >>Patrick Rosvall:   Yes, I'll have a brief statement.
      >>ALJ Bushey:   Mr. Hayes, will we have the pleasure of your company?
      >>Peter Hayes:   I think Mr. Mondon will be speaking.
      >>ALJ Bushey:  And Mr. Petheram?
      >>Peter Hayes:   He will be here tomorrow.
      >>ALJ Bushey:   Okay.
      And, Mr. Buntrock, we'll be hearing from you again?
      >>Ross Buntrock:   Yes, briefly.
      >>ALJ Bushey:   And not (inaudible) no?
      >>Peter Hayes:   If Ms. Malone had a voice, she would have been speaking right now.
      >>ALJ Bushey:   Okay.
      >>Peter Hayes:  As she does not, I think Mr. Mondon will be carrying our story forward.
      >>ALJ Bushey:   Okay.
      Pamela Palpallatoc.
      >> My name is Carrie, I'm from Greenlining.
      Ms. Palpallatoc will be here in the afternoon.
      >>ALJ Bushey:   Okay.
      Will she be making presentations?
      >> Yes.
      >>ALJ Bushey:   Philip Kaplan.
      Tomorrow.
      And Ann Ruth is on for tomorrow.
      But (inaudible) maybe that's just -- okay.
      So I've got -- one, two, three, four, -- five presentations after lunch, then.
      All right.
      And --
      >>Russ Selken:   And CTF has a brief presentation on the CTF.
      >>ALJ Bushey:   Okay.
      >>Peter Hayes:   And Mr. Mondon will have CTF comments as well.
      >>ALJ Bushey:   Okay.
      Based on that, I'm guessing our afternoon is -- 
      Yes?
      >> Lauri Medeiros:  I may like to make some comments on the CTF fund.
      Lauri Medeiros from the California rural health association.
      >>ALJ Bushey:   Okay.
      That gets -- okay.
      My best guess at this point is that we should complete our topics before 4:30 this afternoon.
      Okay, we'll be adjourned until 1:00.
      [ Lunch ]
      >>ALJ Bushey:  Good afternoon, everyone.  We are ready to resume our afternoon session.
      Topics this afternoon are California lifeline issues and California Teleconnect Fund.  Is there anyone else who wishes to talk.
      >>Jean Armstrong:  I am Jean Armstrong for the CTIA.  I had to duck out for a good part of this morning's session so I was wondering if I could go back and say a few words, if we could revisit, about the funding mechanism?
      >>ALJ Bushey:  Sure, no problem.  I am wondering if we should put you at the top of the list as sort of a transition speaker.
      >>Jean Armstrong:  That would be fine.  Okay.  
      >>ALJ Bushey:  Anyone else?
      >> Pamela Palpallatoc for the Greenlining Institute.
      >>ALJ Bushey:  Yes, one of your associates told us you would be speaking.
      Yes?
      >> Do you want the people who are speaking?
      >> Micheline would like to be a speaker.
      >>ALJ Bushey:  Okay.
      >>ALJ Bushey:  And your last name?
      >> Wilcoxen.
      >>ALJ Bushey:  Wilcoxen?  Very good.  Thank you.
      Anyone further?
      I'll ask again, is anyone interested in making a presentation at the end of the presentation?  As we did this morning, we will do this afternoon.  After you have made your presentation, please join us at the table, and at the conclusion of the presentations we will conduct a discussion of the issues that we have heard.
      So let's get started, then.
      The top of my list, I have Patty Ugarte from LIF, and I made an arrow but I have forgotten what it means.
      >> Did you want me to --
      >>ALJ Bushey:  Oh, that's right.  But hang on.  Let me solve the mystery of the LIF speaker first.
      >> Excuse me, actually, earlier today you were supposed to take Patty Ugarte, Latino Issues Forum.
      >> She is not speaking.
      >>ALJ Bushey:  So there is no speaker.  But there is a speaker from Greenlining; right?
      >> Yes.
      >>ALJ Bushey:  Okay.  Ms. Palpallatoc.  Okay.  Very good.
      So then we will begin with Jean Armstrong.
      And it is important when you come to the podium to identify yourself and the organization that you work for.  And if you have a complicated surname, please spell it.  Thank you.
      >>Jean Armstrong:  Thank you.  And thank you for allowing me to sort of go out of order is this afternoon.
      My name is jean Armstrong and I am here on behalf of CTIA, the wireless association.
      And CTIA and the industry as a whole, tends to be very much involved in this OIR process.  We have not had the opportunity as of yet to refine our positions on the Universal Services in California, but there are a few points I would like to make based on our national position.
      CTIA believes that the funding mechanism for Universal Services must be broad based.  In this respect, it must be technology neutral.
      Achievement of technology neutral funding can be done by basing funding contributions from service providers on the number of numbers which they draw from the North American numbering plan.
      CTIA recognizes there are some service providers who do not use numbers.  They currently represent a very small part of the market.
      If and when that percentage begins to increase, then some consideration can be given to connections-based funding.
      But that leap should not be made prematurely, and we believe it would be premature at this time to do so.
      Finally, there was some discussion this morning about the interplay between this commission's actions on Universal Services and those of the FCC.  CTIA would not suggest that this commission defer from moving forward and looking at the funding issues while waiting FCC action, but rather it would hope that California and the FCC can act in a coordinated fashion so that at the end of the day you don't have varying funding mechanisms at the state and federal level.  Thank you very much.
      >>ALJ Bushey:  Thank you.  Please come and join us.
      The process that we went through this morning, and maybe you weren't here --
      >>Jean Armstrong:  Yes.
      >>ALJ Bushey:  -- is speakers would then come and join us.  You don't have to.
      All right.
      Then our next speaker will be Patrick Rosvall.
      >>Patrick Rosvall:  Good afternoon, Your Honor, Commissioner Chong.
      I'm just going to touch on a few points, and actually I'm glad Ms. Armstrong touched on the funding issue and I will as well even though I wasn't on the panel this morning.
      First of all, I am here on behalf of a group of small rural carriers, basically all of the ILECs that are not Verizon and AT&T, serving primarily rural and remote areas in places like Oakhurst and Siskiyou County and a lot of places where, for many of our companies, there are a number of ULTS customers in particular, which is why I chose to speak on this particular program.
      Some of the companies have in the neighborhood of 30% or even close to 50% of their customer base that is on the ULTS program.  So to the extent that the funding issue becomes a problem in the future, which we're very fearful that it will with the movement toward VOIP and other technologies, we do remain very concerned about the ongoing viability of the program.
      And I think there are a lot of details to work out as to how the commission might go about ensuring that the funding -- the billing base will continue to be there for that program on a GOING-FORWARD BASIS.
      I think we heard a lot of good ideas this morning.
      We do feel that VOIP in particular should be part of it, and whether that's done on a number basis or a connection basis or some other related combination of revenue and connection, we don't have a refined position on that at the moment.
      But we do think that as a general matter, that as VOIP continues to grow as a technology and customers continue to shift toward that, and especially for our small companies, it's going to create this sort of snowball effect where certain companies who are regulated by the PUC are paying into the fund and, therefore, those customers who choose that carrier, their bills are higher because they are paying these surcharges.
      And if the competitors, the end-regulated competitors are not paying those surcharges, it just continues to shift what we see as a regulatory disparity between those competitors and then further reduces the billing base for the public policy programs and specifically ULTS.
      So I don't know that we have sort after turn-key proposal as to how to take that problem on but it is something that's on our minds, and we look forward to working with the commission as this proceeding unfolds as to how to resolve that problem.
      A couple of other things from the staff report that we noticed.  And, you know, we haven't had a chance to digest.  The staff report is pretty detailed, and I guess we'll look forward in the months, weeks, and the rest of the year to come to look at these things in more detail.
      But a few things that we did notice.
      I think -- and I will skip to I guess it's number 11 on the ULTS list of issues.  And it seems to suggest that perhaps there's no longer a need for operating costs to be reimbursed under the ULTS program.  And we just wanted to state here that we don't believe that to be the case.  That even though there's a third-party administrator involved now in the program, with the recent program changes as far as certification is concerned, carriers are still the first point of contact.  And for ULTS customers, there still is an administrative function that carriers are performing there.
      And in addition, carriers are still involved with -- in this case it's SOLEX that is the third-party administrator as far as transferring data and making sure that everybody is on the same page as far as who is on the program.
      So carriers do still have a role there and I think there's going to continue to be administrative costs associated with that that are going to need to be reimbursed from the ULTS program.
      And I guess lastly, I'll look forward to hearing what others think on some of the other issues regarding ULTS, but we faced, as particularly small companies, a lot of problems recently since there was a bill, I guess in 2001 or so, called SB 669 which shifted the control of the public policy programs to the legislature as far as how the money would be appropriated and funded.  And I think maybe a lot of people didn't fully realize when that happened what that was going to mean.  And what it's meant for -- and it's impacted the small companies maybe even more than the large companies.  It's an issue not just for ULTS but for all of the public policy funds.
      And really it's a pair of issues.  One is that you have to forecast in advance the amount that's going to need to be appropriated in the following fiscal year.  So right now we are in the process of figuring out what's going to be needed for '07-'08, which is a long time away.
      And there's -- we have noticed that in certain cases the appropriations are insufficient.  And so then what happens is -- and it's sometimes through no fault of anyone.  It's just that it's a long time away and it's difficult to forecast.
      And what happens is then the time comes, and the (inaudible) are too large and the appropriations are insufficient and it's important to realize that that has nothing to do with what's actually in the fund.  There may be plenty of money in the fund.  Carriers may have collected the correct amount or there may have been a surplus from a previous year that would allow those funds to exist, but without the appropriation authority from the legislature, it's impossible to get to the money and actually pay the claims.
      So that's, I guess, one problem that's arisen through that process.  And again, I don't have a solution to that.
      One would probably be some coordinated effort to put in place a legislative change that would remedy or make that process a little bit easier.  Another would be some kind of streamlined process where maybe the PUC could put something in place to allow supplemental appropriation to happen in coordination with the legislature in a more -- in a quicker fashion, because we just found that suddenly the claims don't get paid and, particularly for small companies, this can be a big problem.  Just because the revenue isn't there to pay the bills, essentially.
      So that's one problem that was caused by that bill.
      The other is maybe not exactly related to it, but there have been a couple of instances in the past couple of years where there have been budget crises.  And suddenly there's these pots of money out there in these special funds, you know, these public policy funds, and the state sees that and they have seized the money.  And they are under an obligation to pay it back but it doesn't always happen in an expeditious manner.
      And so, again, I don't say these things as a way to -- I don't have a perfect solution to them.  But it's something that's on our minds and something we'll be thinking about as this proceeding goes forward as to maybe some way that we can work on making that process a little bit better.
      I guess I'll stop here other than to say that we also are interested in the definition of basic service issue.  And at this point, we are skeptical as to whether that really needs to be expanded dramatically.  I look forward to hearing what other parties have to say on the matter.
      But as a general position, we don't -- we're not looking to expand the definition of basic service and the scope of these programs dramatically.  We don't see them as "broken," to use a term that was used earlier today.
      We think it's more like there are some issues to be resolved but that we don't think that there's necessarily a need to completely revamp everything.  And it's obviously dependent also on things at the federal level.
      So I guess with that I'll stop and join you at the panel here, unless you have any questions.
      >>ALJ Bushey:  Thank you.  Do you have questions?
      >>Com. Chong:  Mr. Rosvall I think there is a pending bill in the California legislature on the state seizing universal service issue.
      >>Patrick Rosvall:  I think that's true.
      >>ALJ Bushey:  Our next speaker is Ross Buntrock representing Fones4All.
      >>Ross Buntrock:  Good afternoon, I want to say thank you for sponsoring this proceeding.  California obviously has a long history of being a leader in universal service policy and I think the outcome of this proceeding will allow that to continue to be the case.
      And I have a personal interest, having grown up on a cattle ranch in the middle of nowhere, South Dakota, I have been a direct beneficiary of our country's Universal Service program.
      So I have a special place in my heart for Universal Service issues.
      I'm not going to rehash the comments that Fones4All kind of hastily put together on the staff report.  I want to highlight four different issues that they have identified and likely other things will come out of our discussions here today and as the OIR process goes on.
      Number one, Fones4All's concern about the ULTS program continuing to meet and achieve its purpose.  And Fones4All believes that outreach is a significant portion of the ULTS program's purpose and that's something that we want to talk about in this proceeding as well here as here today.
      Number two, Fones4All has a position on expansion of basic service, and we believe that the commission should seriously consider expanding the definition of basic service to include CRS services, not only facilities based but retail based as well as consistent with the FCC policies and conditions that have come out of the FCC and TrackPhone decision.
      Third the staff report asked a question about how the commission can maximize service options for ULTS customers, and Fones4All believes that one of the best ways for the commission to do that is to maximize competition for ULTS customers.  In today's marketplace there are very few carriers who are actually out there attempting to serve ULTS customers.  Most ULTS customers are left being served with the ILECs or incumbents in their respective territories, and Fones4All believes that the program would benefit significantly there was actually some real competition, specifically competition that people who are not ULTS customers are offered and have available to them in today's marketplace.
      The fourth point that everyone has been focusing on this morning is the funding issue.  And Fones4All agrees with the comments of the small ILECs who spoke momentarily ago, that really, the system is it exists today is not necessarily broken. Certainly as we consider expanding the definition of basic services and other, migration to VOIP and as new services come into the marketplace, there are going to be strains on the funding mechanisms, but we shouldn't be throwing out the baby with the bath water here.  And assuming that a numbers-based approach or another specific approach is something that should replace the specific surcharge system we have today.
      Unlike the federal system where you have a surcharge that has grown to be 11% and more on interstate revenues, that's not the case we face here in California.  The surcharge in some cases has fluctuated but it has been relatively sustainable and relatively small, especially in comparison with the federal surcharges we are talking about.
      So those are the main issues that we would like to discuss and see addressed in the OIR.
      In addition, as we consider any numbers-based approach, I think we do need to focus in particular on an issue that was raised briefly this morning, and that's the issue of the regressivity of that kind of a policy.  And at the federal level, that's certainly been getting a fair amount of discussion.  And I think it's something that we have to consider very seriously here today as well.
