CCC PPPPP U U CCC N N EEEEE W W W SSS C C P p U U C C NN N E W W W S S C P P U U C N N N E W W W S C PPPPP U U C N N N EEE W W W W SSS C P U U C N N N E WW WW S C C P U U C C N NN E W W S S CCC P UUUU CCC N N EEEEE W W SSS California Public Utilities Commission 505 Van Ness Avenue, Room 5301 San Francisco, CA 94102 CONTACT: Dianne Dienstein October 25, 1996 CPUC - 72 415-703-2423 (R.95-01-020) NEW CPUC UNIVERSAL SERVICE RULES ASSURE CONTINUED AFFORDABLE BASIC PHONE SERVICE STATEWIDE The California Public Utilities Commission (CPUC) today set new rules to assure continued availability of affordable residential basic phone service everywhere in the state - universal service - as the telecommunications market becomes more competitive. The new rules assure funding for universal service programs, and availability of that funding to current and new service providers. Commission objectives for universal service are access to essential phone services for all Californians regardless of language, culture, ethnicity, income, physical ability or geographic location, and are designed to avoid an 'information rich'/'information poor' society. Basic service for residential customers includes elements consumers have come to expect, and the Commission has deemed essential using this criteria: O the service is essential for participation in society, O 65 percent of residential customers subscribe to the service, and the service is widely available, has been promoted by the carrier, customers are educated about it and it is targeted for use in a variety of communities, O the qualitative and quantitative benefits of adding the service outweigh the costs, and O availability of the service, or the number of subscribers would not increase without intervention. - more - Every company providing residential local phone service must provide the following elements to customers as part of basic service: o single party local service and access to long distance carriers; o voice grade connection to the telephone network, the ability to place and receive calls, and touch tone dialing; o free access to 911/E911; o access to directory assistance, directory listing, and operator services; o Lifeline rate for eligible customers; o customer choice of flat or measured rate service [the current 17 small local phone companies are exempt from this requirement unless they currently offer this option]; o a free white pages phone directory, and a yellow pages phone directory; o access to information services and 800 services o one-time free blocking for information services and one-time billing adjustment for charges incurred inadvertently, mistakenly, or that were unauthorized; o access to deaf and disabled and telephone relay service; o free access to customer service for information about service activation, service termination, service repair and bill inquiries, and Lifeline service. Companies providing local phone service must show prices for services in a uniform matrix to enable consumers to easily compare different companies' rates and services. As part of the Commission initiative to educate the public about important changes in the telecommunications market and how they will affect consumers, it will make available to consumers information about every certificated carrier including the number of complaints about, and investigations of, the carrier. Qualifying schools and libraries will receive a 50 percent discount on service. Community-based organizations which provide health care, job training, job placement, or education can receive a 25 percent discounted digital access to the network to - more - facilitate everyone's access to information available through developing telecommunications technologies. Government-owned hospitals and clinics can receive a 20 percent discount on service. Funding for the discounts will come from the California Teleconnect Fund surcharge of 0.41 percent. A Universal Service Working Group will be formed to address how access and use of advanced telecommunications technologies can be provided to all customers, and how education, health care, community and government institutions can best access these technologies. Previously with monopoly-provided local phone service, rates were averaged and some services priced above the cost of providing them to keep the cost of basic service affordable throughout the state's 500 plus local telephone exchanges. With many companies competing to serve the same customers, these ways of subsidizing universal service are not feasible. Instead, small local phone companies will continue to be subsidized by the existing California High Cost Fund (CHCF-A). And for the first time, Pacific Bell, GTEC, Roseville, Contel, CTCC and other companies which choose to serve rural and other areas which cost more to serve than urban areas will be subsidized by a separate fund, the CHCF-B totaling $351 million, so that all companies have access on a competitively neutral basis to an explicit universal service funding mechanism. A proxy cost model was used to determine that the statewide average cost of serving a customer is $20.30. If the cost to serve customers in a specific area exceeds this cost, the area will be designated a high cost area, and carriers serving the area will be eligible for subsidy from the CHCF funds. Companies also will be eligible for subsidy if they serve Lifeline customers. - more - The five universal service programs - CHCF-A, CHCF-B, the California Teleconnect Fund, Deaf and Disabled Telecommunications Program, and Universal Lifeline Telephone Service Program - cost $855 million annually, and will be funded by surcharges totaling an estimated 7 percent of the monthly bill. The surcharge to fund each program will be listed separately on the bill. The Commission developed these new universal service rules based on comments from the public during 13 CPUC public participation hearings held throughout California last year, and input from parties representing most affected interests during a full panel hearing in September 1995, another last month, and 13 days of evidentiary hearing held in April and May of this year. ###