CPUC Eyes Big Changes to Low-Income Internet Subsidies

An impending vote by the California Public Utilities Commission could drastically change access to state and federal communications subsidies, the kind often relied upon by low-income households for Internet and telephone services.

Proposed Decision 20-02-008 — now set for a Sept. 15 vote — addresses whether recipients of federal subsidies through the Affordable Connectivity Program and similar federal subsidy programs would also be able to receive maximum subsidies through the California LifeLine program. As written, the decision would cap the state funding if a recipient was getting more than $9.25 in federal assistance.

Opponents of the decision say the rulemaking would ultimately hurt low-income households, while proponents say it’s a step in the right direction to limit the profits that service providers can make from state and federal subsidy programs.

THE DECISION

According to the official document from the CPUC, the decision comes from the issue of “how to apply California LifeLine subsidies to Program service plans that receive additional federal support through the Affordable Connectivity Program (ACP) or another federal program.”

The LifeLine Program was created through the Moore Universal Telephone Service Act to provide discounted home phone and cellphone services to eligible households. Since then, the CPUC and Legislature have expanded the Moore Act’s purpose to include offering basic communications services, including wireless and broadband. In the state of California, there are two programs available: California LifeLine and the federal Lifeline program.

The proposed decision is a recommendation to adopt a policy that would adjust California LifeLine subsidies for service plans that receive federal ACP subsidies. Essentially, California LifeLine subsidies would be reduced for subscribers for whom federal support applied to their service plan exceeds the amount of $9.25.

Proponents of this decision believe that it would limit excessive payments to providers, arguing that there has been no evidence provided that the ACP discount alone, or combined with the federal Lifeline subsidy, is insufficient for a provider to offer no-cost wireless plans to state subscriber program.

In contrast, opponents believe that because the decision would deny low-income California households from combining state and federal support, meaning the state and federal lifeline program support and the ACP support, it could limit access for low-income Californians.

POINTS OF CONTENTION

Organizations including the Center for Accessible Technology (CforAT) and The Utility Reform Network (TURN) have submitted reply comments in support of the decision, while other entities like TruConnect — a provider of free cell service and phones to those eligible customers through the LifeLine program and the ACP — and the National Lifeline Association (NaLA) have submitted reply comments in opposition.

Organizations that support the adoption of this proposed decision argue that the California LifeLine program’s minimum service standards meet participants’ wireless data needs, citing evidence from the Joint Consumers’ opening comments on a March 2022 ruling that most program participants use less than one-quarter of their data allotment, as stated in the CPUC document.

Danielle Perry, board member of the National Lifeline Association and chief compliance officer at TruConnect, meanwhile argues that this evidence is not sufficient. Consumers with a limited amount of data ration it because they want to be sure to save data in case of an emergency, she countered.

Paul Goodman, legal counsel with CforAT, argues that while companies say additional funding is needed to offer unlimited data, they have not provided data to back up this claim. “[CPUC] specifically notes that we can’t take these provider claims seriously, because the providers refuse to demonstrate or provide any data about how much data consumers use and how much it costs providers to purchase that data from the backbone network,” he said.

Perry argues that this is not the case, pointing to comments submitted to the CPUC, which include reference to an Ericsson report projecting that Americans’ mobile data usage will continuously increase over the next decade.

The other point of contention is that not instituting limitations on the amount of lost revenues that utilities can recover from the California Lifeline Program would “allow some utilities to game the ULTS [Universal Lifeline Telephone Service] program to reap unreasonably high profits,” as stated in the text of the proposed decision.

Perry said that this is far from the truth and not fair to providers, noting that sharing certain contract details between her organization and carrier partners could constitute a breach of contract.

IMPACTS ON CONSUMERS

Despite disagreements about the best way to serve California communications customers, each party argues that that is what they are trying to do.

According to Nathan Johnson, a co-CEO of TruConnect, the proposed decision would shift the burden of affordability onto carriers. He believes the goal of providing the best service possible should be the No. 1 goal, and one that CPUC and carriers should work together for.

“We’re trying to just make [CPUC] aware. Why would we be taking away things from consumers in a high-inflationary environment when things are already becoming more constrained?” Johnson said.

Johnson’s recommendation is that the decision is put on hold so that more analysis can be done — with all stakeholders coming together to evaluate — prior to making a decision that could potentially have a negative impact on low-income consumers and potentially worsen the digital divide. He said questions need to be asked about what it might look like for the state to offer funding along with ACP.

“How do we make this a win-win-win all the way around?” Johnson possessed. “This could really be a test case for other states that are expanding their programs.”

If the CPUC adopts the decision prior to this analysis, Johnson said TruConnect will be successful.

In contrast, Goodman noted that it is difficult for CPUC to regulate wireless service rates, and instead, those decisions are almost entirely up to providers. He argues that providers have come to see the LifeLine program as a benefit for providers, when it should be seen as a benefit for low-income individuals.

And this benefit, as he explained it, allows wireless providers to continue to provide the service they’re providing and give people mobile access to broadband, while those people can also use the ACP to help offset the cost of home broadband, as home broadband is faster and cheaper on a per-gigabyte basis.

“I think it’s actually very well crafted to promote a sort of dual broadband access, which is a benefit for everyone,” he stated.

The Sept. 15 voting meeting will be available via webcast. CPUC declined to provide comments beyond the official written comments until after voting on the measure.

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