      So with that, I will take any questions.  You said you had a bunch of questions for me.  I'm happy to answer them.
      >>ALJ Bushey:  I do.  Tell us about your business.
      >>Ross Buntrock:  Sure.  Phones for all is kind of like -- it's -- they focus basically on low-income customers in inner cities, similar to Telscape and others, who go out and look for low income, mostly Spanish speaking customers where they live.  And that's who they focus on.  Fones4All is in the process now of basically transitioning from a UDP carrier to a facilities-based carrier and deploying their own network, starting in Southern California and through some of their carrier agreements with X/O Communications and others, expanding their network footprint throughout the state of California.
      >>ALJ Bushey:  You focus exclusively on lifeline customers?
      >>Ross Buntrock:  Not exclusively.  Fones4All has begun offering in the past year bundled packages to non-lifeline customers and others.  They have looked at expanding their product offerings into VOIP and other innovative telecommunications services, including possibilities of advanced service of all kinds, including broadband and others.
      >>ALJ Bushey:  I'm curious, it seems to me you are targeting the missed customers.
      >>Ross Buntrock:  That's right.
      >>ALJ Bushey:  And I am wondering how many of them you are finding, how long you are keeping them, and what are their characteristics and kind of what are we doing wrong?
      >>Ross Buntrock:  Sure.  I think -- unfortunately, I should have brought -- I am Fones4All outside counsel and I am very familiar with their operations.  I have been representing them for the last six years.  But Fones4All utilizes methodologies that the Universal Service joint board recommends, and they essentially try to find these customers where they live and work.  They go to places where government benefits are being provided, they go to -- they work with community-based organizations, senior living centers, homeless shelters, places for abused children.  There is an orphanage that they work with.  Orphanage is not the proper term.  It's a center in Pasadena.  They have a number of community-based partners they work with.  Essentially they go to community fairs, Cinco de Mayo is coming up, there are large events in Los Angeles they attend,, passing out flyers and basically trying to find people and tell them about the existence of this program.
      So that's one way they focus their outreach efforts that differs from other carriers that are kind of finding these customers in incidental fashion or relying upon the marketing board and their very worthy efforts of putting out general information, saying call this number and we will put you in touch with a carrier.  Fones4All is actually going out and having kind of on-the-street, kind of a grass-roots presence.
      >>Com. Chong:  So you are going to be a facilities-based carrier soon?
      >>Ross Buntrock:  Yes.  Actually, their switches are in the ground and interconnections taking place, as well as they are working on a very difficult transition from UDP with AT&T and Verizon, but that process is in place and utilizing an agreement, one of which was with X/O Communications, utilizing their collocation to take basically service from the end users back to Fones4All switches.
      >>Com. Chong:  You mentioned a TrackPhone decision when you were talking about expansion of basic service to include CMRS?
      >>Ross Buntrock:  Right.
      >>Com. Chong:  Could you summarize for me what that decision is relevant to that comment?
      >>Ross Buntrock:  I guess it was in 2005, the FCC acted upon a petition for forbearance that was filed by a company called TrackPhone Communications that is a wireless reseller operating nationwide.  They had obtained or sought ETC status in a number of states.  Many states have not acted upon those petitions and actually deferred to the FCC.  And they were specifically asking the commission to forbear from application of a portion of Section 254-B which requires federal ETC's to be facilities-based carriers.  They are providing their service, through, like I said, wireless resale.  They are an agent for most of the national wireless companies.
      And the FCC granted their forbearance petition and said essentially that the FCC should promote Universal Service competition through any means possible, and without respect to the technology that a carrier uses to provide their service.
      And so they decided that, in TrackPhones case, and presumably in other similar situations, that if you are using resale or some other method to provide Universal Service to end users, you should be eligible to participate as an ETC.
      If you'd like, I can get you a copy of that decision.
      >>Com. Chong:   Thank you.
      >>ALJ Bushey:   Final questions?
      Why don't you come and join us.
      >> Your Honor.
      >>ALJ Bushey:   Yes.
      >> I just wanted to follow up on what Ross was saying, if I may.
      >>ALJ Bushey:   Sure.
      Be sure to identify yourself, who you're representing.
      >> Diana Aguirre:  My name is Diana Aguirre, and I am from Telscape Communications, regulatory administrator.
      Your Honor, you posed the question, along with commissioner, specifically regarding ULTS customers, were we missing the mark.
      Telscape Communications is a competitive carrier.
      We are facilities-based, we have been facilities-based since 1999.
      A large base of our customers are ULTS customers.
      You posed the question, where are we missing the mark?
      How are we not reaching this sector of Californians?
      And what's happening is that, quite frankly, I feel that these customers just don't know that this is available to them, because I don't think that as a commission we're making an effort to outreach.
      We at Telscape, what we do is we have what we called (Spanish name), which are basically retail outlets that we have, specifically, in San Diego and Southern California, where it's predominantly Spanish-speaking households.
      We specialize in residential phone service, and we have dialup Internet.
      And we are in the process of getting ready to launch our (inaudible) for wireless. 
      We have a center where our base, our customers, prefer to do business face to face. 
      As opposed to just calling and speaking to someone on a phone, when it actually comes to signing papers or exchanging cash, our base, our culture, prefers to deal face to face.
      So because of that, we have six that are located throughout the Southern California and San Diego area.
      We are currently in the process of getting ready to open about ten more within this next coming year.
      The revisions to the ULTS program that just took effect, we are trying and working really hard with my team not only at Telscape, but I have also been consulting with other competitive carriers, also to CalTEL, to brainstorm how to make this transition as seamless as possible, because, respectfully, quite frankly, I feel these new revisions are going to make it a lot more difficult for people that I feel that this program is entitled -- the people that are entitled to the discount, they're the target market, but because of these new income document, whether it's a tax return or pay stubs or a child support decree, et cetera, again -- and I'm speaking specifically for our base at Telscape, our customers, predominantly Spanish-speaking households, live in a cash society that don't have, you know, readily available pay stubs or tax return documents or stuff like that.
      So it's more difficult and I feel, quite frankly, people have going to shy away now from wanting to even try to obtain this discount that normally they would be entitled to because of the fact that they're going to be hesitant to have to provide documentation.
      So I do commend the commission by allowing the second alternative by being able to qualify through participation and need-based program.
      But I think that these changes are -- we're going to see a big hiccough, and when I say "we," I mean Telscape, we're going to see a big hiccup with a large base of our customers.
      I am already starting to receive calls.
      We took the initiative and put it out in our quarterly, and we put that out, advising them who SOLEX is, any documentation you receive from them is going to be just as important as if it said Telscape on it.
      If you get this, you're going to need to fill it out, explaining it.
      I just wanted to respond to your question.
      I feel that we're missing the mark collectively in the sense that we really aren't putting it out there for the consumers, hey, this program is here, these are the qualifications.
      You can be entitled to it.
      And like I said, with these new changes that are coming, I think people are going to be a little bit more hesitant now to sign up or participate in it just because they're going to be a little gun shy, I think, about having to produce those documents or prove they really are eligible.
      >>ALJ Bushey:   We now have two of you who are out there and are doing it.
      What's the incentive?
      What got you out there and what can we do to get more of you?
      >> Well, our charter at Telscape, we -- and when I say "we," I speak for my colleagues I work with -- we're very passionate about our customer base, we feel there are certain tangible, identifiable needs that Hispanic-speaking -- Spanish-speaking market -- has, we do our best to embrace that and cater to our marketplace.
      Anyone can have a Spanish-speaking call center, but when you contact us, the Spanish we speak is -- while maintaining a professional attitude, of course, it's the more familiar conversational Spanish that we speak here in Southern California.
      Billing, English and Spanish; any literature, any publication that comes out of Telscape, English and Spanish.
      And, again, it's not collegiate, Castilian Spanish, but more the Spanish that we speak here in the Southern California area.
      >>ALJ Bushey:   You didn't go out looking for customers, your customers guided you to it.
      >> Absolutely.
      We know it's there.
      When our customer base, whether they're coming into the retail outlet or contacting our call center, we are, obviously, making the option available to them.
      If our customers meet the requirements, we're sending, as of right now, sending out the apps, up until the July 1st date, of course.  But we haven't gone actively looking for them.
      When we go actively out looking for customers, we're looking for customers regardless whether you're Spanish-speaking or not.
      But when I say part of our charter is those are identifiable needs at Telscape that we feel are there, and we do our best to not only meet but exceed the needs.
      >>Ross Buntrock:   To further answer your question, our actual -- your question asked -- you asked a question about what we need to change about the program.
      And one of the things that was addressed in their comments was we need to write the program kind of agnostic about who's participating, whether you're a CLEC or an ILEC, make the rules the same for everyone, including, Fones4All specifically agrees with AT&T that AT&T's tariff rates should no longer be the benchmark for reimbursement for competitors.
      The way that the general order 153 is drafted now, it's actually the ILEC, the lower of the ILEC rate or the -- I'm trying to remember the exact language -- but the point being that that should not be the case, as well as with other rules specifically relating to operational expenses.
      There's a difference now in terms of the way that carriers are incented to be reimbursed.
      A lot of CLECs no longer claim operational expenses simply because it's administratively burdensome to do so.
      At the same time, they're allowed, through a decision that came out of a Fones4All proceeding, to opt out to a cost factor, which was a (inaudible) -- for carriers who didn't want to or weren't able to provide documentation needed to prove their operational expenses.
      So the point being that Telscape, Fones4All, whoever wants to participate in the ULTS program should be treated no differently than any ILEC who is participating, subject, obviously, to the same kinds of requirements and the same burdens the rest of those participating in the program as well.
      But (inaudible) in that respect.
      >>ALJ Bushey:   I don't mean to order you, but --
      Ms. Palpallatoc.
      >>Pamela Palpallatoc:   Good afternoon, I'm Pamela Palpallatoc for the Greenlining Institute.
      First I wanted to let you all know that I'm going to summarize our comments from the staff report and also provide a preliminary report on our initial findings of Greenlining's low-income 21st century technology study.
      The Greenlining Institute thanks the PUC staff for crafting visionary leadership questions with a clear effort to make California LifeLine and other Universal Service public-policy programs relevant to 21st-century needs of all California communities.
      The leadership exhibited by the Public Utilities Commission has the potential to increase access to technology as well as for research to bridge the digital divide for California's low-income and minority communities.
      Greenlining's main concern in this proceeding is to expand California LifeLine to cover other telecommunications services.
      Greenlining believes funds should be directed to advance accessible and affordable technology to prevent low-income customers from being left behind.
      Although Greenlining would like the opportunity to comment on all public-policy programs relevant to the proceeding on Universal Service, our legal team was limited to research on the California LifeLine portion.
      And we will comment only on this portion for these workshops.
      Greenlining's initial comments on the staff report on Universal Service public-policy programs include discussion on the following:  Greenlining's low-income 21st century technology study, meeting the needs of low-income customers with technology options, and recommendations for an informational hearing that would circumscribe jurisdiction questions.
      And some of this discussion has taken place today and will continue.
      But we ask that there should be a specific hearing to clarify some of these jurisdiction questions.
      In regards to our low-income 21st-century technology study, we hope that the study will determine awareness and effectiveness of the California LifeLine program among low-income customers across the state.
      Some of our other goals in the study was to determine customers' awareness if they qualify for ULTS and determine penetration of other technologies and telecommunication services among ULTS-qualified customers, and also to determine interest amongst these low-income customers if discounted programs were offered for services that they currently do not subscribe to because of cost.
      Some of our preliminary findings thus far -- the study has not yet been completed, but we hope to submit a separate filing with the final results of the study -- include:  A large majority of low-income customers have land line phones; more than half qualify for ULTS but do not know about ULTS; nearly all have at least one cell phone in their home; more than three-quarters have computers with Internet access, at least one computer with Internet access; and more than half of these who have computers with Internet access do not have high-speed DSL or high-speed Internet access through cable broadband.
      Nearly all have at least --   I'm sorry.
      Nearly three-quarters will not know -- nearly three-quarters of the low-income customers do not have an awareness of VOIP technology.
      In regards to basic service, the California Public Utilities Commission itself has placed emphasis on broadband access by creating a broadband task force in the Verizon, MCI, and AT&T merger decisions.
      Based on the precedents set by these decisions, high-speed broadband Internet access should also be a key component in the reevaluation of Universal Service public-policy programs, and Greenlining asserts that broadband, high-speed broadband Internet access should be included in the definition of basic service.
      Broadband Internet access should be an accessible and affordable technology option for low-income customers in California.
      We know that our position results in jurisdictional questions, and we suggest a hearing to specifically discuss these questions.
      And we talk more about that in our comments.
      Thank you.
      >>Com. Chong:   Excuse me.
      Would you mind answering a few questions?
      Thank you, Pamela.
      So you're interested in a hearing on jurisdictional questions?
      >>Pamela Palpallatoc:   Yes, we are interested -- we are interested in a hearing on jurisdictional questions.
      >>Com. Chong:   And what exactly -- what types of jurisdictional questions are you talking about, just to be specific?
      >>Pamela Palpallatoc:   Questions that would address whether or not broadband Internet access, VOIP services, wireless services, if those types of services can be included in discussion about what types of packages, for example, can be offered to low-income customers, what types of discounted programs can we address that would include some of these services.
      >>Com. Chong:   So it might, for example, go to the bundles issue?
      >>Pamela Palpallatoc:   Yes.
      >>Com. Chong:   And that ties in, I presume, to your argument on basic service included in the (inaudible) services.
      >>Pamela Palpallatoc:   Yes.
      >>Com. Chong:   You talked about this interesting study by Greenlining.
      Do you have a rough estimate of when that study will be ready to be provided to us.
      >>Pamela Palpallatoc:   We do not have a statistically valid study, we do not have the stats to provide one.
      We hope our preliminary study will push the PUC to ask for a larger study done by maybe a combination of the Public Utilities Commission and the telecommunications companies.
      So we're hoping that we'll have our goal of a small sample of 200 by the end of this month.
