California Public Utilities Commission Seeks to Update Surcharge Mechanisms for Telecommunications Services

The California Public Utilities Commission (CPUC) has initiated a rulemaking process to review and update the surcharge mechanisms for telecommunications services in the state. This effort aims to ensure equity and transparency in the collection of fees, taxes, and surcharges from customers. Center for Accessible Technology (CforAT) has submitted comments to the CPUC, highlighting concerns and recommendations for improving the surcharge mechanism.

Key Takeaways:

• The CPUC is considering updating the surcharge mechanisms to address issues of equity and transparency in fee collection.
• CforAT has expressed concerns about the Commission's 2024 surcharge collection resulting in a surplus of Universal Service funds, which may be used to create a subsidy for broadband providers or increase broadband deployment.
• CforAT recommends changing the user fee funding mechanism from an intrastate revenue-based mechanism to an access-line based mechanism.
• The Commission should investigate provider fees and prohibit any fees that are not clearly explained and are not mandatory fees such as government fees and taxes.
• CforAT suggests that the Commission should require customer bills to clearly indicate which fees or charges are company-imposed and identify whether any of the company-imposed fees or charges are subject to mandatory surcharges or other fees.

Statistics:

• In 2024, the CPUC's surcharge collection resulted in a surplus of Universal Service funds.
• Approximately 20% of the average cable bill consists of company-imposed fees, according to a 2019 study by Consumer Reports.
• The CPUC is considering changes to the user fee funding mechanism to ensure equity and transparency in fee collection.

Sources:

• California Public Utilities Commission, Order Instituting Rulemaking to Update Surcharge Mechanisms to Ensure Equity and Transparency of Fees, Taxes, and Surcharges Assessed on Customers of Telecommunications Services in California, March 4, 2021
• Center for Accessible Technology Comments on May 14, 2025 Phase 2 Scoping Memo and Ruling, June 16, 2025
• Phase Two Scoping Memo, May 14, 2025
• Legislative Analysis, Senate Bill 716 (Durazo), available at https://trackbill.com/s3/bills/CA/2025/SB/716/analyses/senate-energy-utilities-and-communications.pdf (last accessed June 20, 2025)
• Consumer Reports, What the Fee? How Cable Companies Use Hidden Fees to Raise Prices and Disguise the True Cost of Service, October 2019