      >>Com. Chong:   That's just in a few days, end of this month.
      >>Pamela Palpallatoc:   We're more than halfway completed.
      And we think that the pattern that we have experienced so far from the surveys that we've collected will continue.
      >>Com. Chong:   The sample group that you are interviewing, are they regionally diverse through California?
      >>Pamela Palpallatoc:   Some in Southern California and some in Northern California, predominantly in the San Diego/Los Angeles and the Bay Area.
      >>Com. Chong:   Thank you.
      >>Pamela Palpallatoc:   Thank you.
      >>ALJ Bushey:   Our next speaker is from AT&T, Jeff Mondon.
      >>Jeff Mondon:   Good afternoon.
      On behalf of AT&T, I wish to thank Commissioner Chong for her leadership as we begin this very important dialogue leading to a comprehensive review of universal LifeLine telephone service or California LifeLine.
      Such a review will ensure this program's continued viability and responsiveness to meeting the needs of low-income California consumers.
      A comprehensive review of California LifeLine should follow these guiding principles:  Conformity with URF objectives currently being developed; consistency with FCC rules and regulations; funding mechanism that is consistent with the FCC -- and as we had indicated earlier this morning, AT&T's proposal is to use telephone numbers.
      This would include numbers used for broadband and wireless.  
      -- consistent funding for all public-purpose programs; competitive and technology-neutral; voluntary participation for innovative services.
      This, again, will provide an incentive for providers to participate in the program.
      And a third-party administrator.  
      This would benefit the program management for both consumers and providers.
      Specifically, a review of California LifeLine should lead to -- lead to a program -- program modifications that will first expand the telecommunications services available to LifeLine participants.
      However, it is vital that any expansion of the program conform with guidelines and framework of the federal LifeLine link of programs.
      Modification should not risk federal funding.
      Also, it's critical that inclusion of nonregulated or lightly regulated services or providers does not make those services or providers subject to commission's jurisdiction to regulate.
      Second, modify the LifeLine program so it's competitively and technology neutral to compel providers to bring new technologies to this market segment.
      Third, offer greater access to innovative telecommunications services, including those that are not regulated by the commission. 
      In order to ensure that these innovative services are part of LifeLine's future, the Commission should make it clear that a provider's participation in the program would not make its participants subject to the commission's jurisdiction.
      The Commission should institute a policy of limiting its authority over providers that participate in LifeLine program to the extent necessary for administering the program, i.e., fund collection, claim reimbursement, and make it clear that those providers are not otherwise subjecting themselves to commission jurisdiction by participating in the program.
      Fourth, adopt principles of competitive and technology neutrality in the ultimate transition to market-based pricing for communication services in which AT&T recommends that the commission consider revising its implementation of section 874 of the public utilities code to eliminate AT&T's tariffed rates as the basis for LifeLine rates.
      Fifth, improve administrative efficiencies by expanding the role of the commission's new certifying agent beyond certifying and verifying a participants' eligibility into the program, but to also distribute the program's benefit.
      Having a certifying agent responsible for certifying all the participants and distributing the benefits will be administratively cost-efficient.
      Finally, six, continue to provide reimbursement to providers' administrative costs to all providers regardless of size, and administer the program with as much ease as possible.
      A cost recovery system may also encourage non-regulated and/or lightly regulated providers to participate in the LifeLine program, which will assist in serving as many customers as possible.
      Questions?
      >>ALJ Bushey:   I have a couple.
      I'm just going to make it consistent.
      What do you mean -- do you want a minute to get a drink of water?
      >>Jeff Mondon:   There is a separate proceeding currently going on with the commission right now.
      And there's a lot of -- that proceeding needs to -- we need to kind of make sure that all of these (inaudible) stay in sync and that we don't do something in one proceeding that's going to complicate the other.
      So we just need to make sure that we tie things all together.
      >>ALJ Bushey:   Can you give me an example of what you're thinking of.
      >>Jeff Mondon:   Pricing, pricing flexibility and the delinking, if you will, of the LifeLine rate, as an example, to AT&T's tariff rate.
      >>ALJ Bushey:   So if URF does away with AT&T's tariffs, then LifeLine can't be linked to that tariff anymore?
      >>Jeff Mondon:   I'm saying we need to delink the LifeLine programs right on LifeLine from the AT&T rate.
      >>ALJ Bushey:   And how does that affect URF?
      >>Jeff Mondon:   URF will give us the pricing flexibility to change our rates.
      >>ALJ Bushey:   Not to determine the outcome or anything.
      >>Jeff Mondon:   Right.
      [ Laughter ]
      >>Jeff Mondon:   We hope.
      >>ALJ Bushey:   Which brings us back to the next link.
      You emphasized it was important that the commission not interpose itself in nonjurisdictional or lightly regulated entities.
      If we do away with using AT&T's tariff as the cost basis and we can't go looking at other entities' cost basis, what, pray tell, do you suggest we use?
      >>Jeff Mondon:   I think what we need to do is come up with some flat rate, some type of fixed benefit.
      And how we come up and determine that, I think we need to kind of flesh that out probably in this proceeding.
      But if we come up with some type of fixed rate that the consumer then can use to apply to whatever technology that they want to use for this LifeLine benefit, whether that be wire line, wireless, or some type of broadband.
      >>ALJ Bushey:   So you're suggesting -- and when you say "rate," you don't really mean a rate.
      You mean an amount?
      >>Jeff Mondon:   Correct.
      >>ALJ Bushey:   Fixed amount.
      >>Jeff Mondon:   A fixed discount amount.
      >>ALJ Bushey:   Well, now, I wouldn't -- discount -- you mean --
      >>Jeff Mondon:   A fixed benefit.
      >>ALJ Bushey:   Right, a fixed amount, "X" number of dollars.
      >>Jeff Mondon:   Correct.
      >>ALJ Bushey:   However you use it, maybe half of the otherwise applicable cost might be a tenth, might be all of it?
      >>Jeff Mondon:   Correct.
      >>ALJ Bushey:   Do you have a specific proposal?
      >>Jeff Mondon:   As far as?
      >>ALJ Bushey:   Package.
      >>Jeff Mondon:   As far as how the program would work?
      I think --
      >>ALJ Bushey:   Maybe I should rephrase it.
      How soon --
      [ Laughter ]
      >>Jeff Mondon:   I think we can develop that during the proceeding.
      We have some preliminary ideas that we're still trying to bat around.
      But I think using a third-party administrator approach not only for LifeLine, but for some of the other programs, would give the public-purpose programs the flexibility it needs to allow a lot of these other non-regulated or lightly regulated services and those providers to come to the table to participate on a voluntary basis.
      Because it's the end user consumer that would be working with that third-party administrator by seeking eligibility, and that third-party administrator applying -- or providing the benefit.
      >>ALJ Bushey:   I'm just thinking out loud here.
      Your proposal would make basic service irrelevant; correct?
      The concept of basic service.
      >>Jeff Mondon:   For --   Well, I think we also need to talk about what -- how do we define basic service.
      Are we going to leave it the ways?  There have been some discussions about changing basic service.
      >>ALJ Bushey:   But doesn't it become irrelevant?
      If you're just getting "X" dollars and, I mean -- the reason we define basic service is so we can have (inaudible).
      >>Jeff Mondon:   Certain elements.
      >>ALJ Bushey:   And if we don't need half of anything anymore, why do we need the definition of basic service at all?
      If someone is capable -- is satisfied with -- so only a broadband connection for all their communication purposes, why should they be forced to have what we now call basic service?
      >>Jeff Mondon:   That's a very good question.
      I think we will have to take some time to flesh all of that out.
      >>ALJ Bushey:   Okay.
      Yes.
      >>Robert Haga:   Can you address the statutory issues that we would have to confront with that idea of a fixed amount?
      >>Jeff Mondon:   That is something that the commission would have to address, as it is tied to half of basic rate.
      So that is something that we would have to -- may have to seek some legislative changes in Sacramento on that.
      >>ALJ Bushey:   Boy, you've inspired all sorts of good thoughts.
      So come on down, and we'll get ready to have our....
      Sure.
      >>Patrick Rosvall:   Just a quick follow-up.
      I'm also involved in the URF proceeding.
      And hearing these questions about URF, just wanted to make a couple points about that.
      And I should say, in the URF proceeding, I'm representing sure West and Frontier, not the small ALECs like I'm representing here.
      But I think it's a good question that AT&T raises about what the overlap would be with the URF proceeding.
      And just to try to make that more concrete.
      I think one of the proposals that all of the ILECs are supporting is the issue of how the public-policy funds relate to AT&T's rate be addressed in phase II of URF after pricing flexibility has been given to the now NURF but hopefully soon to be URF ILECs.
      It has to be in sync and talked about in phase II of the URF proceeding, where that issue will be addressed.
      Another thing is that there has been discussion in URF of what's being called basic service.
      And I think it's going to be important not to be confused about that, because the basic service that's under discussion in URF is not necessarily the basic service that we're talking about here.
      There is the term "basic service" that is used in URF, for lack of a better word, to refer to services that people either think should be price-deregulated or not price-deregulated, in other words, it's considered basic for the purposes of URF, somebody is arguing that that service should remain price-regulated.
      So there's disagreement as to what basic service would be in that proceeding for that purpose.
      But that has, really, no direct bearing on what we're calling basic service in the ULTS context.
      >>ALJ Bushey:   So even though we're using the same words, it's not the same thing.
      >>Patrick Rosvall:   Correct.
      >>ALJ Bushey:   And that makes sense.
      >>Melissa Kasnitz:   I think that's --
      >>ALJ Bushey:   Come to the microphone and remember to identify yourself, please.
      >>Melissa Kasnitz:   This is Melissa Kasnitz, from Disability Rights Advocates, and we are participants in that URF proceeding.
      And we've been vigorously engaged in the discussion of what constitutes basic service.
      And while I think that's a valid question to be presented, I don't think we should automatically presume that the two terms are not the same.
      It's worth exploring whether basic service in URF and basic service as it's being used here should be the same.
      But I would like to caution against predetermining that they automatically are not the same.
      I think there may be a strong argument that they are in fact the same and should be considered with that in mind in both separate proceedings.
      >>ALJ Bushey:   Okay.
      Thank you.
      >>Patrick Rosvall:   That's -- that's correct, certain parties have said in the URF proceeding, or suggested, that maybe they should be linked up.
      But it's not been determined one way or another as to what basic service would be, and there are many parties that think that it should include or exclude things that wouldn't be part of basic service for the ULTS, you know, D961066 or whatever it is standard.
      But I certainly understand your point.
      >>ALJ Bushey:   Very good.
      >>Patrick Rosvall:   One last thing.
      The other last point which I have to make since I am here on behalf of the small LECs is that all those URF is important, not every (inaudible) would be on URF.
      So it's important to make sure we're in sync with URF, but it would also be important to make sure that in doing so, we don't forget that there are still a bunch of companies that would be rate-based regulated still.
      So wouldn't be subject to the URF standards.
      >>ALJ Bushey:   Thank you.
      Our next speaker, I wrote down the name, and I can't really read it.
      Madera?
      >>Lauri Medeiros:   Medeiros.
      It was on the teleconnect fund.
      Do you want to do that --
      >>ALJ Bushey:   No, the teleconnect fund is rather particular.
      Why don't we -- do you want me to move you to teleconnect fund?
      >>Lauri Medeiros:   Yeah, that would be better.
      >>ALJ Bushey:   Are there any other speakers for the teleconnect fund?
      >> Right here.
      >>ALJ Bushey:   Mr. Selken?
      I have you under CTF or teleconnect?
      >>Russ Selken:   I use the same terminology.
      Sorry.
      It's kind of like the NURF and URF, all those --
      [ Laughter ]
      >>ALJ Bushey:   More like UGH.
      Yes, sir, you had your hand up?
      No.
      All right.
      Any other teleconnect?
      >> Teleconnect.
      >>ALJ Bushey:   Teleconnect.
      >> Micheline Wilcoxen.
      >>ALJ Bushey:   So we have three teleconnect speakers, then.
      Is there anyone else on ULTS?
      >> Ana Montes.
      >>ALJ Bushey:   Oh, yes.
      >>Ana Montes:   Good afternoon, Commissioner Chong and ALJ Bushey.
      Thank you very much for having this workshop today.
      We appreciate you looking into this area in your first term as a CPUC commissioner.
      I'm also a member of the ULTS Advisory Committee, and I've been asked to represent the committee today and to present you with some issues that we're interested in having you look into, and also issues that we're concerned about.
      First of all, the ULTS AC charter allows for 12 meetings a year.
      Currently, the ULTS has been meeting every six months.
      And in the past year, we only met once a year.
      And we would like to have that schedule reinstituted and to amend the budget to reflect that change.
      Now, the reason why we stopped meeting 12 times a year was because two years ago, the California state budget crisis in the department of finance issued an executive order limiting all state advisory board meetings to one meeting a year.
      As a result, in fiscal year 2004/2005, the committee met only once, which severely limited advisory committee input.
      And we think it's really impacted the outreach, for example, and messaging that has been done by the marketing firm.
      Through the annual budget process, the department of finance approved the committee to meet six times for the current fiscal year.
      This allows to us meet every month in fiscal year 2005/2006.
      For the coming fiscal year, even though we requested a budget associated with 12 meetings, the commission, through Resolution T-16593, reduced our budget request to six meetings for fiscal year 2006/2007.
      So I can imagine that the question that you're now asking yourself is, why is it so important to meet 12 times a year.
      Well, due to current changes in the program, that necessitates meeting more often.
      The possible future of this program in regards to the OIR necessitates us being able to meet more often.
      Changes scheduled for July impact outreach strategies.
      Changing technology and funds for Universal Services impact all public purpose programs.  So funding issues.
      To carry out our responsibilities as outlined in the charter, we need to meet to submit a budget, an annual report once a year.
      And again, due to changing technologies and impact on consumers, meeting more often allows us to be more informed and in turn we can better advise the commission.  For example, if we had met last month, we would have had a better prepared packet for you for today's meeting.
      If we had been able to meet on a regular basis, we would have had input in other areas where -- that the commission is involved in today, such as outreach strategies.  And we have a suggestion that we'll present today to give you an example of what we mean by that.
      The second thing that I want to also share with you is that there is currently a conflict-of-interest issue which impacts the ability of our committee to be able to have full involvement.
      The conflict-of-interest issue has still not been resolved.  The conflict of interest, which is government code section 1090 -- and I have a copy of that for you -- needs to be resolved.  The impact of no resolution has been the following:  It's impacted the filling of ULTS AC seats.
      Members cannot vote on issues because they must abstain.  And it also impacts the structure and effectiveness of the committee.
      In terms of outreach, we also have a recommendation that the ULTS AC and low income energy board that is outreaching to similar populations work together.  To gain synergy, the ULTS marketing efforts should be combined with the energy care program and standardized qualifications for both programs.  For example, standardized to include same poverty levels and program eligibility standards.
      Information can be distributed on all low-income programs through the marketing program.
      And also, we would like to invite the commissioners to ULTS AC meetings at least once a year or as time allows.
      We also would like to share with you some policy issues and our comments on those.
      To broaden the choice of consumers, the commission should broaden the applicability of the ULTS discount to other technologies by making it technology neutral without jeopardizing federal support.
      so we need to make advanced technology availability as broad as possible.
      We need to increase funding for ULTS outreach.  The funds for today's marketing program amount allocation was designated ten years ago and has never been adjusted.  So we are operating on a budget that dealt with costs as far back as ten years ago, and we know there have been significant increases in costs for doing outreach and different other kinds of efforts.
      For the first time since its inception of the ULTS program in 1984, the commission is going to launch a major program change in July 2006 from self-certification to program-based and income documentation.  Changes to the ULTS program impact outreach and funding for outreach needs to be increased in order to conduct more efficient educational outreach activities.
      The demographics of California has changed, which requires different methods of outreach.
      We also request that the commission make a good faith effort to increase the penetration rates to 98% and include all voice communications.
      And an example -- we -- the reason why we brought this up is, as part of the SBC/Pac Bell merger agreement, SBC committed to a telephone penetration rate of 98%.  And so we would also like to see the commission also make the same commitment.
      The committee remains neutral on the appropriate funding mechanism for the public policy programs.  However, we strongly advocate ULTS customers should continue to be exempt from contributing to public purpose programs as they are today.
      I have some material for you, and along with this material, as a community-based members of the advisory board I have also included a description of what is a community-based organization.  Because I think there is still some confusion as to what a community-based organization is.  So Latino issues forum has put together a description which we have submitted to the board and we would also like to share this with you.  Any questions?
      >>Com. Chong:  You were talking about broadening the definition of services to include some advanced services in a technology neutral way, and you said but don't risk federal funding when you do that.
      What exactly did you mean by that?
      >>Ana Montes:  We know that, for example, some -- due to federal guidelines, there may be restrictions which would impact the ability to receive the funds from the Federal Government, and we want to be careful that we don't close ourselves off from receiving those federal funds.
      >>Com. Chong:  Thank you.
      >>Diana Aguirre:  I have one quick question if I may, just for my own curiosity.
      >>ALJ Bushey:  Would you please use the microphone and yourself.
      >>Diana Aguirre: Diana Aguirre, Telscape Communications.   
      Quick question.  I know you said the committee wasn't able to meet because of budget crisis and funds and things like that.  But was I correct in understanding you were able to meet once, you had said, last year? 
      >>Ana Montes:  Two years ago we were able to meet once.
      >>Diana Aguirre:  And no other meetings since then?
      >>Ana Montes:  We are now meeting six times a year.
      >>Diana Aguirre:  My question is, I wanted to know specifically with these drastic changes that are coming up with the new date July 1st, what kind of -- you mentioned marketing budget.  What kind of marketing is being done if any at all right now?
      >>Ana Montes:  There has been an interim marketing plan in place which has been doing marketing to geographic -- they have been doing marketing through the use of media, community based organizations, and community newspapers, et cetera.
      So there is a marketing plan in place which has targeted underserved communities, and there was an RFP process and there was a selection made to choose a marketing firm which has been doing marketing throughout California.
      And during that time when the RFP was being written and when the firm was hired, that was the year that we had only met once a year.
      Since we started meeting, we have been updated on what that marketing group has been doing.
      So there are efforts.
      As a community-based member, I think that some of the efforts could have been better.  And the board is addressing that with the commission and also with the marketing group.
      >>Diana Aguirre:  And I guess that's what my point was, just because the way that I see it right now, this big dramatic change, if you will, is set to take place July 1st, '07.  And the only notice that customers are really going to receive about it is going to come via a bill insert from June 1st to June 30th.
      >>Ana Montes:  There were limitations as to what the message could be that was put in place that we had no control over.  We agree with you 100% that there needs to be increased outreach effort because people are still going to be surprised when they receive a letter saying they are no longer eligible or that they have not recertified.
      There are areas that need to be worked on.  And part of it has been I feel our lack of involvement.  And also just the fact that there are limitations to the outreach program itself that no one has control over.
      >>Diana Aguirre:  Thank you.
      >>ALJ Bushey:  Thank you.  Are there any additional speakers?
      Shall we take a short break?  And then we will resume for our discussion phase.
      So ten minutes, till 20 minutes after.
      (Break)
      >>ALJ Bushey:   Would you take your seats, please.
      We're beginning. 
      As we were reconvening, issues arose from the discussion to some of the changes to our LifeLine program that we had discussed immediately before our break.
      And Helen Mickiewicz, the commission's telecommunications counsel, is here to clear up what may have been some inaccuracies that we discussed.
      So, Helen, please enlighten us.
      >>Helen Mickiewicz:   Thank you, ALJ Bushey.
      I just wanted to clarify a couple of things.
      One had to do with the number of meetings that the ULTS board has and the transition from meeting 12 times a year to only one a year to only six a year.
      And that came about as a result of the fact that the -- that the legislature passed a bill several years ago mandating that the commission internalize the functions of the various public-purpose programs that we have.
      And the two that were the most seriously affected were the ULTS program and the deaf and disabled telecom program, which we'll be talking about tomorrow.
      And in both of those cases, the advisory committees had some operational authority over the programs.
      And then after the statute went into effect and the operational duties were transferred into the PUC, the commission reduced the number of committee meetings for ULTS because -- well, first of all, the one meeting a year was the result of a mandate from Sacramento that advisory boards are only allowed to meet once a year.
      The commission made a case that because these advisory boards are providing input to the commission on an ongoing basis for ongoing programs that are of considerable importance to the public, that we made a case that the committees should be allowed to meet more than once a year.
      And with ULTS, we were able to arrange for six meetings a year.
      So that's how that came about.
      And that's what's in the budget resolution.
      And Angela young in the back who's the staff person who works on the budget resolutions said that's what we put in the budget a year and a half ago when we had to adopt a budget for this year, for '06/'07.
      And, you know, there's -- the opportunity for some adjustment to that going forward, if that's the pleasure of the commission.
      Now, the other item I was asked to talk about, Robert, you have to remind me, because I already forgot what it was.
      >>ALJ Bushey:   The grandfathering of existing --
      >>Helen Mickiewicz:   Thank you.
      I'm sorry.
      It's the over-50 brain.
      [ Laughter ]
      >>Helen Mickiewicz:   I tell you, the grandfathering of the ULTS certification, that came about because -- the comment was -- or the concern expressed was that customers in the ULTS program will get a notice telling them that they're now no longer eligible.
      And that is not quite correct.
      The FCC decision which prompted the commission to undertake a review and changeover in our ULTS program from purely self-certification to third-party verification, that decision does allow -- that FCC order does allow for a one-time third-party verification when service is established.
      Each subsequent year, the customer can self-certify, although there's a requirement that we have to do a 3% random check each year to ensure that folks who have signed up are in fact in the program appropriately.
      No one who is a customer now in the program is going to be kicked out because that customer has not gotten third-party verification.
      Everybody who's in it today is grandfathered in.
      So I wanted to be sure that everybody understood that.
      >>ALJ Bushey:   You've wandered away from our table.
      And I specifically left a name tag out for you.
      So not a chance.
      Come on.
      >> Come on down!
      >>ALJ Bushey:   Come on down.
      You started a topic and we're going to follow up on it.
      >>Diana Aguirre:   Diana Aguirre, Telscape Communications.
      I understand what it is that you're saying.
      But my concern is, the caveat, if you are randomly audited in that 3% and you qualified before based on self-certification, now you need to be able to provide either documentation to prove your income or participation in a needs-based program.
      >>Helen Mickiewicz:   Okay.
      Now you're at a level of detail that I can't quite answer.
      But I would be willing to say the following, and Angela in the back can tell me if I'm wrong.
      I would be willing to bet that we aren't going to be doing that 3% sample right out of the box..
      >>Diana Aguirre:   >>Diana Aguirre:  I'm sure.
      >>Helen Mickiewicz:   But there will be a notice going out to customers telling them about the change in the program.
      And so at some point down the road when we do that 3% sample, if a customer gets snared in that, the customer should have had notice by the time that comes around..
      >>Diana Aguirre:   >>Diana Aguirre:  And they should, being the operative word.
      But the thing is, I -- and this is just mean, I don't mean to get into semantics.
      But I don't think it's fair to say they're grandfathered in when that possibility still exists that, yes, auditing is not going to begin right out of the gate, but it could happen.
      And, again, if you normal are one of the customers that the program is designed for but you don't have documentation to prove your income or being involved in a needs-based program, you are going to be, I guess, disqualified from the program and removed.
      And that's the concern.
      The only notice is a bill insert that's going to go out for a month in June when the program starts in July.
      That's my concern.
      >>Helen Mickiewicz:   Okay.
      Well, I don't -- I just don't have the level of detail to answer that.
      And all I can tell you is that it's my understanding that notices are going to be sent and that customers will be told they have to meet these requirements.
      And at some point later, they will have to be able to produce the documentation if they are among the 3% who gets plucked..
      >>Diana Aguirre:   Yes, 
      But like I said, it just goes back to my original statement, the notice is going out via a bill insert for one month, along with notice that's a separate issue that's going out in the same bill insert for customers to also read, along with the 310-424 area code overlay.
      So all I'm saying, it's a lot of information via one bill insert for customers to take in, and then, bam, there it is, you have notice now.
      >>Helen Mickiewicz:   Okay.
      It's my expectation that if a problem arises, the commission will require additional notice.
      That's what it has done in the past.
      When there's a perception that customers have not been properly notified, the commission has the discretion to require companies to send additional notice, either through further bill inserts or through a separate mailing, which the commission itself has found to be the most effective notice.
      But we just kind of have to wait and see how things unfold, I think.
      But, again, it's up to the commissioners..
      >>Diana Aguirre:   Certainly.
      I just -- just having spoken with other people, I think the concern is, like I said, it's just, yes, it's notice.
      But it's rush, rush, rush, along with other information that's going out via the same bill insert the same month.
      >>ALJ Bushey:   Okay.
      Thank you.
      Thanks a lot, Helen.
      All right, for our discussion, the commissioner and I have two taxi that we'd like to focus on.
      The first one is an outreach and reaching our missing customers, if you will.
      And the second one is the notion of leaving behind the concept of basic service and turning into more the straightforward subsidy program.
      So let's start on the outreach issue, and then we can move on to the second one.
      Anyone who would like to get started in no one has anyone ideas?
      Come on.
      >>Ross Buntrock:   Ross Buntrock, representing Fones4All.
      Like you said, the issue that we teed up in our comments on the staff report was some notion of the commission basically reimbursing carriers to some extent for certain of our outreach efforts that are very important and supplemental to the outreach efforts that the ULTS marketing board already undertakes at a significant expense and to great effect.
      At the same time as we talked about and as evidenced by the statistics that we talked about from the FCC, as well as statistics we have all seen in California specifically, there's a certain number of people that are not being found, as well as there are new people coming into the system all the time.
      And so how do you pick up that gap?
      And I think one way to do it, although, obviously, it would have to be carefully considered, is to provide carriers with some form of incentive, as AT&T talked about in terms of whether it be, you know, ensuring that they're exempted from certain requirements, or whether it's reimbursing them for certain of their operational expenses to a limit.
      But some notion that there is outreach that -- lots of outreach work yet to be done.
      And I think that's something that we should seriously consider in this proceeding.
      >>ALJ Bushey:   I'm hearing a couple of ideas in there, both of which are fairly complicated.
      Reimbursing for costs.
      Having spent a lot of years in rate cases, it sounds a lot to me like it would require a rate case to do that.
      How could we do that that doesn't have us crawling through your accounting data?
      >>Ross Buntrock:   One way to do that would be to come up with a proxy, similar to -- although perhaps more sophisticated than -- the cost factor proxy that we use now for certain carriers who opt into the cost factor for operational expenses, and come up with a -- you know, a per-head, per-customer amount that the commission is willing to provide carriers who have demonstrated a certain amount of success in outreach and develop whatever milestones or metrics might make sense.
      But some notion of demonstrated that you are achieving outreach success, and if you achieve that outreach success, we'll give you "X."
      >>ALJ Bushey:   That sounds to me, different -- that sounds to me like some kind of a reward system.
      If you're -- you're a -- your ULTS rate is X, we'll give you Y, and I'm not sure where the money would come from, but let's assume we can argue this out.
      >>Ross Buntrock:   Fones4All isn't necessarily (inaudible) it's really something to kick off the idea in this proceeding.
      But that idea that you just mentioned was something that was discussed in the (inaudible) to the cost factor, some capitation fee, I think they called it, in their discussion in that decision.
      So the commission has entertained this idea before, although in a very -- you know, very brief fashion.
      But it's certainly something that I think is worth considering.
      And, obviously, we're open to any suggestions the parties might have to the extent that the carrier outreach is a goal of the program.
      >>ALJ Bushey:   Thank you.
      >>Com. Chong:   Do any of the carriers have ideas on carrier incentives, what would be effective?
      >>ALJ Bushey:   Yes, sir.
      >> I just want to address that --
      >>ALJ Bushey:   Wait a minute.
      >> I'm sorry.
      >>ALJ Bushey:   We need to you come to the microphone.
      And when you get there, we need you to get you to tell us who you are and who you represent.
      >> Enrique Gallardo:  My name is Enrique Gallardo, with Latino Issues Forum.
      Just because capitation program was mentioned, we know, actually, capitation program has been used before in energy through a capitation program getting people onto the CARE program.
      So that's something that I think is possible, but I really think that's problematic to offer it to carriers, just because you get into issues of what's marketing and what's outreach.
      But I think that's something that could be considered for community-based organizations.
      >>ALJ Bushey:   I'm sorry.
      When you say "capitation," what do you mean?
      >> Enrique Gallardo:  Giving someone a bounty for signing someone up onto the ULTS program.
      So giving a CBO a bounty for signing someone else to the ULTS program.
      >>ALJ Bushey:   Okay.
      And it's a set amount?
      It's not based on their costs or anything?
      >> Enrique Gallardo:  No.
      It's a set amount, yes.
      >>ALJ Bushey:   So it's not like a commission.
      >> It's like a commission.
      >>ALJ Bushey:   Commission, okay.
      >> And this has been used very successfully in the CARE program.
      >>ALJ Bushey:   Okay.
      Now, I -- I don't understand why it won't work or you don't think it would work with telecommunications companies.
      >> Enrique Gallardo:  No.
      I think it's possible to work, although I think there are problems -- I'll resolve -- withhold judgment on saying whether it would work with telecommunications companies.
      But I will say that a more, perhaps, -- a less problematic focus of a capitation program would be with community-based organizations.
      That's -- that could be a target of a capitation program.
      >>ALJ Bushey:   So the commission would be paying to the community-based organization?
      >> Enrique Gallardo:  Yes.
      >>ALJ Bushey:   Okay.
      >> Enrique Gallardo:  And, in general, I just wanted to comment on using community-based organizations to conduct outreach.
      We find that that -- in terms of people being left behind, they can very effectively reach those people who are left behind.
      In the previous proceeding that was just concluded overhauling the ULTS program to comply with the federal guidelines, there were some limitations placed on what community-based organizations can do in terms of helping people.
      I actually don't have a complete recollection of what they were.
      But I think that's something that could be addressed as how community-based organizations can be more effectively used in outreach.
      >>ALJ Bushey:   Thank you.
      I'm sorry.
      >>Ana Montes:   If I can just add to that.
      If I can just add to that.
      I think that there are limitations that (inaudible) in terms of per capitization is that some community-based organizations or, actually, some nonprofit organizations can afford to do that.
      Smaller, grass-root type of organizations cannot do that, because it requires a staff person that has allocated time to be able to do that.
      So it does work for some, but it doesn't work for others.
      And so what we have seen is, one, first of all, is a non-branded approach to educating customers about ULTS programs.
      We think that's important, because we want to be able to give consumers choice.
      So we feel that a non-branded approach is important.
      The other thing is, if you look at the models that have been incorporated, there was a ULTS outreach effort several years ago that was -- a contract was given to another firm.
      And what they did and what a lot of other groups have done is given small grants to smaller community-based organizations.
      And they've been very, very successful, because, one, they have trust.
      They're in the community.
      They knew where to distribute the information.
      They were able to develop culturally appropriately, linguistically appropriate, lit -- appropriate in terms of literacy, et cetera.
      And they were able to get the information out to the communities.
      They were door to door.
      They had ongoing events.
      They had day-to-day activities where they were actually seeing the people, so they were able to distribute that information.
      And this was in limited English-speaking communities, disabled communities, and other low-income communities.
      So community-based organizations were really able -- are really able to reach the most harder-to-serve communities.
      And a lot of those were given small grants to be able to do that.
      And it was very, very effective.
      The other thing is, in terms of utilization of media, it's also important to know that it's -- the bigger bang for your buck is targeting community-based newspapers and media that reaches into the different diverse communities, for example, Spanish-language television and other types of minority or ethnic minority-directed media.
      Those kinds of efforts really reach those communities.
      And we found those to be extremely successful.
      The other thing is is that even though the programs involved grants to those communities-based organizations, it was still much more cost-effective, because of the amount of work that they were able to accomplish and the fact that it was part of the mission and the goals of that organization.
      In -- again, the per-capitization, that limits your choice of the smaller groups not being able to do it, because they can't invest and have a person on staff that just do that.
      Whereas if they -- the small grants, then that's an actual staff person with allocated time.
      >>Ross Buntrock:   To that point, this is Ross Buntrock, Fones4All, the FCC's joint board actually recommends that carriers and community-based organizations work together.
      And that's actually one of the recommendations that was in the 1997 Universal Service report.
      And that's the model, actually, Fones4All has used very effectively, because, as you point out, many CBOs don't have the resources to implement these programs, even if they do have grant money there to administer, they don't have the staff, they don't have the expertise even in conjunction with the ULTS marketing board, they don't have the resources and the ability -- that would kind of deter them from their core missions if they got involved in making this their sole purpose in being out in the community.
      This is an adjunct that when you have a carrier involved, can be very effective.
      And, in fact, Fones4All worked with -- and recommended to one of the members of the ULTS AC committee the vendors the Fones4All actually uses to do some of their door-to-door campaigns, various of their media outreach efforts and kind of grass roots efforts.
      So there's a lot there.
      And I think that the marriage of the two carriers and CBOs is really the best-case scenario.
      And I'm interested in more about the gentleman's discussion about the limitations or problems that might be encountered when a carrier's involved through CBOs.
      >>ALJ Bushey:   Let's go up to the audience first.
      >>Melissa Kasnitz:   This is Melissa Kasnitz from Disability Rights Advocates again.
      And this is one of the issues that I tried to flag in my preliminary comments.
      And I just wanted to add a little bit of detail. 
      In the context of the recent ULTS proceeding, this use of CBOs in particular to sign people up was discussed.
      And it was something that was not fully resolved.
      And one of the issues apparently was the nature of the contract for the third-party administrator and the way that the third-party administrator was going to be reimbursed for signing up customers for the ULTS system.
      It was never explained with great clarity, at least to me, but there was concern about double payment.
      And that's why the final decision declined to adopt a CBO-based enrollment program.
      And it was something that, at the workshops in that proceeding, there was acknowledgement that it should be reexamined and revisited because of the potential effectiveness of CBOs.
      So I would like to bring that to the people in this room's attention because I think this proceeding will provide an opportunity to revisit that question that was not fully resolved in the context of the ULTS proceeding.
      >>ALJ Bushey:  I want to get clear on exactly what the question is.  You are talking about a contract between the ULTS administrator and the CBO.  And I understood our earlier discussion would be talking about carriers working directly with CBOs.
      Where does the administrator come in or are these two different models?
      >>Melissa Kasnitz:  I may not be entirely clear on it.
      In the former ULTS proceeding, a number of consumer groups advocated for a process by which CBOs would be allowed to go out into the community with the paperwork and assist individuals in enrolling in the ULTS program.
      There was concern expressed that if the TPA were not the exclusive interface with the consumer, there might be consumers who effectively double enrolled, and there would be a double liability for payment for the enrollment of that individual.
      I'm not entirely clear how that would work, but that's the concern that was expressed to me, best as I understand it.
      So at that time, the final decision declined to allow CBOs to actually take the paperwork to potentially eligible consumers and assist them in signing up.  And rather, encouraged CBOs to communicate directly with the, at that time, unnamed but now identified third-party administrator because of the way that the RFP had been written.
      I'm probably explaining this poorly because it was never explained to me in detail, but the main point I'm trying to convey is there has been an interest among the consumer organizations in allowing CBOs to actually go out and assist people in filling out the forms.
      There were procedural reasons, in part based on the contract and in part based on the time pressure to conform California to the FCC guidelines where that was not resolved in the past ULTS proceeding.  And while I don't want people to rely on my characterization of what the problems are, I want to raise that this proceeding may very well be an opportunity to revisit that.  And I want to add my voice to those who are saying that community-based organizations may be a very effective way to close that gap and reach those consumers that are among the most difficult to reach.
      >>ALJ Bushey:  Thank you.  I am guessing we might have some clarification right behind you.
      >>Angela Young:  Thank you.  Angela Young.  I am with staff.
      The two issues -- we have a marketing contract right now.  The contract has another year to go, amending the contract requires DGS approval.
      The question came up during the proceeding regarding community-based organizations as an outreach effort, also assisting customers to complete the ULTS forms.
      Right now, the structure that we have established for the third-party administrator is the third-party administrator will send the form directly to the customer.  Each form, we have a unique uniform code, okay, I.D. number.  When the customer finished and complete the form, they will send it back to the TPA for process.
      They will scan and use the uniform coding as an identification.
      The issue came up that unless they bring the form to the CBO to complete, we will -- the form will remain its integrity from issuance to the final process.
      If they download a blank form without the uniform -- what is the name of the UC --
      >>Diana Aguirre:  It's a bar code.
      >>Angela Young:  The bar code, yes.  Without the bar code, there may be situations that the customer may submit two forms and -- for the TPA to process.
      Right now the reimbursement under the contract is the TPA will pay on each form that they process based on the bar code.
      Unless we can resolve that --
      I think we -- there's a lot of room for change and amendment in the future, but we would like to implement existing process we have established now and see a further amendment and justification will be needed.
      >>Jeff Mondon:  I just want to comment that the commission currently uses a third-party agent to provide outreach on ULTS.  In fact, Ana Montes was commenting about the funding currently being allocated for that.  And I think one of the concerns of the advisory -- because I also serve on the advisory committee with Ana is the amount of funding being allocated for outreach really needs to be addressed because I think it's hampering the effectiveness that the current vendor, Richard Ethan & associates is currently doing.  They provide outreach using community-based organizations, television media, et cetera.
      I think we need to make a look at the current tools that are currently being used and just provide the adequate resources for those tools to let them work at their utmost efficiency.
      >>Patrick Rosvall:  Patrick Rosvall for the small companies again.  Just a couple of things generally on outreach.
      I think, and maybe this echoes what Jeff just said as well.  I think we believe in the marketing board as the best vehicle to conduct outreach.
      And I don't think we would necessarily oppose some kind of involvement with CBOs potentially coordinated by that marketing board, but I think -- I guess our position would be that it's the most competitively neutral and most comprehensive way to conduct outreach to have a body specifically dedicated to that task.
      And I have also participated in a lot of the meetings of the administrative committee so I have heard some of the issues that have arisen with the marketing board.
      I'm sure there are ways that we can improve that.  But as far as what we would like to see be the vehicle for marketing or outreach, that's what we would rather see it be rather than giving a bounty, as we have described it, to a carrier or -- and to the extent that CBOs are given some kind of credit, we'd like that to happen coordinated by or in connection with the marketing board, not as a separate vehicle.
      And I guess I'd just have to hear more about the details of how something like that might work as far as where we come down on that.
      As far as the issue of carrier compensation for outreach, I would just note that that issue has been discussed at length, and actually the Fones4All proceeding from a couple of years ago, a lot of these issues are in the record.  The record I think is actually pretty robust there.  And Fones4All probably has other ideas as to where things might go, but a lot of the issues, I think, that we would see here, it may be useful to look back at some of the things that arose in connection with that proceeding because it seems like some of the same issues are coming up now.
      >>ALJ Bushey:  When you say the Fones4All proceeding, what --
      >>Ross Buntrock:  It was a petition for modification.  And so actually, I would take issue of the characterization of the record as being robust.  There was one comment round and reply comment round.  Nothing approaching anything like what we are doing here today or what this OIR contemplates.  So I think the time is ripe, actually, as we undertake a global view, to revisit some of those issues and decisions that were made on a relatively limited record.  
      >>ALJ Bushey:  In what document was the petition --
      >>Ross Buntrock:  I can get you the decision.  It's 03-10-020, but don't hold me to that.  
      >>ALJ Bushey:  In what proceeding was it?
      >>Ross Buntrock:  Basically, Fones4All filed a petition for modification to General Order 153, and I don't have the docket number committed to memory.
      >>ALJ Bushey:  That's fine.
      Any more comments on ideas for outreach?
      Let's move on to our next topic.  Discussion of leaving behind the concept of basic service and allowing participants to use that amount as they see fit (inaudible).
      Is there anyone from out in the audience who wants to talk on that?
      Okay.  That leaves the people at the table.  Who would like to start?
      >>Jeff Mondon:  As I stated earlier in my presentation, that moving away from a set discount that's currently tied to AT&T's basic rate and coming up with some set fee or amount of benefit to provide the end user so that end user can take that benefit and apply that to whatever service that we finally determine is under the umbrella of lifeline telephone service, whether that be wireless or broadband or whatever, as far as what amount that should be, probably we need to take a look at what services does the commission want to provide this benefit to.  Maybe look at averaging pricing, and then coming up with some type of an amount from that.
      And then provide that benefit using a third-party administrator with some type of electronic voucher system.
      >>Com. Chong:  We are going to call them coupons, not vouchers.
      >>Jeff Mondon:  Coupons.
      >>Com. Chong:  If I may speak.
      So my question would be based on that comment by Mr. Mondon, what types of services would we want this hypothetical coupon to apply to?
      I saw a concern when I read the comments about if you want a voice over Internet protocol service, it does require a broadband hookup.
      So there was an issue raised about the availability of VOIP and its link to some type of broadband service.
      I also wanted to point out that currently the FCC defines "advanced services" as broadband speeds of 400 kilobits per second, I believe.  I don't believe they have updated that definition since we kicked it off back in '96, '97.
      But I wanted to get a sense today from the groups what they thought might be includable in this possible group of services to be available under this program.
      >>Ana Montes:  I hope I don't raise my questions with my comment, but -- because it's -- oh, Ana Montes.  I am speaking as Ana Montes from Latino Issues Forum.
      I think that's an interesting idea.  I really do.  I think it's really interesting.  I think that one of the access that I ask myself, first of all -- I think that Internet access, wireless, and telephone service.  My concern is that when we start looking at the entire cost, that it's -- we are still talking about something that's affordable.
      And this -- because one of my concerns, for example, on bundled services, and also a concern in terms of a ULTS customer, having -- a ULTS customer subscribes to a service where the cost is subsidized and it's an affordable rate.  And they are able to pay the $5.80 a month and are able to have phone service.
      If we start bundling other kinds of services, even though they have every right to be able to subscribe to other kinds of services, then if they -- it creates a problem on the cost because one of the reasons why people lose phone service is because of other services.
      And so my concern is that it still remains affordable and that we are still looking at something that is still $10 a month, $15 a month at the absolute most, versus 29.99 plus Internet cost and then subsidizing that.
      I think that that's where it starts to become a problem.
      But I do believe that we need to look at a way that provides access to the Internet, wireless, because we do have a population that's highly migratory.  There are issues of people not -- you know, cost of living, not being able to afford to live in certain places so they have to move around a lot, and wireless service meets their needs which is why they have wireless phone service and not telephone line.
      But enough people still utilize telephone lines to where that cost still needs to be subsidized.
      Like I said, I hope I didn't open up a whole bunch of questions, but those are my immediate thoughts.
      >>Com. Chong:  May I ask for a clarification, Ana?  When you are concerned about the bundling, your concern is you would have a larger cost for the bundle, say 29.99, as opposed to $5.89 for a basic land line phone line.  Is that what you are saying?
      >>Ana Montes:  Mm-hmm.
      >>Com. Chong:I see.
      >>ALJ Bushey:  I think did you open up a bunch of questions.
      >>Jean Armstrong:  This is Jean Armstrong from CTIA.  There needs to be clarification.  If you get this coupon, it gives you the right to discount for basic service, whatever we decide is in basic service, then do you take your $15 coupon, whatever it is, and say, okay, I am going to apply it to wireless?  So you no longer get a discount off your land line.  Is that how it would work?  You would have to -- so at that point, your universal service is tied just to wireless or your Universal Service is tied just to Internet access.
      That raises a whole host of questions for 911.
      I mean, if you have -- if universal service is a coupon for household and that household uses it, applies it to wireless, and the person takes the wireless phone and leaves the household, the household no longer has access to E-911.  It gets very complicated.
      So I'm not sure what the answer is.  It just -- talking about it raises a whole host of issues where I don't know where we go to resolve them.
      >>Com. Chong:  I'm glad you raised those issues because those are exactly the kinds of issues we are discussing, at least in my office.
      There would have to be a certainly level of public education, one would assume, if you were to choose a VOIP package, which presumably would require Internet access.
      There are issues, as I'm sure people know, relate to E-911 and whether that capability exists with all VOIP providers.
      So that's one issue.
      Secondly, I think you have to break away from the old concept of there is a discount on a particular wire line service, and let's just put that aside for now.  Let's just pretend it's past history.
      If you were to start this whole program new with a technology neutral viewpoint, how would you structure it?
      And when we were talking about it, one of the ideas that we had was using a coupon with a certain dollar value that could be applied to a number of services that would be within the available services under the program.
      You wouldn't be forced to take a bundle, for example.  You could opt, if it suits your needs better, to pick a particular very simple service.
      Suppose you were a disabled person and wire line actually fits your needs better because you have a medical condition so that if the power goes out, you need the wire line service up.  Then you might choose just the basic land line service.
      But if you were someone who is perhaps in a motorized wheelchair and you want the portability of a wireless phone in case you have some kind of accident when you are out and about and want to call for help, you might want a wireless phone for that capability.
      So we are trying to think outside of the box about shouldn't we give the consumers the ability to choose more, taking advantage of the different aspects of different services, to suit their lifestyle better.
      Ana just brought up, I think, a good point about some of the immigrants, for example, or people who are newly come to the country might be moving a lot because of the cost of housing, so wireless might be better for them.
      So instead of looking backwards, because we started the program in a wireless world, if we were to start the program today in tic, what would make better sense?  I think that's what we are getting at.
      But it's fraught with all types of issues and that's why this type of discussion is fantastic.
      >>Pamela Palpallatoc:  Pamela Palpallatoc for the Greenlining institute.
      We addressed one of these questions in our comments, and we particularly addressed it in the staff report question on whether or not California lifeline services should be bundled with other telecommunication services.
      And we actually prefer that a revamped California lifeline program provide discounted technology choices, including copper land line phone access, wireless phone access, broadband Internet access, and affordable VOIP services.
      And I think maybe the way our idea differs from some of the other things that have been mentioned is that a discounted rate be provided for each option.  I guess something similar to, I think now basic service provided by AT&T and Verizon is half of the regular rate that customers who are not low income would pay.
      And this is something that we kind of addressed in our study where we asked if, for example, high speed broadband Internet access was offered at half of the rate of the lowest rate that it's offered now, either through cable or through a phone company, would a low income customer subscribe at that rate.
      And we're still trying to distinguish whether or not this would actually create more interest in the service that is not common amongst low income customers.
      >>ALJ Bushey:Bill.
      >>Bill Nusbaum:  Bill Nusbaum with T.U.R.N.  I'm all in favor of out of the box and can we think about this in a new way.  I think one of the things I am not hearing though when we're talking about access to different kinds of service or the technology neutrality is the quality of service or the underlying service.
      I'm not convinced personally that all of these services we talk about are equally substitutable for each other.
      So yes, I am an avid user of wireless.  I use it for all my long distance.  I still have my wire line phone but I still believe the quality of my wireless is nowhere near the quality of my wire line phone.  So at a minimum, we talk about basic service, I think we also need to establish what's the service quality standard that that service has got to be at.  So it's part of the definition, I think.
      >>ALJ Bushey:  What I'm hearing us talking about is leaving the definition and raising customer choice.
      >>Bill Nusbaum:  But I think there's a bunch of competing things here.  I think at the very beginning of today's session, Commissioner Chong talked about some first baseline principles, full.  And one of them is the social goal behind Universal Service.  And that's to have everyone have equal accessibility so we can all talk to each other on the same kind of basis.
      So whether we call that basic -- whatever we define that at, whatever term we use, I think the question is, we still have to look at what's the quality that's acceptable that we're going to give to people.
      One other point I'd like to mention, at least on the issue of phone stamps or phone coupons, --
      [ Laughter ]
      >>Bill Nusbaum:   We were batting around phone stamps a long time ago.
      And that's the question, again, it gets back to the social purposes.
      This is going to sound terribly paternalistic, but if we're going to give people a coupon, I think we need to make sure they're going to spend it on what the subsidy is being provided for.
      So somewhere locked into the system, because our goal here is to give everyone accessibility, however we define the technology, or whatever service it is, we want to ensure that's what people spend it on.
      >>ALJ Bushey:   Mr. Rosvall is next.
      >>Patrick Rosvall:   I find myself in the position of agreement with Mr. Nusbaum.
      [ Laughter ]
      >>Patrick Rosvall:   On this, in a couple of respects at least.
      One new thing that I'll add to this discussion, I guess, generally, I think we're squeamish about expanding the concept of basic service too broadly.
      Another thing I'll add to the discussion here is just that I think we need to be a little bit concerned the size of the fund at some level, particularly if we're going to do something like give a discount off of broadband and then a discount off wireless and then a discount off the wire line.
      And I know that's one proposal.
      Then there would be something like a coupon, which would be something different.
      Someone needs to do the analysis.
      And I'm sure that many of us will do that analysis, at least on the back of a napkin or something, to see what that mean for the surcharge, because it really could get fairly out of control if we start to go down that path.
      And that raises all sorts of competitive issues, like I think I raised in my initial remarks.
      So that's one thing.
      I guess another thing, and maybe this dovetails with what T.U.R.N. was expressing, which is that it's interesting to me, and I think we need to be careful about when we're using state subsidy funds, essentially, to promote technologies over which the commission may not have full jurisdiction.
      And I'm not sure where I go with that exactly.
      But some of these things are, you know -- if we're talking about broadband offerings and wireless, the commission doesn't exactly have full command over regulating those things.
      So that's just something to consider.
      And I guess related to that, I'm going to take a bit of a nuanced view on what Mr. Nusbaum said.
      I mean, I do view these technologies as substitutable from an economic standpoint, but that doesn't mean necessarily that from a subsidy standpoint, that, as a policy matter, from California, that we regard them as substitutable in the sense that we're willing to spend, essentially, ratepayer money to fund particular technologies as opposed to others.
      In other words, we might believe that the reliability of a wire-line offering is worth subsidizing and something else isn't, even if, as a broad economic matter, they're substitutable.
      >>ALJ Bushey:   (inaudible).
      >>Ross Buntrock:   Ross Buntrock.
      Just one quick observation or concern on something else that you raised on the coupon proposal is that it presupposes the availability of all of these various alternative technologies.
      But even though you can use the coupon for whatever, you know, service you want to apply it to, all of these different technologies are -- you may not be able to have access to VOIP if you're a migrant worker in Riverside county, versus this model works very well in dense urban areas we're mostly thinking about as we discuss it.
      The other competitive issue I see as we present it is also the issue of competitive neutrality aspect and taking into account how various providers provide their service.
      In other words, it might be difficult for a CLEC to provide service at the same cost as AT&T, whether that service is VOIP or something else, particularly when you have carriers who are relying upon a resale model, and as (inaudible) pointed out in their comments, certain times in today's new environment, there are times when the wholesale cost that the competitor is paying is more than the retail cost that the ILEC is charging their end user.
      So it limits the modes of entry of competition and it limits the number of carriers who are going to be able to provide these services to people we target.
      >>ALJ Bushey:   Thank you.
      (inaudible).
      >>Jeff Mondon:   I just wanted to make a comment regarding the preliminary thoughts about using a coupon.
      I think if we go down there where we need to make sure that we don't go into a paper type of coupon, but I think we need to do some kind of virtual or electronic type of coupon, where using a third-party administrator, the customers, who is then certified for LifeLine, identifies to the third-party agent who their carrier is, and that third-party agent provides the benefit, sending that benefit on behalf of a customer to a carrier as kind of a credit to the customer's bill.
      Therefore, the customer doesn't have to deal with any type of paperwork.
      It's all done behind the scenes, it's all done electronically, so you can ensure that the benefit is actually being applied to the service to which it was intended.
      >>ALJ Bushey:   Final comments on this topic?
      All right.
      Commissioner.
      >>Com. Chong:   I wanted to comment on the quality issue that was raised I think by T.U.R.N.
      I think it's interesting, you know, we used to have this very high quality standard based on the wire-line service.
      But I have found that as mobile phones become more predominant, that interestingly, the quality issue has become a little less important.
      I know in the beginning, when cellular came out, everybody was complaining about drop calls and coverage and static and all that kind of thing.
      But in the metro areas, certainly, the quality has gotten better.
      And it's interesting that that perception has -- the importance of quality has started to wane in terms of people appreciate the fact that they can connect no matter where they are, I mean, not everywhere, but you know what I mean.
      There's better coverage now.
      So that's just a comment.
      >>ALJ Bushey:   Thank you.
      That will conclude our discussion of this topic.
      Then why don't we take just a short break, maybe seven minutes, until 20 after, and we'll come back and talk about the California teleconnect fund.
      (Break.)
      
      >>ALJ Bushey:   Let's resume our seats and begin our discussion of the teleconnect fund.
      I have three speakers:  Medeiros, Selken, and Wilcoxen.
      Shall we start with Medeiros, then?
      >>Lauri Medeiros:   Good afternoon.
      I'm Lauri Medeiros, I'm the executive director of the California (inaudible) association.
      And my organization represents about 350 health care providers organizations in rural California.
      And I'm here to offer our support and our continued partnership around the teleconnect fund and to help sign up eligible rural providers in the program.
      And I wanted to share with you that we have worked with program staff in the past, and it is our experience in terms of enrolling eligible participants, I noticed that 2005, that the enrollment was down from 2004.
      And as we were seeing it increase, I was hoping it would continue.
      Working in a state as large as ours and on behalf of rural areas, I have found as a statewide organization that it's the one-on-one contact with people in underserved communities that really makes the difference in terms of outreach.
      And instead of trying to talk about fancy ways to enroll people, I'd like to suggest that, as an organization, we can help partner by providing opportunities for the applications and the information about the teleconnect fund to be distributed to people specifically face to face.
      And our organization does this by coordinating what we call rural roundtables.
      And they are convenings that occur quarterly in three parts of the state:  Central, south, and in the northern part.
      And they rotate around counties in rural areas.
      And the executive directors, CEOs, administrators, and those people who make decisions for small rural provider organizations attend these meetings.
      And they're the ones who would be most likely to direct their staff or participate in enrolling for the teleconnect fund.
      And I think this would probably be the best way we could partner.
      And I'd like to offer our organization to continue to work with the program staff to do that.
      Just trying to think of other ways we could do that.
      I do know also that there are approximately 500 rural health organizations in California.
      We have all of the addresses of those people, all of their E-mail addresses, their phone numbers.
      And what we really do need are champions for this program, champions to sign up organizations who could use the services.
      I wanted to share with you a report that we did in conjunction with the California Health Care Foundation.
      It was published by our organizations collectively around technology.
      And we asked all of our members who are rural health nonprofit organizations about their use of technology.
      And what they use it for.
      And the respondents overwhelmingly, 60% said they rely heavily on technology, information technology, to serve the needs of their patients.
      And it's mostly around e-health activities, everything from telemedicine to more simple applications of E-mail and contact with patients.
      And they do describe the barriers that they have to information technology.  
      There are three of them they listed.
      One was the infrastructure, inadequate infrastructure.
      And insufficient funding to keep their operations going for providing support in the technology field.
      They also have limited technical expertise.
      And that's a barrier for them as well.
      And with regards to the teleconnect fund, we are a strong supporter of it.
      We'd like to help continue to do the outreach, to have local workshops in rural communities.
      And I think that this is probably the best way for us to increase enrollment in the program.
      And we would also like to suggest that unspent funds go towards more travel in local areas, in rural areas, so that the program could be advertised, and for it to be used on the program.
      And if you have any questions, I'd be happy to answer them.
      >>ALJ Bushey:   That's quite a to-do list for us.
      >>Lauri Medeiros:   Yeah.
      It's a big state.
      >>ALJ Bushey:   Yeah.
      Now, you -- you're offering your organization.
      Do you do any -- do you talk about the teleconnect fund when you have your quarterly roundtables?
      >>Lauri Medeiros:   We do.
      We have done that, actually, last year we did that at each one of our rural roundtable meetings.
      And staff members came and participated in those meetings.
      And it also increased enrollment. 
      To have the Public Utilities Commission program staff attend a meeting is a big deal in rural areas, to even learn about the commission, what it does, what kind of programs are out there.
      We are continually surprised that even with our own outreach efforts, that -- and our offer to help people apply for applications, our partner organizations do that as well, still they'll get a tremendous amount of response for programs that they're unfamiliar with.
      So it is -- I think it's on both sides.
      And I think that outreach is -- it's, you know, more effective ways to do that, but we also need to connect one-on-one with people.
      We also advocate that broadband in rural areas is very important and still an issue that needs to be addressed in California.
      So....
      >>ALJ Bushey:   By that, you mean the absence of it?
      >>Lauri Medeiros:   Absence of it.
      >>ALJ Bushey:   That your infrastructure (inaudible).
      Any questions?
      >>Robert Haga:   Do you have any data on your group's -- or your entity's participation with the federal rural health care fund and the -- any overlap that's provided here?
      >>Lauri Medeiros:  I don't have it with me but I believe we could probably find that information for you.
      But you're talking about the FCC Universal Service fund program as well?
      >>Robert Haga:  More people are participating there that are not participating there.  That would be the thrust of my question.
      >>Lauri Medeiros:  I don't know the answer to that, I'm sorry.  But I could find that out.
      >>ALJ Bushey:  Thank you.
      The next speaker, Mr. Selken.
      >>Russ Selken:  My name is Russ Selken, I work for Butte County Office of Education, and also I am the director of network services for K-12 high speed network.  That's an educational network in conjunction called Cal Red 2, the statewide operation for that.  I also work with the Department of Education providing statewide E-rate and CTF training for the K through 12 community, and we also partner with libraries when possible.
      I am also the administrative chair for the CTF fund, so I am kind of wearing different hats today.  But I kind of broke out my points to align with the discussion points this morning, within the three areas, statutory requirements, commission's accountability of funds and ensure the 21st century for this fund.
      So the first area, streamlining was mentioned in this report, so this is more in the area of statutory requirements.
      I wanted to reassure you, it was one of the comments by the telecom provider about outsourcing to a third party.  If you were to ask me this as an applicant a year, year and a half ago, I would say go for it.  But in the last 12 months the telecom staff have done an excellent job.  And you can see by the stats they have turned around the applications.  I get a lot of feedback from the field are participants, mainly in the K through 12 area, and I don't hear the complaints I heard a year and a half ago which is where is my application.
      I will make some points about areas I hear other complaints.  Not in that area anymore.
      So that's one thing, the streamline process, and it's like any area put on public funds it's about people doing the work and working with us and being amenable and working through issues as they come up.  So that's a commendation to that staffing in the telecom division.
      One of the points brought up by the previous committees is echoed in this committee also, kind of hamstrunged by the meeting (inaudible).  We have four we are limited to and probably up to six or seven a year would probably be ample enough, with Bagley-Keene as part of our operational process, it does kind of hamper us in getting momentum in marketing efforts and things like that.  And I will bring up points where we are keeping good energies but we have to be within requirements because of budgetary issues for meetings.
      Conflict of interest.  We also echo that same concern and issue with our committee.  There's  members that preclude themselves from voting because of the conflict-of-interest issue hasn't been resolved yet and they don't feel comfortable voting which is kind of unfortunate because it's great to have a committee of all the different constituents participate actively.
      One thing just to mention about the budget relative to marketing and outreach, we are a little bit unique in that this is not a consumer marketing effort we need.  We are a community-based organization, non-profit, health care, and I was glad to hear we have groups to support and willing to help out with the health organization, so we have the same thing in libraries and schools, community-based organization.  So the committee is starting to work through a budget plan we are going to present to Mr. Wetza in the next month, so we want to emphasize the importance of that marketing budget stay in place.  In past years we haven't gotten the momentum to take advantage of it but don't line item that out yet.  We are going to take advantage of it.
      Now I am kind of moving on into the commission's accountability aspect of the program as well as ensuring the program meets the 21st century.  I kind of outlined six points.  One of them has to do with continuing flexibility that I already mentioned, and an example is economies of scale.  When you can allow other eligible entities that are -- maybe government entities are not eligible for CTF, but if there would be a way like the USAC E-rate where you can admit some of their traffic from being eligible for CTF but you can share economies of scales of lines.  As we move into the 21st century, T-1s are going to be passe in terms of these type of programs using them for rural health, medicine and also distance learning.  And if we can take community colleges and K through 12 and aggregate our connection points, and not be hamstrung by the business drawback, because we lose our CTF as the community college connects K through 12.  Those are things about the flexibility of the program that the telecom staff can work through things like this.
      There is also the online system, that's one of the recommendations the committee put forth is have an application that is online, and keep track of that in terms of updates when they apply for new lines.
      This is a large point for the committee and it's mainly affected the community-based organizations as DSL being smoothly, cleanly CTF eligible.  And I know there is a lot more detail and think there are people in this room who could talk to it for about an hour, hour and a half but the point is the flexibility, I go back to that point, it needs to be flexible so we are not overdesigning and E-rate and federal FCC terms they call it gold plating.   You don't want to push people to T-1s and higher circuits when DSL will do that as well as any other technology.   But when they can't get and realize the CTF discounts that's a roadblock for them.
      Outreach and education, I already mentioned that before.  But continue the support of it and remember like I mentioned, it's not consumer based so it's a little bit more of a creative opportunity for us to market within our own organizations.  And I do agree it's hands on.  One thing I found with E-rate training is that these people already have 120% job role right now and when you throw -- even though the CTF commission has done a great job of simplifying it to one page, it just overwhelms them when they have to figure out another piece of paperwork on top of what they are doing.  And schools and libraries have to do the complexity of E-rate on top of it.
      So that's one thing, outreach has to do training and hands-on training.  Because we have attrition in our industries and the people who were doing the paperwork before and tracking the discounts will be gone from one year to the next.
      The digital divide.  One thing, there was a bill that was $3 million and we only -- the report shows us only using 60,000 of it.  The devil is in the detail.  It didn't allow someone to go from a DSL to a T-1.
      I know there is a bill currently being worked on to help solve that so you can take advantage of the connectivity.
      Even though the picture may be that schools and libraries, even the community based and health care, are moving in the right direction, I know specifically with schools we still have over 15% of the districts in the state not connected to the educational network.  So that -- we did a study, approximately kind of a rough study, 10 to 15 million would be need today connect the rest of the schools in the state of California.  I think if you go to the other participants, community based, non-profit, health care, they still have that issue.  So I want to make sure there isn't this error that we aren't all connected but maybe there are still nuances.  We still have a long ways to go to 100 percent.
      The other area, I think I am more speak to go the resolution that was put in place which we totally support.  Let's leverage federal funds before state funds.
      I want to bring up a point, the billing complexity.  It's a bear for the carriers, it's a bear for the applicant.
      We all know there are businesses that survive to do audits of your telephone bills, find what you are missing on your discounts.  If you take that over to the CTF and the E-rate, it's a nightmare for the applicant.
      All these other things I can give you with committee members inputs and my own I can give you suggested paths to solve them but this is one of those I don't have the golden EGG for that one.
      I want to make you aware when you talk about the E-rate program not giving you discounts till halfway through the year or three-quarters yet our carriers are asked to give you a discount come July 1, you have to back that out, add the E-rate on, put it back in.  It's a complexity issue.
      And I think the resolution is doable, but it's just one of those things I want to bring to your attention.  It's not over with, so to speak.  I know that's the area I will hear complaints about.  We can't be sure a school district is getting the discounts on their bill and the carriers have a really tough job to enact this.  It would be nice if there could be one big system, they can go in and punch their school or library name, find out what the discounts should be and apply those to their bill.
      Those are my comments.
      Thank you.
      >>ALJ Bushey:  The last teleconnect speaker that signed up is Wilcoxen.
      >>Micheline Wilcoxen:  Good afternoon, commissioner.
      I'm Micheline Wilcoxen, and I'm from Community Technology Organizing Consortium.  We are a local community-based organization in Los Angeles that's worked with other community-based organizations that use technology.
      I am also vice chair for the administrative committee for the Teleconnect Fund, so I am going to try not to be too redundant in what Russ's comments were, but mine are along the same lines.
      I want to say I think that overall, the spirit of the Teleconnect Fund has been somewhat realized in the community-based organization field that there are a lot of organizations that are participating.  And for some small organizations, this is a huge budgetary item for them in terms of their bottom-line budget.  I mean, for them to get 50% discount off of telecommunication services and broadband services makes a huge difference in their budget.  So I think in that spirit, it's been successful.
      Over the few years that I have been part of the Teleconnect Fund administrative committee we have seen a lot of enhancements and changes, streamlined application process.  The application made more simpler and easier to use, and quite easier to understand.  The PC staff has been more responsive to the needs of those that are applying to the fund.
      So overall, I think we have seen some huge changes and improvements.
      But we could -- there's other things that can be done, sort of along with what Russ says.  We have been looking at online applications, allowing people to apply online at the Web site.
      Outreach.  We've really been grappling with outreach and struggling with how do you make people more aware of the Teleconnect Fund.  It isn't a consumer-based program but it is more directed towards community organizations and health organizations are not seeming to get the message that it's available to them and how to go about applying for it.
      We talked about different ways that could happen, working with other organizations, intermediate organizations to kind of get the word out, kind of help organizations to understand whether or not they qualify for this fund or not and which kind of services would apply from the Teleconnect Fund.
      Along with challenges for the committee, I think for our -- in terms of getting momentum for outreach and other things, I'll echo what Russ said about our meeting times.  We were minimally allowed to meet -- minimum, we were allowed to meet four times a year but budgetary we are not allowed to meet more than four times a year.
      So that can be a bit of a challenge when we are getting ready to try to implement something or explore some options around outreach.  And our next meeting is three months away, and you sort of lose some of that in our ability to talk to each other and communicate about those particular issues can be hampered.
      Let's see.
      And then there's also the conflict of interest, which I think he has brought up already and you guys have heard.
      The other thing I just wanted to bring to bear is AB 720 which was the funds that allowed people to move from narrow band technology, so to speak, into broadband technology.  And there was some money set aside, $6 million or I can't -- I think Russ said the amount.
      >>Russ Selken:  3.
      >>Wayne Baker:  $3 million.  That program wasn't implemented because of the definition of broadband and people moving from one thing to the other.  As you can well understand in this day and age, an organization or entity more than likely does not have dial-up access if you are going to be functioning correctly.  And so to expect an organization to move from dial-up to DSL is probably not going to happen.  It's not -- the numbers are not out there for people to actually utilize that.  Most organizations, small businesses or anybody would start off with the minor DSL and then want to move up.
      And the way that particular program was done was that you would actually have to be at dial-up speed to move -- and then have to move up to DSL in order to apply that kind of discount from that legislation.  So that needs to be re-looked at in how we define broadband for organizations and how they are going to actually move up.
      So I think that was one of the challenges.
      And then DSL.  I mean, that continues to be a problem with the application.  I think AT&T mentioned a third-party administrator.  Maybe that's part of the solution for that, but most non-profit, or community-based organizations, health organizations use DSL, and because there is some question about DSL being discounted through telcos, some of those organizations have not been able to take advantage of that particular discount.
      And so some way or another, figuring how that can work, which will work with AT&T, Verizon's issues, and with the issues of those organizations.
      So I think that will....
      >>ALJ Bushey:  Thank you.
      Mr. Mondon.
      >>Jeff Mondon:  Good afternoon again.  A comprehensive review of the can California Teleconnect Fund, as I mentioned earlier in my lifeline discussion, we should continue to follow some guiding principles such as consistency and compatibility with FCC rules and regulations.  A funding mechanism that is consistent with the FCC, and as we indicated earlier today our proposal was to use telephone numbers that would include broadband and wireless.
      Consistent funding for the Public Policy Programs, competitive neutrality, technology neutrality, voluntary participation for innovative of services.  This will provide incentives for providers to participate in a program and then a third-party administrator that will benefit the program for both the consumer and the providers.
      Specifically in reviewing of the CTF program, program modifications should include the following.  First to offer greater access to innovative telecommunication services, including those that are not regulated by the commission.  In order to ensure that these innovative services are part of CTF's future, the commission must make it clear that a provider's participation in the program would not make a participant subject to commission jurisdiction.
      Providers of these nonregulated or lightly regulated services will simply have to -- have no incentive to offer their products under the CTF if it comes with any threat of regulation.
      Second shall modify the CTF program so it is competitively and technology neutral to compel providers to provide new technologies to schools, libraries, hospitals, health care clinics and community-based organizations.
      The third, improve administrative efficiencies of the program by utilizing a third-party administrator similar to the lifeline program to verify an applicant's eligibility participation into the program but also to distribute the program's benefit.
      Fourth, AT&T recommends that the CTF program, the benefit could be provided as a rebate directly to participants rather than discounts that can be used to pay for the qualified services to meet the individual customer needs.
      This system could increase the choices available to customers by giving consumers access to products over which the commission has no or limited jurisdiction.  Such a rebate system would allow participants to utilize funds for payment for nonregulated services such as DSL.
      Any rebate system adopted by the commission must be administratively cost efficient and all processes must be done electronically.
      Fifth, as currently the practice under the lifeline program, reimbursement of providers' administrative costs should be expanded to the CTF program so all providers, regardless of size, can administer the program with as much ease as possible.
      Cost recovery system may also encourage not regulated or lightly regulated providers to participate in the CTF program which will assist serving as many customers as possible.
      Thank you.
      >>ALJ Bushey:  So Mr. Mondon, do you want a coupon for CTF, too?  Is that what it boils down to?
      >>Jeff Mondon:  Right.  Again, because of the -- I think the DSL issue brought that to light, that in order to provide those types of services that are not under the commission's jurisdiction, the use of a third-party administrator to provide not only the eligibility aspect but also to provide the discount would make it consistent with the public policy programs using a third-party administrator for all those programs.
      >>ALJ Bushey:  Don't we have a different problem, though, in the CTF field as opposed to lifeline in that we don't have an amount.  It's not currently an amount.  Currently, depending on what services --
      >>Jeff Mondon:  That's correct.  It's currently 50% off the eligible service.
      >>ALJ Bushey:  Whatever that might be.
      >>Jeff Mondon:  Correct.
      >>ALJ Bushey:  So there is no upper limit.
      >>Jeff Mondon:  Correct.
      >>ALJ Bushey:  So we would have to devise.
      >>Jeff Mondon:  We would have to come up with some type of mechanism as perhaps different amount based on type of service.
      >>ALJ Bushey:  Several coupons.
      >>Jeff Mondon:  Several coupons
      [ Laughter ]
      >>ALJ Bushey:  All right.  Thank you.
      Our presenters --
      >>Jeff Mondon:  Do you want us to come up?
      >>ALJ Bushey:  Our presenters got away from me here.  I'm not watching here.
      So all of you come back.  Take your seats.
      >>Russ Selken:  As long as you add a buck off on the back of that coupon, I think it will work well.
      >>Com. Chong:   Would someone help me out and define this conflict-of-interest issue that keeps coming up.
      Helen, can you help me with that?
      >>Helen Mickiewicz:   Section 1090 of the government code says, in essence, that anybody who makes a contract cannot bid on a contract or get the benefit -- sorry, cannot get the benefit of the contract.
      So if you're -- if you participate in making a contract, you can't get any benefit from the contract.
      Some of the folks who sit on the ULTS board are representatives of districts that get -- what is it, CTF board, it's the CTF board, sorry, not ULTS board.
      They get discounts from providers of service.
      And that means they get the benefit of that.
      And the concern that has been flagged by the legal division is that -- or, actually, it's the participants who have raised this, and the legal division has looked into it.
      And we have a memo which I'll provide to you separately.
      But the bottom line is that the concern is that if representatives on the board have -- if they representative a district that's getting the benefit from the program, that they -- it limits their ability to participate.
      And it has to do not only with section 1090, but certain language in the statute that creates CTF.
      There's something of a mismatch.
      And so what -- the fix is that there needs to be a legislative change.
      I can't explain it in more detail because I didn't write the memo.
      One of our other attorneys did.
      Although I am familiar with the issue to this extent that I can explain in a very broad-brush way what the problem is.
      But it has to do with folks having the potential to, as representatives of a district, get the benefit of the program, and therefore they can't participate in -- or there's a question about their ability to participate in providing advice to the commission on the structure of the program.
      Seems a little bit of a stretch, but that's what we've concluded.
      Did I summarize that correctly?
      Yeah.
      That's my recollection.
      >>ALJ Bushey:   So it would require legislative changes to solve this problem?
      >>Helen Mickiewicz:   That is what the legal division has concluded in the memo that I will provide to all of you separately.
      >>Com. Chong:   And have we asked the legislature for that change yet, Helen?
      >>Helen Mickiewicz:   As far as I'm aware, no, because the issue arose as one representative for the commission in Sacramento was cycling out, the next one came in.
      The ball has been dropped.
      Don't know exactly where it is right now.
      >>Com. Chong:   Do you mind finding out for me?
      >>Helen Mickiewicz:   Not at all.
      >>Com. Chong:   Thank you.
      >>ALJ Bushey:   The other issue is the DSL issue.
      Now, I'm -- I'm understanding that that's -- the cause of that is that eligible teleconnect customers, if you will, have DSL service other than telecommunications companies?
      Is that the problem?
      >>Micheline Wilcoxen:   No.
      The problem is that -- sorry.
      Is it on?
      The -- Micheline Wilcoxen.
      The issue is that -- and this falls with the health agencies and the community-based organizations, primarily the issue is with them.
      Most of them use DSL as a service, broadband service.
      According to, I guess, what AT&T can explain from their side, what they do is they apply, they get the discount, and then they send the information to the carrier.
      The carrier then applies the discount to their monthly bill.
      DSL is not a service that is regulated by the commission.
      Therefore it does not -- they're not able to get the discount, or the telecommunications companies are not able to apply the discount for that particular service.
      >>ALJ Bushey:   Oh, so it's a type of service that's the problem?
      >>Micheline Wilcoxen:   You can --
      >>Jeff Mondon:   Right.
      DSL is an interstate service versus an intrastate service.
      And it's not tariffed here in California.
      It's an FCC-tariffed product.
      And as far as for AT&T, the Telco does not offer DSL to the end user; it's actually our ISP is offering the DSL service.
      The Commission Telecom Division recently, in their administrative letter of the 13th, identified that they did not have the jurisdiction for the DSL.
      So they could not require carriers to put it into their tariffs.
      So one of the options that we had presented is, if we use a third-party administrator to provide the participants of the CTF with the benefit of the program, you remove the service provider out of the picture in providing the discount and having third-party administrator providing the discount to the end user.
      Therefore the commission can go ahead and provide whatever discount that they want for whatever service.
      It's just you're removing the service provider from that mix.
      >>ALJ Bushey:   So, then, the transaction is between the third-party administrator and the customers, period?
      >>Jeff Mondon:   Correct.
      And we just provide the service.
      >>ALJ Bushey:   So then the customers would develop with their bill or somehow --
      >>Jeff Mondon:   I think it would still go back to, I think, how we go ahead and apply for the service -- apply for CTF.
      And then we -- since CTF is handled a little bit differently than ULTS, for instance, they just apply once and then they're approved going forward.
      >>ALJ Bushey:   The ultimate customer.
      >>Jeff Mondon:   The ultimate customer only has to apply once, and once they're approved, they're on the program.
      The customer would have to somehow communicate to the third-party administrator that they have this DSL service.
      And as far as what type of documentation they would need to present, I mean, we definitely can work that out.
      But I think the -- the way to get around and resolve this issue is to bring in the use of a third-party administrator.
      Therefore you eliminate this jurisdictional issue between service provider and the commission, that the commission is just going ahead and providing -- allowing the discount to occur, or the benefit, rather, and letting the third-party administrator provide that benefit to the end user.
      >>ALJ Bushey:   So then it just becomes rebate from another source.
      >>Jeff Mondon:   Right.
      >>ALJ Bushey:   And the DSL provider, whoever, wherever, whatever, doesn't matter, just (inaudible) documentation that is required..
      >>Jeff Mondon:   Correct.
      Correct.
      >>ALJ Bushey:   Okay.
      >>Com. Chong:   Mr. Mondon, what does the federal e-rate program provide in terms of a benefit on DSL?
      >>Jeff Mondon:   The specifics -- maybe Russ can help me out here -- but the e-rate benefit is based -- it's a sliding scale based on the participants in the school lunch program, based on your district scale, ranges from I think it's 20 to 90% paying on that.
      And, obviously, depending on where your school resides, you would then apply for that discount.
      And they would then apply the specific rate for that district. 
      >>Russ Selken:   It goes into more the service aspect of the Internet part of it that you already covered.  It's not just the connectivity.  You can do both elements.
      And they put both of those on the priority one category, which means they fund those first, even if you're at 20%.  And then they come back and fund internal connections.
      So if you do the paperwork correctly and you don't run into any federal issues, you should get your approval funded for connectivity as well as the Internet service itself.
      >>Robert Haga:   Does e-rate fund intrastate services?
      >>Jeff Mondon:   I believe they do.
      >>Russ Selken:   Yeah, they'll fund -- whether it's long distance, local, you know, in the data side, they do both inter and intra.
      >>Jeff Mondon:   And that -- as Russ had alluded earlier, that becomes the complexity of the CTF and the e-rate programs because of some of the discount -- or the benefits overlapping, and then we have the stacking of discounts.
      And the complexity not only for the service provider in doing that, but also the customers are confused as well as far as the -- just how that all works.
      >>Robert Haga:   Maybe I'm too new and just not getting this, or it's too late in the day, but I don't understand why we can't pay for an interstate service, but you'll take money from an interstate source to pay for an intrastate service.
      I mean, I'm not understanding the logic why we can't pay for the DSL service in the program.
      >>Jeff Mondon:   It goes back to the jurisdictional issue of the concern of regulation, as I had indicated in my opening comment.
      A concern if a service provider decides to participate in the offered DSL discount is that the first step in getting -- that service being somehow regulated, getting an arm around that particular entity.
      >>ALJ Bushey:   Scared of us?
      [ Laughter ]
      >>ALJ Bushey:   That's pretty nice.
      How do we get beyond that?
      Or maybe we can't?
      I mean, we've got -- the cable people are ready to spend money for (inaudible).
      >>Jeff Mondon:   Okay.
      We were talking --  Are we talking contribution or are we talking about participating in providing discounts?
      >>ALJ Bushey:   I'm talking about voluntarily participating, heard at least one example (inaudible) from the DSL providers.
      >>Jeff Mondon:   I think for most schools and libraries, I think the DSL is not the product of choice.
      I think they use higher bandwidth services.
      I think DSL, under the CTF program, I think primarily is more appropriate, and Micheline can correct me, but I think it's the CBOs that are more likely to use the DSL than a school or library.
      >>ALJ Bushey:   So it's the CBOs that are using the DSL, and school library is using the broadband.
      So that's why we're not hearing about that issue.
      >>Russ Selken:   That's correct.
      >>Micheline Wilcoxen:   And just to reiterate, look at the chart, and CBOs who have applied, it's gone down after they have realized that they couldn't get a discount on that service.
      Because for them to participate, that's primarily their broadband service that they use.
      So it doesn't really help them to apply if they can't use the discount on that service.
      >>ALJ Bushey:   So the money is so small without the DSL that it's not worth it to fill out the forms?
      >>Micheline Wilcoxen:   They can't apply it to DSL.
      >>ALJ Bushey:   Right.
      They can't apply it to DSL, but presumably they can to their regular phone service.
      >>Micheline Wilcoxen:   I don't think it's been told to them.
      Then we had some issue about whether or not it could be applied to just regular business line service, too.
      There is some discussion on that.
      >>Jeff Mondon:   Yeah, CTF discounts do apply to measured business service.
      >>Micheline Wilcoxen:   So we never advertised -- or they never did any outreach for business-line services.
      It was all around broadband, advanced services.
      It wasn't around telephone services.
      >>There was a rumor that 1MBs may go away, and Centrex, but don't tell anyone.
      >>Russ Selken:  That's the confusing part of the market that community-based organizations were kind of strapped with.
      >>ALJ Bushey:   There was a hand up.
      >>Ana Montes:   I wanted to add --
      >>Com. Chong:   Ana, you should really come to the table.
      Honestly.
      >>Ana Montes:  There are so few women in this area that you'll see us everywhere.
      I just wanted to add a point in terms of community-based organizations, and recommendations as well.
      One of the things is that community-based organizations, there is a limit to what kinds of community-based organizations also qualify for the California Teleconnect Fund.
      So community-based organizations that offer technology access to underserved communities or do community technology training or do provide educational services.
      So there is still a lot of other community-based organizations that are not eligible for the California teleconnect fund.
      And we would like to offer a recommendation that that definition be expanded to include other kinds of community-based organizations.
      And I had given you a copy of a definition of a community-based organization, because I know there is concern about nonprofit organizations versus community-based organizations.
      And I think that one of the ways to handle that expansion is maybe to look at budgets.
      So a nonprofit organization with a budget maybe higher than -- and this excludes community technology centers -- that has a budget higher than $3 million or $5 million or something like that not be eligible.
      Because one of the things that we have found is that with community-based organizations, and even with the communities for telecom project that I work with that relies on providing information to community-based organizations, we have people on dialup, because they can't afford to pay for an Internet connection.
      Plus we recently completed a survey of community-based organizations in the Bay Area and found out that a lot of groups only have one connection in the office, or have a dialup in their office.
      And then being eligible for the California Teleconnect Fund would help to bridge that can't in community-based organizations that provide direct services.
      And, again, I think you do have to look at the definition.
      I will gladly provide you with another copy.
      But I would like to make that recommendation.
      I also think that --   I really -- I really strongly support the idea also of a third-party administrator helping to manage the project.  
      Because there are other programs which have recently been created, or will be created, that we are asking the California Teleconnect Fund Advisory Board to manage, such as the Digital Divide Fund, which means that there is a need to have expertise in providing not only this service in terms of reimbursements, but also funding for access to pay for training and/or equipment.
      And I think that that requires a different kind of expertise.
      And so with the third-party manager, you would be able to also integrate that expertise into the California Teleconnect Fund.
      >>ALJ Bushey:   Thank you.
      Do we have any (inaudible)?
      Did you have anything to say in conclusion today?
      >>Com. Chong:   I wanted to thank everybody who came today.
      I don't know about you, but I feel like this was a great discussion, robust, challenging, thought-provoking.
      It will probably wake me up tonight.
      I did have some people to thank, so let me grab my little sheet.
      I wanted to thank ALJ Bushey for doing a great job today, and I know she will in the future.
      And I wanted to thank our staff, who have been working very hard, Linda Rochester, Angela Young, and Miriam Epkey, for all their work.  And I also wanted to thank my staff, Robert Haga and my intern, Jack Stoddard, for helping me prepare for this proceeding.
      I look forward to seeing, I hope, more of you tomorrow as we do the Deaf and Disabled Program.
      We are going to have sign language interpreters, we're going to have closed captions, and we're also doing an audiocast on the Web to facilitate it for our deaf and disabled community in California.
      I think that's wonderful.
      If you know anyone who might be interested, give them a call tonight or get them to listen in or come tomorrow, if you can.
      But thank you again for coming.
      This was really helpful.
      >>ALJ Bushey:   All right.
      I will see you all tomorrow.
      I want to draw your attention to our opening time tomorrow is 9:00 a.m.  Today we started at 9:30.
      So different starting time tomorrow.
      Thank you.
      (4:14 p.m.)